Corporate TreasuryCentralisationGeneralThe Role of Project Management in Realising Centralised Solutions

The Role of Project Management in Realising Centralised Solutions

Requests for proposals from multi-national corporates to banks are ever increasing in complexity. The RFP documents themselves can now reach 30 or 40 pages in length. Part of the reason for this, is that the further companies centralise their treasury, the more they centralise their banking activities. And the larger the company group is, the more complex that whole process is.

The kinds of treasury solutions which today’s big companies require from their banks reflect the challenges of centralisation. Solutions range from basic banking services, account structures and cash pooling, through to treasury management suites that encompass operations globally. Implementation can take up a great deal of resource and co-ordination, by both the bank and the company’s treasury department. Banks regularly commit a whole team simply to preparing a proposal, before even having won the mandate. Then there is always the risk that the project can go wrong. But that need not be the case.

A successful project, with efficient, just-in-time implementation, should have its foundations in a well-prepared RFP. It will save everyone a lot of time, money, energy and human resources in the future. Smooth project implementation has to begin at the earliest stage, not once the mandate has been won. Too often, a kick off meeting starts with an eager review of how expectations can be met, but ends with a postponement of the whole project and a search for another way forward.

If one considers any of the most common problems faced by project teams implementing new systems in the treasury, every single one can be avoided or mitigated by advanced consideration and a coherent project structure. Are subsidiaries proving resistant? Sell benefits to them at the beginning! Is the system roll-out proving cumbersome? Establish it on a country-by-country basis! Is a contractual dispute holding up the next stage of the process? Bring in lawyers and tax advisers at the beginning! Are firewalls preventing systems from communicating? Include technical specifications in the RFP!

First let’s look at the preparation, then the project itself. When you first contemplate any new treasury solution, you must be sure that you have the resources to actually do the project. That may sound basic, but companies can so easily ‘overload the boat’, running too many projects in parallel and finding that new projects are incompatible with what they already have going on.

To avoid immediate problems, and to create achievable project goals, it is often useful for the company to administer a healthy dose of self-analysis. This will pave the way for free and open communication with the bank in which the company’s strategy and philosophy are laid bare. Providing as many relevant facts to the bank as possible helps the bank ensure that the solution it proposes is correctly tailored to your needs. And if your philosophy is that your staff should have responsibility for their own cash, but you would like to have a unified cash management solution in place, the bank can take account of this in its project proposal.

With thorough analysis, it should be the case that once the proposal is made, all the important decisions will also have been made. Any contractual or documentation issues should have been clarified and tax opinions sought at an early stage. This may all sound like a lot of work, but in the end it could save up to three to five months of project time.

Just consider the tight time-scales and the challenges of some treasury projects, and you will see what a difference early preparation can make: in order to install a solution for a client, we had to open 48 accounts for 30 subsidiaries within 18 countries. The client wanted the system in place within just five months. We managed to do it, but the project was tough and the contractual work could only be done with all the facts available in advance.

Implementation steps depending on the dimension of the Project

 

Of course, such an ambitious project could not have been achieved within such a tight timescale if it had not also been for strong project management skills deployed within a diverse but dedicated team working in concert to achieve a series of well thought-out milestones. The following elements are crucial to an effective project:

  • An effective and responsible project leader, on both the bank and the corporate side. The better the project leader, the better the project. Ideally, the company’s project leader will be committed full-time, although in practice that rarely happens, especially if the group treasurer is appointed. But a part-time senior appointee is often better than a full-time project leader with less experience.
  • Effective internal communication. In order to get subsidiaries on board, and to go along with the project, they should be invited into the company group’s own kick-off meeting. Adopting an inclusive approach at an early stage, can work for much smoother implementation. When the project is up and running, a liaison officer should be appointed at every key subsidiary to report to the project leader.
  • Diverse project team with clear responsibilities. Supporting the project leader, will be a project team that typically includes a cash manager, IT and accounting specialists, as well as on-call tax and legal advisers. These will be part-time members of the project brought in at as various steps of the project are achieved.
  • Project definition and plan. A ‘kick off’ meeting should build on the bank’s proposal to the RFP to define the objectives, i.e. the deliverables, of the project and begin to build the roadmap toward achieving these. This initial meeting will establish many of the boundaries but the detailed plan will be agreed by the project leader and the single point of contact at the bank. A detailed plan should include all the responsibilities of both project teams as well as scheduling project meetings and status reports.
  • Single point of contact. It is important for one person on either side (i.e. bank and corporate) to be identified as ultimately responsible for deliverables. The bank’s single point of contact should ensure that the bank’s specialists and solutions are brought in ‘on cue’ and that status reports are always kept fully up to date.
  • Regular meetings and status reports. Depending on the complexity of the project, the bank and the company teams will meet together weekly, fortnightly or at the very least monthly. Typically, weekly status reports are produced, tracking implementation progress against deadlines and milestones set out in the project plan. If it becomes apparent in the status report that a meeting is required more urgently, then a more immediate conference call can be booked.

Given a project leader with full responsibility, along with carefully prepared groundwork and good project management practice, then there is no reason why even the most complex of projects cannot be delivered on time and on budget. However, it should be remembered that the closing stages of a project are the most vital in securing its ongoing success.

At the project’s end, a review meeting should evaluate the project’s performance against expectations and ensure that the solution as implemented can carry out the tasks required of it. Your bank will most likely want feedback to help its implementation teams continue to improve. The meeting should also be forward looking. This is where the bank’s project leader hands over responsibility to the relationship manager and local support staff and as such the necessary processes and procedures should be put in place to support the smooth operation of the solution.

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