Front-office related units address a growing number of open issues through small projects. These projects are very often run with existing resources and without any formal project management approach. Unfortunately, many of them fail, or their results are tightly linked to individual project team members. Experience has shown that addressing the five areas of 1) stakeholder management, 2) mini business case development, 3) governance structure implementation, 4) applying a communication framework, and 5) relying on a formal project management process, allows to significantly increase the success rate of small projects.
In many financial services companies, sound project management techniques are mainly applied to projects run out of operations, back-office units, or IT. Rarely do projects lead by front office and front-office related units, including portfolio management, relationship management, and legal and compliance, apply systematic project management approaches. There exist various reasons for this, one being the lack of knowledge and expertise in project management methods. The felt burden from applying systematic processes is often cited as another reason.
Experience has shown that many so-called small projects run without sound project management often fail. The question to be answered is, how much and what kind of project management is needed to increase the success rate of small projects, mainly found in front-office related units.
A small project is a project that fulfills four criteria:
- The project is run with existing resources and no outside support, like centralized PMO, consultants, or other resources and skills. No dedicated budget is allocated to the project.
- The project team is small (up to three to five full-time employees) and the project is of short duration (up to three to six months).
- The main focus of the project is on fixing or enhancing current operations through incremental, rather than radical, change.
- There is little to no interaction within the company, or alignment with overarching strategic objectives.
Small projects are usually not accounted for at the divisional or firm level and do not follow company policies regarding project management, like formally approved business cases and dedicated budgets.
The main advantage of small projects, in addition to addressing an open issue, is that they can be set-up and executed with minimal administrative and bureaucratic overhead. But with these advantages, come their main reasons for failure or lack of sustainability.
MAJOR ISSUES IDENTIFIED
Three major reasons why, in the long run, small projects are rarely successful can been identified.
- No management commitment to a measurable business goal In many cases the business goal is even not formally defined.
- The project manager has no formal authority to make decisions with respect to the work to be performed. Micro-managing steering committees are common.
- There does not exist any willingness to invest in a structured project management approach, as those are seen as unnecessary burden.
Even though a reasonable number of small projects deliver in the short run on their expectations, many of them fail in the long run. As soon as the project members move on to an area or function no longer related to the results of the project, the project outcome gets rejected or ignored. Small project results are very often tightly related to the people executing the projects and are not seen as value creators for the organization.
But how can these issues be fixed without waiving the advantages that come with small projects.
FIVE KEY AREAS TO ADDRESS
First and foremost, the project manager is and must be responsible for the success of the project. He is the project’s CEO. There exist five main areas that need to be addressed when setting up and executing a small project.
First and foremost, all stakeholders must be identified along three dimensions and a strategy for managing their power and interest defined.
- Their role related to the project.
- their decision authority within the firm, and
- their interest in the project and its outcome.
MINI BUSINESS CASE
Although a detailed business case is rarely necessary, it is important to associate with each small project mini business case containing five sections:
- Description of the issue to be addressed
- What issue should be addressed?
- Why should the issue be addressed?
- Who benefits from addressing the issue?
- Measurable project goals
- Quantifiable criteria defining success
- Qualitative description of the project expected results’ and their alignment with the form’s overall strategy
- Feasibility analysis and concept overview
- Why is it possible to address the issue?
- How should the issue be addressed?
- Financial analysis showing value creation
- What is the financial value created by addressing the issue?
- What is the cost of not addressing the issue, for example, in terms of opportunity costs?
- What is the expected cost of the project if it would have to be fully financed by an external budget (rough estimate)?
- Risk review
- What are the risks of not addressing the issue?
- What may go wrong during the project?
- What are the risks associated with the expected result of the project?
Without a governance model, defining the roles and responsibilities of the key parties involved, it is impossible to successfully manage a project. At least the following four roles must be defined, and the responsibilities of their owners clearly agreed upon.
- Steering body, responsible for overall decisions.
- Project manager, responsible for delivering the project’s results.
- Project team members, contributing to the targeted project results.
- Related stakeholders, affected by the project’s outcome.
In addition to a sound governance structure, a communication plan must be put in place. The communication plan answers the question who receives what information when and at what level of detail.
Communication is one of the most important activities of the project manager. It is his responsibility to manage all information flows (as well as necessary information barriers).
PROJECT MANAGEMENT PROCESS
Finally, a project management methodology should be applied for initiating, planning, executing, controlling, and closing the project. This methodology does not need to be complex, but it should ensure that the project’s work is managed. The two most common approaches are the PMBOK (Project Management Body Of Knowledge) and the Prince2 (PRojects IN a Controlled Environment) approaches. Exhibit 2 illustrates the five phases of a simplified version of the PMBOK approach.
- Ensure there exists a well-defined and communicated project goal that is aligned with the firm’s business strategy.
- Identify all stakeholders and communicate actively with them based on their identified information and involvement needs.
- Agree on roles and responsibilities of all involved stakeholders and formalize the authority of the project manager.
- Take the time to develop a project plan and stick to it.