The 18 Month Rule: Avoiding the Endless Project

November 9, 2006


New York, NY, USA November 9, 2006

Insurance carriers have invested heavily in project management, but large projects continue to fail. A new approach is required.

In a new report, , Celent provides a guide to address the pitfalls of large IT projects.

The report examines the history of large projects in insurance, including why they have failed so often in the past. Also considered are how insurers define success and failure of a project, often believing a project has succeeded when it has not.

Celent suggests an approach that includes breaking down large projects into a program預 group of related, dependent, and often parallel projects. None of those projects should be greater in length than 18 months.

"To most carriers, any project that gets finished and meets the original specifications is a success," said Chad Hersh, a senior analyst in Celent's Insurance practice and author of the report. "Insurers need to focus not only on completing projects on time and on budget, but on shortening projects so that the resulting systems aren't outdated from the day they go live."

The report also provides recommendations on how to set up a program management office and how to break large projects up into programs.

The 20-page report contains two figures and one table. A table of contents is available online.


Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

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Table of Contents

New York, NY, USA November 9, 2006

Executive Summary 3
Introduction 5
Large Projects Fail (on Average) 6
Typical Large Insurance Projects 7
Large Projects Failing -- and Succeeding -- in Insurance 8
Why Do Projects Fail? 10
Case Study: Claims at Canal Insurance 14
When to Use the 18 Month Rule 16
What's the Catch? 18
Objectivity and Methodology 19

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