Is Critical to Successful Programs and Projects
Project governance is structured management framework within which project decisions are made.
A Project Governance Framework is a critical element of any project.
Why?, since the general Business AS Usual(BAU) accountabilities and responsibilities associated with an organisation’s activities are laid down in their organisational governance structure, it is rare that an equivalent framework will exist or work effectively to govern the development of its programs or projects, being both business or ICT related.
For instance, the Governance framework provides a good indication of who in the organisation is responsible for any particular operational activity the organisation conducts. But unless an organisation has specifically developed a project governance policy, no such framework is likely to exist for project development activity, which is a risk to potential failure automatically.
Therefore, the role of project governance is to provide a decision-making framework that is logical, robust and repeatable to govern an organisation’s programs and project. In this way, an organisation will have a structured approach to conducting both its business as usual activities and its business change, or project, activities
It is important to align the Program Governance Framework to the Organisation’s Governance Framework where possible.
Key alignments must be:
- Identical pathways for “Delegation of Authority” guidelines.
- e.g. at organisational level an organisation has set limits various level of management can make decisions on in relation to purchasing value or level, hire of resources, signing of contracts and other types of contractual obligations on behalf of the organisation.
- Funding and finance approval limits – often critical for projects.
- Strategic and Operational decisions and or reviews
These are often critical for the success of a program or project that maybe experiencing critical timeline impacts. You must have representation on your Project Board or Committee that has the “appropriate” authority to make decisions. It is no point in have a representative of a GM or Director who then has to report back to the line management and seek instruction and report back before you can get a decision
There are 4 core pillars of project governance
Since this Governance Framework is primarily a decision-making framework it must have core foundations or pillars to support its functions:
In creating a Programme or Project Governance Framework, there must be alignment to some of the organisations corporate policies and procedures. These will include guidelines aligned to financial approvals, resource engagement policy, OH&S, legal and contractual agreements.
It will also include standard reporting guidelines, procedures for hiring specialists for specifics projects, releasing tenders for outsourcing activities and purchasing of equipment etc. While these requirements may seem extensive, they all play a critical part of effectively managing and running a Programme and project. This level of detail also confirms the importance of having the appropriate representation on your committee’s or boards when running programmes and projects.
- Board Structure
This refers to the actual governance committee structure itself. All Projects will already have a Project Board or Project Steering Committee. Additionally, there may be a Programme Board, governing a group of related projects. Finally larger enterprise organisations may have a Portfolio decision-making group managing larger programs of work and projects.
The decision rights of all these boards or committees and how they relate must be laid down in policy and procedural documentation. In this way, the project’s governance can be integrated within the wider governance arena of the organisation. Generally this type of policy documentation is usually owned by a Programme Management Office (PMO) or Enterprise Programme Management Office (EPMO)
- People
The effectiveness of the board or committee structure is dependent upon the people who populate the various Programme or Project Boards and Committees. At a Project level, the Board or Committee membership is determined by the nature of the project with the key membership being sponsor, client, vendors, and relevant stakeholders. While at Programme and Portfolio boards, other factors come into play when determining membership – which in turn determines which organisational roles should be represented on the committee, as discussed earlier, an example of a key member is senior management with appropriate levels of delegation.
- Information
This concerns the information that informs decision makers and consists of regular reports on the project, issues and risks that have been escalated by the Project Manager and certain key documents that describe the project, foremost of which is the business case. At this level the stakeholders and decision makers need to be able to make “informed” decision based on reliable, up to date and accurate data. While the decision makers are responsible to insure the Programme or Project has appropriate level of support, they will set budget tolerance levels, acceptance criteria etc they must also conform to the organisation governance level.
Core project governance principles
Project governance frameworks should be based around a number of core principles in order to ensure their effectiveness.
Principle 1: Ensure a single point of accountability for the success of the project
While it is a given that there may be a single person who accepts accountability for the success of the project as in delivery of its product within approved budget and agreed timelines. Every Programme or Project must also have individuals accountable for the success of the project. That can be a single person or in the case of a Portfolio’s or Programme there may be a key group of stakeholders that have accountability, one of the reasons for this would be the Delegation of Authority within organisations corporate structure, some approvals and decisions may need more than one single person to approve. A Program Manager or Programme Director will have day-to-day accountability for the Programme and they will be accountable to a Board, who in turn is accountable to the organisations Director, Chief Executive Officer or even the Board. This structured reporting line is also involved in the Programme or Project Governance Framework, for setting policy, approval processes and tolerance limits as in who can approve increases to a project budget or approve the project schedule being extended.
So a project without a clear understanding of who assumes accountability for its success has no clear lines of leadership in this reference I’m not referring to the Project Manager who is accountable project budgets, timelines, scope development and approval, QA, Risk & Issue management etc.. It is however generally NOT the project Manager who has FINAL accountability. That does belong to the Project Committee or Board. It is the Project Board or Committee who has accountability to provide guidance to the project team, they set budget approvals, approval of risk management strategies, approve revisions of scope, schedule or resources etc. They are also the sole accountable body to ensure compliance to Corporate Governance through the Programme Governance Framework.
In the case of a Programme or Project Governance Board or Committee being in a situation where a decision is not being made for varying reasons and therefore may well impact the success of the project, there must be a Board or Committee Chairperson that has appropriate level of authority to make an appropriate decision
As with a project, with no clear accountability for dealing with issues at board level regarding the project success, there is little chance of that Programme or Project being successful. Therefore the concept of a single point of accountability is often referred to the first principle of effective Programme governance.
Principle 2: Independent Project ownership
It is also essential for the Governance Board to have “independent” representation as opposed to membership from other stakeholders that may have corporate Asset ownership, Supply or Service ownership or other stakeholder group
In many cases, it’s a common practice for organisations to select or promote the allocation of the Project Owner role to the service owner or asset owner with the goal of providing more certainty that the project will meet these owner’s fundamental needs, which is also a critical project success measure.
However, this approach can also have negative impacts to the project, which can include wasteful scope inclusions and failure to achieve alternative stakeholder and customer requirements:
- The benefit of the doubt goes to the stakeholder allocated with the Project Owner responsibility, skewing the project outcome;
- Specific requirements receive less scrutiny, reducing innovation and reducing outcome efficiency;
- Different skill sets surround Project ownership, Asset ownership and Service ownership placing sound project decision-making and procedure at risk;
- At corporate level, often operational needs always prevail, placing the project at risk of being neglected during such times;
- Project contingencies are at risk of being allocated to additional scope for the stakeholder allocated project ownership.
The only proven rule for ensuring projects meet both customer and stakeholder mutual and individual needs, while optimising value for money, is to ensure Project ownership is to an Independent body, that otherwise would not be a stakeholder to the project. This is principle No. 2 of project governance.
The Project Board is engaged under clear terms which are outlined at the organisations Corporate Governance level. Often, organisations establish a Governance Board or Committee, which identifies the existence of projects and appoints project owners as early as possible in a project’s life, establishes Project Boards or Committee’s which form the basis of customer and stakeholder engagement, establishes the key result areas for a project consistent with the organisations values, and, oversees the performance of projects. These parameters are commonly detailed in a Programme Governance Framework which remains in place for the life of the programmes or projects (and is distinct from a Project Management Plan which is more detailed and only comes into existence during the development of the project).
So as we have discussed so far, projects have many different stakeholders and therefore an effective project governance framework must address their needs as well as alignment to any corporate or organisational level Governance Framework. The next principle deals with the manner in which this should occur.
Principle 3: Ensure appropriate separation of stakeholder management and project management
The decision-making effectiveness of a board or committee is often impacted by many situations, the follow points are listed in brief as an overview of what these often are;
- A key issue is the size. Not only can large boards or committees fail to make timely decisions, those it does make are often ill-considered because of the particular group dynamics at play or what is often referred to a corporate politics. If project decision-making forums are allowed to grow in size, they tend to separate into aligned stakeholder management groups.
- Another critical issue is when numbers increase, the detailed understanding of each attendee of the critical project issues reduces. Many of those present attend not to make decisions but as a way of finding out what is happening on the project.
- Not only is there insufficient time for each person to make their point, but those with the most valid input must compete for time and influence with those with only a peripheral involvement in the project.
- Often not all stakeholders attend all and every meeting, nor do they review and read appropriate reports that they need to review so they are in a position to make “informed” decisions.
- Further not all present will have the same level of understanding of the issues and so time is wasted bringing everyone up to speed on the particular issues being discussed. Hence, to all intents and purposes, large project committees are constituted more as a stakeholder management forum than a project decision-making forum. This is a major issue when the project is depending upon the committee to make timely decisions.
While there is no question that activities, project decision-making and stakeholder management, are essential to the success of the project. The issue is that they are two separate activities and need to be treated as such. If this separation can be achieved, it will avoid clogging the decision-making forum with numerous stakeholders by constraining its membership to only those select stakeholders absolutely central to its success. This is where the Governance Framework must establish Terms of Reference (TOR) for formation of various Programme or project committee’s or boards. It must include set guidelines for membership to these boards, their duty, liability and accountability. The TOR should include who is eligible to join a board as in title, delegation of authority etc. and set membership size.
There is always the concern that this solution will lead to a further problem if disgruntled stakeholders do not consider their needs are being met. Whatever stakeholder management mechanism that is put in place must adequately address the needs of all project stakeholders. It will need to capture their input and views and address their concerns to their satisfaction. This can be achieved in part by chairing of any key stakeholder groups by the chair of the Project Board. This ensures that stakeholders have the project owner to champion their issues and concerns within the Programme or Project Board.
Principle 4: Ensure separation of project governance and organisational governance structures
As we have discussed there are 2 distinct level of Governance within an organisation or corporate structure being Corporate Governance and Programme Governance. Project governance structures are established precisely because it is recognised that organisation structures do not provide the necessary framework to deliver a project. Projects require flexibility and speed of decision-making and the hierarchical management structure within organisation charts don’t always enable this.
Effective Project governance structures overcome this by drawing the key decision makers out of the organisation structure and placing them in a forum thereby avoiding the serial decision-making process associated with Business As Usual corporate structures.
Therefore it is essential that the project governance framework established for a project should remain separate from the organisation structure. As we have discussed, it is acknowledged that the organisation will have various requirements in terms of reporting and stakeholder involvement. However appropriate reporting requirements established by the project can address the former and the project governance framework must itself address the latter. Finally, it is essential to also make sure that a situation is avoided where the decisions of the steering committee or project board are required to be ratified by one or more persons in the organisation outside of that project decision-making forum. As identified earlier, it is essential that there is appropriate representation with the correct delegation of authority is a member of this board or committee for each project. This is the final principle of effective project governance. It will ensure a project decision-making body empowered to make decisions in a timely manner. Adoption of this principle will minimise delays in decisions that create a flow on effect in regards to the time delays and inefficiencies associated with it.
Additional principles of Governance Framework
Terms of Reference” (TOR)
- Earlier we referred to the “Terms of Reference” (TOR) which are a set of rules that a board or committee is internally governed by.
- It clearly identifies the need for recording minutes, frequency of meetings, how many must attend a meeting, how votes or decisions are made, what authority they have as a collective group. Who can be a member, if there are different types of membership etc.
- The board or committee members have overall responsibility for governance of project management
- The roles, responsibilities and performance criteria for the governance of project management are clearly defined
- They must ensure that an appropriate level of disciplined governance, supported by appropriate methods and controls are applied throughout the life cycle of a project
- A coherent and supportive relationship is demonstrated between the overall business strategy and the project portfolio
Health Checks or Tollgates Reviews
- All projects must have an approved plan containing authorisation points often called Tollgates, at which stages of the project are approved. One of the first examples is where the business case is reviewed and approved. It is essential that each tollgates has an “approval criteria” that the project must comply with before being granted approval to the next phase or stage of the project.
- Decisions made at these Tollgates or authorisation points are recorded and communicated. Members of delegated authorisation bodies have sufficient representation, competence, authority and resources to enable them to make appropriate decisions.
- A Second level of review for Programme or projects is a Health Check which is designed to review the overall progress of the project; it will review how things are going in reality compared to planned. Is the project healthy as in meeting both current and proposed timelines, budget is meeting commitments as require and the project has sufficient level of expert resource to deliver the requirements of the project to the required “acceptance criteria.” The tollgates activity process discussed earlier is also usually included in a Project Health Check process. The board or its delegated agents decide when these Health Checks of projects and project management systems are required, and implement such processes accordingly.
Reporting
- There are clearly defined criteria for reporting project status and for the escalation of risks and issues to the levels required by the organisation.
- The organisation fosters a culture of improvement and of frank internal disclosure of project information.
- Project stakeholders are engaged at a level that is commensurate with their importance to the organisation and in a manner that fosters trust.
Stakeholder Management principles
Where there is to be multiple ownership of a Programme or project, often referred to as a Joint venture (JV) it is where the board shares ultimate control with other parties.
This situation requires an additional set of principles or guidelines and policies for the Governance Board to consider and incorporate.
The principles are;
- There should be formally agreed governance arrangements
- There should be a single point of decision-making for the project as in an appointed chairperson refer to Principle 2
- There should be a clear and unambiguous allocation of authority for representing the project in contacts with owners, stakeholders and third parties. These would be in the form of a Joint Venture Contract.
- The project business case must include agreed, and current, definitions of project objectives, the role of each owner, their incentives, inputs, authority and responsibility
- Each owner should assure itself that the legal competence and obligations and internal governance arrangements of co-owners, are compatible with its acceptable standards of governance for the project
- There should be project authorisation points and limiting constraints to give owners the necessary degree of control over the project
- There should be agreed recognition and allocation or sharing of rewards and risks taking into account ability to influence the outcome and creating incentives to foster co-operative behaviour
- Project leadership should exploit synergies arising from multi-ownership and should actively manage potential sources of conflict or inefficiency
- There should be a formal agreement that defines the process to be invoked and the consequences for assets and owners when a material change of ownership is considered
- Reporting during both the project and the realisation of benefits should provide honest, timely, realistic and relevant data on progress, achievements, forecasts and risks to the extent required for good governance by owners
- There should be a mechanism in place to invoke independent review or scrutiny when it is in the legitimate interests of one or more of the project owners.
- There should be a dispute resolution process agreed between owners that does not endanger the achievement of project objectives
Governance Framework Elements
Project governance will:
- Outline the relationships between all internal and external groups involved in the project
- Describe the proper flow of information regarding the project to all stakeholders
- Ensure the appropriate review of issues encountered within each project
- Ensure that required approvals and direction for the project is obtained at each appropriate stage of the project.
At individual Programme or Project level, the following important specific elements are considered to be good project governance include:
- A compelling business case, stating the objects of the project and specifying the in-scope and out-of-scope aspects
- A mechanism to assess the compliance of the completed project to its original objectives
- Identifying all stakeholders with an interest in the project
- A defined method of communication to each stakeholder
- A set of business-level requirements as agreed by all stakeholders
- An agreed specification for the project deliverables
- The appointment of a project manager
- Clear assignment of project roles and responsibilities
- A current, published project plan that spans all project stages from project initiation through development to the transition to operations.
- A system of accurate upward status and progress-reporting including time records.
- A central document repository for the project
- A centrally held glossary of project terms
- A process for the management and resolution of issues that arise during the project
- A process for the recording and communication of risks identified during the project
- A standard for quality review of the key governance documents and of the project deliverables.
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