Project Management Institute

Money in the bank



In the last decade, high-level project management has become a vital fixture in many banks, insurance companies and investment houses. Comerica, the Detroit, Mich., USA-based bank holding company, is an example of a financial services firm strengthened by its project management focus.

Last year, as the firm merged with California-based Imperial Bank, it had to add newly acquired projects to an already full plate, bumping several of its own worthy efforts. “When an opportunity like that comes along, every other project gets shoved down,” says Shirley Edwards, a project manager and vice president for Comerica.

The sudden need could have spelled catastrophe for the portfolio, but Eugene Miller and Ralph Babb, who bridged the merger period as CEOs at Comerica, both understood the complexity of the merger, and the project management team was able to prioritize, budget and chart a strategic path.

Project management champions facilitated the merger through their understanding and commitment—executives supported the discipline before the two firms united. Next, training courses exposed project managers, project participants and sponsoring executives to the complexities and value of sound project management practices. At the same time, Comerica was working up a project management methodology that included process guidelines, reference information, corporate standards, forms and templates that are used in every division of the company.

The result? “Comerica projects are coming in on time, within budget and meeting client expectations, more times than not,” says Edwards. As a major plus, top management clearly sees what a vital contributor project management is to the organization's bottom line—and makes informed decisions accordingly.

Bungee Management

Clearly, CEOs and project managers must work closely to make big visions a reality. Executive churn has been an issue: One third of all chief executive officers last three years or less in their positions, according to a study of executive tenure in 25 countries conducted by Drake Beam Morin, a Boston, Mass., USA-based provider of strategic human resource solutions. That pattern is less true at the more conservative banking and insurance end of financial services, but truer at brokerages, asset managers, holding companies and financial conglomerates such as Citicorp and MBNA. This churn naturally causes disruption to carefully laid strategic plans and what project managers call the biggest project management sin a CEO can commit: shifting projects midstream, also known as “bungee management.”

CEOs and other corporate officers tend to rise from within institutions, so cross-pollination of ideas from other industries is scant. “But we're getting there,” says Edwards, a past president of the Project Management Institute's Financial Services Specific Interest Group. Many CEOs grasp the advantage of closely aligning projects with their own strategic direction, adding the project management mindset to their existing set of operational skills: The business climate demands such attention to project methods.

For example, many firms see the Basel Capital Accord (see sidebar, “Eye on the Prize”), a set of recommendations issued by the Bank for International Settlements (BIS) located in Basel, Switzerland, as the “next Y2K.” The proposal is based on three mutually reinforcing pillars for evaluating the various risks that banks face. The plan focuses on:

  • Minimum Capital Requirements (Pillar 1) to refine the measurement framework set out in the 1988 Accord
  • Supervisory Review (Pillar 2) of an institution's capital adequacy and internal assessment process
  • Market Discipline (Pillar 3) through effective disclosure to encourage safe and sound banking practices.

No organization will find its way to compliance without extraordinary project management, plus the support and understanding of the senior team.



Like all disciplines, project management has its share of intimidating phraseology. Three quick concepts are key for senior managers seeking to get their minds around managing complex projects.


This sequence of tasks must not fall behind schedule, or else the whole project could be delayed. This is the longest path through a project plan, and executives can help a project by providing resources and knocking down obstacles.


This grouping of related projects throughout the organization should help a CEO see how a company is tied together, through project-to-project dependencies and competition for resources.


Some of the most important responsibilities of a sponsor are to enable and authorize the project manager, to provide leadership and guidance to keep the project in line with company strategy, to provide resources and funding, and to clear obstacles.

No organization will find its way to compliance without extraordinary project management, plus the support and understanding of the senior team, Edwards says. “It will impact every line of business, from the credit side to the back office, from the printed forms to the underlying culture.”

Losses in the industry gave rise to these recommendations. The new Basel Capital Accord will require financial institutions to allocate capital enterprisewide, adjusted according to risk. In effect, it will reward banks that manage risks carefully by allowing them to allocate less capital for losses. Banks that can't or won't invest in enterprisewide risk management may be required to allocate more capital.

Pillar 1 sets minimum capital requirements that vary, depending upon which of three possible approaches are selected by the bank for managing risk. The internal risk-based approach, which requires banks to establish in-house rating systems, yields the greatest benefits toward capital determination, says Edwards. As such, objective and statistically sound rating systems must support what typically have been subjective processes. Modeling tools for predicting risk also are required.

This means credit/lending decisions have to be based on statistically sound scoring systems, and operational risks have to be identified, monitored and measured, Edwards says. “This affects every lending function. It also means, for most banks, a gigantic cultural change.”

Implementing the new recommendations will cost global banks trillions of dollars over the next two to three years. In a sense, it will be even bigger than Y2K because it will go on indefinitely. Nearly every bank project portfolio in the world is making space for this immense compliance challenge, and top management has to work hand in hand with project managers to make it happen.

Distasteful Necessities

Project management is in the curious state of being an indispensable core competency of modern financial services organizations—without every organization committing to the discipline, according to Christian Rosenstock, head of the project office for BNY Clearing Services, Milwaukee, Wis., USA, a subsidiary of the Bank of New York.

“We're an intangible industry with invisible products, so it's been harder for us to see the need,” Rosenstock says. “The earmarks of a tough project are that it requires change in the way people think, in their culture, and that it requires crossing or redrawing boundaries. The smart leader sees these difficulties in advance and addresses them early on.”

The hardest challenge for a CEO is pulling the plug on a favorite project. There is no one rule in deciding which projects to continue and which to kill, says Ganapathy Subramaniam, vice president for Tata Consultancy Services in Bangalore, India, Asia's largest IT firm. “It depends on the project, it depends on the stakes. One needs to have an overall feel of the project. Have a sense for what the project manager does not tell you. Decode what he tells you. Interpret information, not data. Review the top risks, and check that processes are in place to address them. Have a mature mechanism for external reviews. Have a feel for client comfort, concern and stake.”

And when required, Subramaniam says, “Give the tree a rough shake.”

As companies mature, many offer training in project management for their own executives. Comerica offers a four-hour course that provides senior management with a comprehensive overview of project management concepts.

However, the task of a project management-smart CEO isn't to be a junior project manager, says David Rea of Insite Institute, Toronto, Ontario, Canada. Being in charge of a complex organization is a different thing than running a specific project. Project managers are obliged to have a kind of tunnel vision, focusing solely on the details of their project. “We don't have to think about stock prices, disasters in other areas of the company; all we should focus on are our project goals,” Rea says. Top managers can't afford that kind of focus, and they certainly don't have that kind of time.

Curiously, Rea says, some of the best CEOs from a project management standpoint are those with a background in sales and marketing, “because sales is about managing customer expectations, and project management as a practice is all about keeping people's expectations engaged but in check.”

The Business of Uncertainty

Executives must realize that a project plan almost never works in reality the way it does on paper or on the computer screen, according to Amy Schwab and David Schmaltz of strategic project consultancy True North Project Guidance Strategies Inc., Walla Walla, Wash., USA. They worry that CEOs who yearn for at-a-glance understanding of projects may too readily believe good news or optimistic reporting. “The hardest thing for executives is seeing beyond what people are saying,” Schwab says.

Schmaltz is careful not to confuse uncertainty with pessimism. “Things can get done,” he says. “You just can't be sure when or how or if. With a novel project, by definition, there is no reliable experience base.”

This discomfort is evident in how financial services projects tend to resemble their respective products. “An insurance project tends to look and feel like an underwriting exercise,” Schwab says. “A bank project is managed like an account. A hedge fund project may sidestep risk management altogether.” When in doubt, the industry falls back on familiar metaphors, and therein lies the problem.

In the end, “CEOs are the most realistic people in a company,” Schmaltz says. “They know this is tough stuff. They know that if all they get is happy news, something is wrong.” PM

Michael Finley is a Saint Paul, Minn., USA-based freelance writer and co-author of The New Why Teams Don't Work, winner of the 1995 Global Business Book Award for “Best Management Book – the Americas.”


The global Basel Capital Accord, which is aimed at mitigating risks for financial institutions, has passed a number of milestones toward implentation:


The Basel Committee on Banking Supervision issued a proposal for a new system to replace the 1988 Capital Accord.

APRIL 2001

The committee initiated a quantitative impact study (QIS) of banks to gauge the impact of the capital requirements. Visit for more information.

JUNE 2001

The committee released an update ( and highlighted several modifications to its earlier proposals based on more than 250 industry comments.


A QIS 2.5 study ( sought industry feedback about potential modifications to the committee's proposals.


The committee revised its approach ( to the new accord and announced the establishment of an Accord Implementation Group.

JULY 2002

The Basel Committee agreed on a number of issues toward the Accord. See for more information.

Source: Bank for International Settlements

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.




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