If film directors can insure against failure, why not project managers?

What's the difference between an IT project and bungee jumping? Answer: they are both pretty scary experiences,...

What's the difference between an IT project and bungee jumping? Answer: they are both pretty scary experiences, but at least you can buy insurance for bungee jumping. For many organisations, kicking off an IT project feels like stepping into thin air with only one guarantee: it's downhill all the way.

Why can't we buy insurance for our IT projects? Many small and medium-sized organisations avoid IT, or do the bare minimum, because they fear the complexity and risk that IT projects bring. The statistics in Standish Group's Chaos Reports suggest they might not be so daft, but it also means that they are forgoing the benefits that effective systems might bring. If they could only buy insurance against project failure, they might consider initiating some very valuable projects.

But you can buy insurance for just about anything, if you look for it - satellite launches, models' legs, film productions - so why not for IT projects?

Lights, camera, insurance!

Take film production. Like software development, it is a creative activity you need a diverse team of technical specialists the technology is always evolving the end result depends on bringing together a lot of disparate scenes into a larger whole. Yet completion guarantees are common in the movie industry.

A completion guarantee is effectively an insurance policy that a project (the film production) will deliver on time and on budget. The film's financier pays a premium to an independent third party (the guarantor), who then monitors the production and ensures it stays on track. If it doesn't, the guarantor repays the original financing.

A guarantor plays a very active role right from the "specification" stage: before giving a guarantee, they conduct a thorough review of the script, production schedules, budget, and so on, and meet with key members of the team to confirm that appropriate controls are in place, that the plans are feasible, and that the team has the necessary skills and experience.

Active monitoring

The guarantor then actively monitors status throughout the production. They receive daily reports showing what scenes have been shot, who's been on set, what materials have been used, and so on. They retain the right to visit the set at any time, unannounced, and to meet with anyone on the team. If the production runs into difficulties, they can take control of the troubling aspects for example, they may impose additional financial controls or seek changes to the script. In extremis, they may even bring in their own producer to take control of the whole project. The guarantor steps in at some level on about one in five films.

There is no fundamental reason why this could not happen for IT projects. The premiums might need to be higher than for films. Otherwise, this level of review, monitoring and, if necessary, intervention is not beyond what the best project teams are capable of.

For small and medium organisations, a completion guarantee would limit their risk and provide access to independent expertise. And for developers, it would open up a range of projects that simply are not being initiated right now.

Graham Oakes is principal at IT consultancy Graham Oakes Ltd

Power politics and the IT project >>

This was last published in May 2008

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