Articles - Good project management is key to your validation success

High quality validation gives Boards confidence in their capital models. Validation also shapes model direction by identifying areas for improvement. Project management is pivotal to a successful model validation but is frequently underestimated, both in terms of budget and resourcing. Let’s delve into six areas where robust project management in your validation work can maximise the chances of success.

 By Wendy Kriz Evans, FIA, Principal at Lane Clark & Peacock 

 1. Clear focus on goals
 A skilled project manager keeps a keen eye on the bigger picture, focusing on identifying and prioritising tasks by impact on project success.

 Capital and validation teams may have differing priorities - project management aligns efforts. For instance, reverse stress testing, often lower priority during model development, is crucial to validation.

 2. Bringing experts together
 A recent LCP market review showed a range of views on the optimal allocation between in-house and external validation support. Most respondents favoured a blend of in-house validation and collaboration with an external validation partner (bringing specialised skills and broader market perspectives). Good project management facilitates planning, coordination, and collaboration between these internal and external teams.

 Key actions include:

 • These help the project stay on track by identifying deviations from the plan.
 • Get the most out of them through detailed planning and action tracking.

 Stakeholder communication - Tracking against milestones is useful when communicating project status to stakeholders. Visualising progress using Gantt charts or a dashboard helps communications with key decision-makers.

 3. Allocating resources
 Resourcing validation work can be challenging. 56% of participants in LCP’s market review agree or strongly agree there is a lack of suitable candidates for capital model validation roles.

 Resourcing considerations include:
 Front-loading - Identify aspects of the validation that can be done early, for example, deep dives, documentation review, and governance testing. Tackling these first means quantitative testing can take the focus once data is available.
 Contingency planning - As validation teams often find themselves at the end of the information chain (where delays can accumulate), consider creating a contingency plan including external resources. LCP’s market review reveals that 87% of firms plan to use consultancies and/or contractors. While these resources offer flexibility, planning can shorten lead times and ensure availability.
 Project management role - Larger validation projects will likely benefit from a dedicated project manager. For smaller projects, project management responsibilities can integrate with other roles (such as reviewing validation testing). However you choose to resource project management, a conscious choice can help ensure smooth delivery of your validation.

 4. Progress updates and tracking
 Effective project management enables real time updates, in turn building confidence in the process. Progress tracking allows identification and mitigation of risks before they escalate.

 Tracking could include:

 Challenge log - Maintain a detailed challenge log to track queries, findings, and responses.
 • This log serves as a valuable format for summarising progress.
 • It also forms the foundation of your validation report, streamlining the reporting process.

 Updates - Regular updates keep your team engaged with the project and helps ensure optimal resource allocation. They increase transparency, enabling informed decision-making by senior executives (who may be overseeing multiple projects). As your validation nears completion, consider increasing frequency – daily updates help with finalising the work.

 5. Enhanced governance
 Governance can easily be overlooked as an important part of validation. Effective project management involves deliberate planning to assemble the right stakeholders promptly for the governance process.

 This proactive approach results in a more robust validation outcome as Boards and committees have enough time to consider the “so what?” and engage in feedback loops.

 6. Proactive project management
 LCP’s market review highlights the challenge firms face in meeting validation deadlines. Validation teams often meet unforeseen delays making proactive project management essential.

 Project managers should anticipate potential challenges and establish interim milestones to keep things on track. Priority should be given to items necessary for Board assurance and stakeholders should be made aware of the impact of delayed milestones. If milestones are missed, prompt adjustments to plans and resource allocation are crucial to avoid undue pressure on deadlines.

 In short, prioritising project management helps firms increase the chances of a smooth-running validation process, ultimately delivering a more successful capital model.

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