Change Management in Projects with Regulatory Deadlines 

         

by Bogdan Marin

Regulations and Their Consequences In some industries, specific regulations apply. For example, in the banking sector, reporting requirements imposed by the National Bank (BNR) according to a certain calculation methodology and within certain deadlines can directly impact the costs of banks if they do not comply with regulations regarding capital and liquidity (Basel). In international passenger air transport, there are strict requirements for reporting passenger data before arrival in destination countries for security or health reasons (disease prevention and control). Other regulations affect all industries, such as the implementation of e-invoicing. Non-compliance with the deadlines imposed by specific regulations can lead to fines or other financial sanctions from regulators. Relationships with regulatory authorities can be damaged. Failure to comply with regulations can negatively affect the perception of external and internal stakeholders, thus leading to reputational damage. Delays may also result in the loss of strategic opportunities, such as launching an innovative product at an optimal time in the market.  Sources of Changes in Projects with Regulatory Deadlines In another type of project, it may be possible to maintain the project’s scope and resource consumption within certain limits by extending the implementation period. In projects with regulatory deadlines, both the project’s scope and allocated resources are often subjected to extreme pressures. Adding the criticality of not meeting the fixed deadline, it can be concluded that managing changes in projects with regulatory deadlines is a colossal challenge for project managers. Therefore, changes in regulations inherently bring challenges related to defining requirements, often with insufficiently identified or detailed requirements. Stakeholders may sometimes force the project’s scope to address related issues. Unexpected conditions in the project context (e.g., infrastructure limitations) can trigger significant changes in the project’s scope. Externally, the regulator itself may clarify the impact of its regulations, leading to changes that involve significant modifications for the implementer.  Efficient Change Management to Meet the Deadline In the complex context described above, changes are often inevitable. From practical experience, I have grouped recommendations into four areas for efficiently managing these changes. 

1. Adaptive Project Planning Organization Usually, start by structuring the project into modules or components that can be adapted or reconfigured independently, increasing the project’s approach flexibility. Then, continue with detailed and realistic planning, including allocating time buffers for unforeseen changes. Instead of a rigid approach, creating a framework that allows quick adjustments to the planning based on emerging changes is recommended. 

1. Monitoring Progress and Making Quick Decisions Using short iterations to assess progress and make frequent adjustments helps in such projects. This allows for the rapid identification of deviations from the plan and the reallocation of tasks or resources. It also enables teams to respond quickly to changes without compromising the deadline or other project objectives. Such an approach facilitates the activation of backup plans to respond promptly to risk materialization. 

1. Change Control Clearly establish which elements of the project are critical and can be adjusted or eliminated if necessary. Agree on a clear change approval process to maintain control over decisions. Ensure that all stakeholders are aware of possible changes and understand their impact. 

1. Communication and Collaboration It is mandatory to keep communication channels open with all stakeholders. This allows for a better understanding of the impact of changes and facilitates collaboration to find the best solutions. Work closely with suppliers to ensure they are continually aligned with the adaptive project planning. By implementing these practices, project managers can ensure that their projects stay on the right track even in the face of unexpected changes, thus meeting the fixed deadlines imposed by regulations without sacrificing quality or other project goals. This approach requires an open mindset, ready to accept change as an integral part of the project management process. 

Case Study: Banking Sector   A typical method for planning projects with regulatory deadlines is the Critical Chain method (different from the Critical Path). We applied this method in a Basel 2 reporting project (Risk-Weighted Assets) in the banking sector with deadlines imposed by national and international regulators. This project involved implementing the bank’s central data warehouse (DW) system, feeding the central model with data from all relevant source systems, and calculating the risk-weighted assets of the bank in a dedicated data model. We took over the project at a time requiring a turnaround to successfully meet the deadline. One of the key elements was adopting the Critical Chain method. The practical use of the method involved estimating all activities with a duration of at least 5 days and obtaining minimum and maximum values for these durations. Activity planning was done based on the average duration of each activity. A global time buffer was created from the differences between the maximum and average values of activity durations, and this buffer was placed on the critical chain of activities, between the last planned day of the project and the regulator-imposed deadline. The role of the buffer was to protect the imposed deadline. A 6-month plan with a buffer of about 20 working days was derived, sufficient for reorganizing and delivering tasks. Weekly project monitoring included updating the buffer consumption, i.e., the remaining duration of the buffer. This also served as a shortcut for diagnosing project progress: the unconsumed proportion of the buffer relative to the remaining time until the regulator-imposed deadline. Details of the Critical Chain method can be found in “The definitive guide to project management. The fast track to getting the job done on time and on budget,” Nokes, Kelly, FT Prentice Hall, 2003.  Case Study: Air Transport   In the context of increased fines imposed by authorities for the inaccurate reporting obligations of 100% of passengers transported by aircraft of an airline, a project was initiated to switch to online connections with departure control systems and proprietary communication software solutions implemented over the infrastructure of international airport operators in 80 cities worldwide. Due to the large number of airports, heterogeneous infrastructure, and the need for individual testing at each airport, implementation in a very short timeframe was not feasible. Understanding the complexity of the project, we assumed exceeding the implementation deadline but transparently shared implementation efforts with the regulator. The backup plan activated to respond to the inevitable materialization of risks considered: 

• Temporary adjustments to ground operations to prevent last-minute changes to the lists of boarded passengers; 
• Weekly transparent communication of the project’s situation to authorities to demonstrate the airline’s good faith and to receive leniency regarding the issuance of new fines.