Chapter 11: Project Management

Question 1

Features of a well-run project

Answer 1

• clear AIM reflecting the needs of the customer
• thorough planning and full analysis of the risks involved
• a schedule of milestones should be produced, and progress against these milestones monitored
• the project should move along at an appropriate pace
• critical paths should be managed
• the success of the project should be measured against performance and quality standards
• thorough testing should take place at all stages
• excellent communication between those involved, with the team working in a supporting way
• relationship with external suppliers should be stable but challenging.
• if conflicts arise, they should be dealt with positively to act as a source of ideas and as a tool for development

Question 2

Who would be in a project team?

Answer 2

• Project owner / sponsor
• Project manager

Other people involved in:

• designing
• building
• specifying
• implementing the project

The end users of the project should also be involved from the start.

Question 3

What roles should the members of the team play:

Project owner

Answer 3

Should concentrate on the agreed milestone review points ensuring that they are properly scheduled and that the project is fully reviewed each time a milestone is met.
The project owner should make sure that critical questions are asked at these points.

Question 4

What roles should the members of the team play:

Project manager

Answer 4

More hands-on.
Must be a strong, experienced individual.

Able to 
- establish direction,
- decide on action,
- organise resources 
- and motivate 
the project team.

Question 5

What does the written strategy document contain (at a high level)?

Answer 5

At a high level:

• sets out the aims of the project
• any implementation issues
• the risks involved
• ways of managing the risks

Question 6

What does the written strategy document contain (at a detailed level)?

Answer 6

sections on

• what the OBJECTIVES are (including economic)
• – how these objectives will be met
• – acceptable quality standards against which to assess the objectives
• ROLES of the parties involved (project sponsor & 3rd parties)
• a BREAKDOWN of the work to be completed
• MILESTONE REVIEW points
• EXPECTED COST of the project
• need for INSURANCE or reinsurance
• VARIOUS POLICIES.

Question 7

Various policies contained in the written strategy document

Answer 7

• financing policy
• legal policy
• technical policy
• communications policy
• risk management policy
• IT policy
• policy dealing with conflicts of interest

Question 8

Project definition

Answer 8

• Project definition produced in a timely and cost effective manner, with minimal changes occurring later in the project.
• Ensures successful implementation and client/company needs met
• Need to be fully planned and monitored during the implementation (esp if long time).

Question 9

Planning

Answer 9

The actuarial control cycle forms a good basis for the management of this project and can be used to create the project plan
The following steps can be used to derive the project plan:
• Understand requirements
• Identify stakeholders in each area that is affected
• Understand current process and gaps that need to be filled – gap analysis
• Interview key stakeholders as part of this process
• Review results of gap analysis and discuss with management and project owner
• Document requirements based on gap analysis
• Estimate requirements to fill gaps and implement requirements in terms of the time required, resources required and the total cost
• Document the plan at a detailed level
This may be done using specialised software

Question 10

Judging progress/ development

Answer 10

• Define and document key statistics used to track the progress of the project
• Involve key specialists in the process and use their input to help plan the project
• Any developments/external factors will need to be monitored to ensure that they do not change during the implementation period

Question 11

Critical path analysis

Answer 11

• The project will have a number of work streams which may have interdependencies.
• Hence the critical path needs to be defined and monitored to ensure that there are no unnecessary delays in the implementation of the project.

Question 12

Risk analysis

Answer 12

A thorough risk analysis will need to be performed and options to manage or mitigate the risks will be required – eg regulatory risk of not meeting deadline

Question 13

Thorough testing at all stages

Answer 13

Hence the software and systems should be thoroughly tested at all stages of the project (mitigate risk of any new systems required not working properly)

Question 14

Scheduling

Answer 14

The plan should include a master schedule that covers all people working on the implementation including both those internal to the project and external suppliers e.g. consultants or advisors.

Question 15

Performance standards

Answer 15

• The project will require a number of different professionals (actuaries, accountants, lawyers, systems analysts etc.) and external suppliers to work together.
• It is vital that setting the standards of performance required from the parties involved is undertaken early in the life of the project, as these will have a major impact on the whole project.

Question 16

Supportive environment/ leadership

Answer 16

• Strong leadership and management to ensure that the right things are done at the right time to make the project a success.
• All team members committed to the success of the project and that the project leaders provide support.

Question 17

Conflict management

Answer 17

• Major project interfaces and potential conflicts need to be managed
• Examples include those between designers and builders; specifiers and implementers; project owners and project managers

Question 18

Milestone review

Answer 18

• At these milestone review points, critical questions on all aspects of the project should be raised by all those involved in the project.
• May be appropriate for an independent party to carry out the milestone reviews (unbiased view of progress)

Question 19

Clear communication

Answer 19

Clear communication to all parties throughout the project

Question 20

Other points

Answer 20

• Technical and design changes should be avoided once implementation has begun.
• Design parameters should be broad enough to give the developers some freedom of approach and to avoid the need for subsequent changes.
• Strict change control management should be implemented.
• Checks on the project manager to ensure the plan is met.
• The written strategy should be shared with the key individuals who will bear the responsibility for implementation of the project.
• Where appropriate the end users of the project’s output should be involved throughout the process.

Question 21

Schedule

Answer 21

• Develop structured breakdown of stages of project
• Include phases (eg data collection, model development)
• Key milestones must be set for reviewing progress of project

Question 22

Quality standards

Answer 22

• Quality of product developed will need to be measured

o Eg based on demand/ surveys

Question 23

Objectives

Answer 23

• Identify project objectives
• Premium – can a high enough premium be charged so as product delivers sufficient profit?
• Volume – consider whether sufficient demand exists for product
• Risks will need to be identifies and managed – may collate risks in register/matrix
• Consider likelihood of meeting objectives (if product is appropriately designed and marketed)
• Financial objective – to maximise returns for shareholders given acceptable degree of risk is taken

Question 24

Achieving objectives

Answer 24

• How will objectives be met
• Targets must be set – eg x% market share after 1 year
• Assess target market to determine consumer needs – insurer’s objectives relating to volume are more likely to be met if product meets consumer needs

Question 25

Roles/ responsibilities

Answer 25

* Role of sponsor (if shareholders, board may act as sponsor on their behalf) * Roles of manager and third parties * Eg for new venture, insurer may rely on third parties such as reinsurers/consultants for data/expertise

Question 26

Policies

Answer 26

* Communication policy – clear lines of communication need to be established between in-house project team and any third parties used * IT policy – IT may be needed, eg to model future cashflows of a product * Financial policy – policy for financing project should be determined * Legal policy – advice needed on appropriate wording related to claims so insurer doesn’t end up paying for unexpected claims due to loose policy wording. Also issue of data protection * Technical policy – how to administer product * Policies should be established at the start of project and are unlikely to change without good reason