Governance of Project Management

Latest revision as of 19:05, 4 March 2019

[edit] Abstract

When considering governance, it is important to differentiate between the several different types that may exist. These include organisational governance, organisational project management (OPM) governance, and portfolio, program and project governance ^[1]. This article will mainly focus on governance at the project level.

It appears that project governance is an ambiguous concept that suffer under a lack of an agreed on, generally accepted definition. This leads to the organisations developing their own understanding or interpretation of the concept of project governance, which fit their individually perspectives ^[2]. However, different frameworks, principles and models have been established to guide project governance in an organisation. The three addressed in this article are; a practice guide to project governance framework implementation provided by Project Management Institute (PMI)^[3], the thirteen principles of project governance which will help an organisation to avoid project failures developed by Association for Project Management (APM)^[4], and the Project Governance Model for non-profit organisations proposed by Patrick S. Renz ^[5].

[edit] Project Governance

The main difference between governance at the project level and governance at the portfolio or program level is that project governance provides guidance and oversight for project management activities in order to deliver a product, service, or result. ^[3] Project governance is in the standard of Project Management Institute (PMI) defined as “the framework, functions, and processes that guide project management activities in order to create a unique product, service, or result to meet organizational, strategic, and operational goals”.^[1] Governance framework refers to the four governance domains; alignment, risk, performance, and communication, with functions; oversight, control, integration and decision making, processes and activities for projects. The project governance framework will be further elaborated in the section of Implementation of Governance at the Project Level together with principles to avoid project failure and a proposed Project Governance Model.

Project governance is needed to ensure appropriate engagement of stakeholders and to guide and oversee the management of a project execution. It helps overcoming some of the challenges that may occur in the process of meeting the competing objectives of the project Triple Constraint: time, cost, and scope. In the everyday changing and dynamic business environment, project governance should provide guidance for inputs, validations of projects and product requirements, effective execution, and the quality of the results. ^[3] To achieve this there are several processes that should be included in the project governance: ^[1]

• Guiding and overseeing the management of project work by appropriate involvement in projects and interactions with the project manager on a regular basis
• Getting the appropriate people involved and ensuring engagement of the stakeholders
• Ensuring adherence to policies, standards, and guidelines
• Establishing governance roles, responsibilities, and authorities
• Decision-making regarding risk escalations, changes, and resources
• Monitoring performance^[1]

[edit] Project Governance Organisation

Example of a Project Governance Organisation. Inspired by Governance of Portfolios, Programs, and Projects: A Practice Guide^[3]

The requirements of project governance should be looked at in the context of the project and organisational environment. Three separate scenarios in which a project may be governed are: as a stand-alone project, within a program, or within a portfolio. When considering these three separate scenarios of governing a project, an example of a project governance organisation structure could be as shown in the figure Example of a Project Governance Organisation.

In the case of a project being in a program or a portfolio, the project governance has interactions with the governance of the program or portfolio. When the project is a stand-alone project outside a program or portfolio it has its own, separate governing body. Then organisational leaders, project sponsor, program or portfolio managers, project, program, and portfolio management office (PMO), or other key stakeholders possible involved in the project are members of the project governing body. Next step in the structure is the interactions between this governing body and the project and project manager and then with the involved stakeholders.^[3] As the figure shows, the possibility of other governing bodies interacting with the project and project manager is also a case. This scenario will be addressed in the section of Governance in a Multi-Organisation Environment.

There are many different responsibilities concerning project governance for the implicated in a project. The key project governance roles are the governing body, the project sponsor, the project manager, other key stakeholders and the PMO, but there may be additional roles depending on the complexity of the project. It is of most importance that the project governance come up with a plan which identify and describe the roles and responsibilities in a project. The roles and their responsibilities as described by PMI^[3] are shown in the table below:

[edit] Governance in a Multi-Organisation Environment

Multiple Governances in a Project. Inspired by Project Governance by Patrick S. Renz^[5]

In the case where a project has a multiple governing organisation it is even more important to define and clarify project governance. Such a case would typically be on a larger, more complex project where responsibilities will be distributed among a larger set of people.^[6] It could be that the project receive financial or in-kind contributions from several sources, e.g. the government, the target group, or other donors, which will arise the question of whose responsibility it is to govern the project.^[5] In this case the relationship between the project management and the governance is more complicated than in the one-to-one scenario since some roles and responsibilities are being shared. Therefore, the primary concern in a multi-organisation environment is to ensure clarification of individual accountabilities, limits of delegation and authority, and governance within the project.^[6]

[edit] Implementing Governance at a Project Level

Every project is unique in terms of complexity, uncertainty, and risk levels that affect the managing and governing of the project. Project governance provide the needed guidance to project managers, sponsors, and stakeholders within the organisation. In the next sections three different guides to implement project governance at the project level will be presented.

[edit] Project Governance Framework

A project governance framework provides the project management team with structure, processes, decision making models, and tools for managing the project, while monitoring the quality of the project for at successful delivery. ^[3] Because of the different levels of complexity, uncertainty and risk in projects, it is impossible to have one governance framework that fits all projects. However, PMI provides a general categorisation of domains, functions, and processes that can be customised to any specific project and will help guide organisations in the implementation of governance in projects.

The Four Governance Domains. Inspired by Governance of Portfolios, Programs, and Projects: A Practice Guide^[3]

The four governance domains are described as: ^[3]

Governance Alignment Domain: Functions and processes to create and maintain an integrated governance framework.

Governance Risk Domain: Functions and processes to identify and resolve threats and opportunities to ensure balance of risk and reward.

Governance Performance Domain: Functions and processes to ensure measurement and evaluation of key performance indicators (KPIs) against parameters and realisation of business value.

Governance Communications Domain: Functions and processes to spread information, engage stakeholders, and ensure organisational change.

The Four Governance Functions. Inspired by Governance of Portfolios, Programs, and Projects: A Practice Guide^[3]

The four governance functions, within each of the four domains, categorise critical processes and activities that are performed to provide for the project of an organisation. The four governance functions are described as: ^[3]

Oversight function: Processes and activities that provide guidance, direction, and leadership for projects.

Control function: Processes and activities that provide monitoring, measuring, and reporting for projects.

Integration function: Processes and activities that provide strategic alignment for projects.

Decision making function: Processes and activities that provide structure and delegations of authority for projects.

[edit] Implementation

The guide to project governance by PMI provides a four-step implementation approach that regard implementation and ongoing improvement of governance processes throughout the lifecycle of the project. The four steps can be done in a parallel, overlapping or linear progression, though it is important to establish, define, and plan governance in the beginning of the life cycle. The four steps of the implementation are: assess, plan, implement, and improve. In the figure below the implementation approach provided by PMI is summarised: ^[3]

Four-Step Guide to Implementation of Project Governance. Inspired by Governance of Portfolios, Programs, and Projects: A Practice Guide^[3]

During the four-step implementation it is importance to engage stakeholders on an ongoing basis. This helps them to better understand what the changed means for them, and in that way, carry out the transition and overcome possible challenges. The ongoing communication with the stakeholders is also essential to gain and maintain the support and buy-in of the stakeholders. ^[3] In general transparency of governance meaning enough easily understandable and directly accessible information provided to the affected, is very important to ensure engagement of all involved in a project.^[2]

[edit] 13 Principles to Avoid Project Failure

Link Between Corporate Governance and Project Managment. Inspired by Directing Change - A Guide to Governance of Project Management^[3]

The Association of Project Management (APM) has provided a guide that outlines 13 principles for governance of project management. The governance of project management is the link between the corporate governance and the activities of project management within an organisation as shown in the figure Link Between Corporate Governance and Project Management. At the corporate level in an organisation, governance begins with the “board of directors” defining the objectives of the company and the role of projects in attaining these objectives. ^[7] Corporate governance also involves the relationships between the organisation’s board, management, shareholders, and other stakeholders. .^{[4] [2]} Since the guide focuses on the coherence between corporate governance and project management processes, it is targeted the corporate level of an organisation and is formed as a “check-list” for the board of directors.^[4]

The 13 principles are as listed below: ^[4]

1. The board has overall responsibility for the governance of project management.
2. The organisation differentiates between projects and non project-based activities.
3. Roles and responsibilities for the governance of project management are defined clearly.
4. Disciplined governance arrangements, supported by appropriate methods, resources and controls are applied throughout the project life cycle. Every project has a sponsor.
5. There is a demonstrably coherent and supporting relationship between the overall business strategy and the project portfolio.
6. All projects have an approved plan containing authorisation points at which the business case, inclusive of cost, benefits and risk is reviewed. Decisions made at authorisation points are recorded and communicated.
7. Members of delegated authorisation bodies have sufficient representation, competence, authority and resources to enable them to make appropriate decisions.
8. Project business cases are supported by relevant and realistic information that provides a reliable basis for making authorisation decisions.
9. The board or its delegated agents decide when independent scrutiny of projects or project management systems is required and implement such assurance accordingly.
10. There are clearly defined criteria for reporting project status and for the escalation of risks and issues to the levels required by the organisation.
11. The organisation fosters a culture of improvement and of frank internal disclosure of project management information.
12. Project stakeholders are engaged at a level that is commensurate with their importance to the organisation and in a manner that fosters trust.
13. Projects are closed when they are no longer justified as part of the organisation’s portfolio

APM states that applying these principles would help avoid common causes of project failure such as lack of a clear link with key strategic priorities, and lack of effective engagement with stakeholders. Other common causes of project failure is listed in “Directing Change - A guide to governance of project management” by APM.^[4]

[edit] Project Governance Model

The Project Governance Model is introduced by Patrick S. Renz in “Project Governance – Implementing Corporate Governance and Business Ethics in Nonprofit Organizations”.^[5] The Renz’ studies are based on the hypothesis of a governance gap and conclude that closure of this gap by means of the Project Governance Model supports a more efficient and accountable implementation of development objectives. The book describes the governance gap from the perspective of corporate governance, non-profit governance, project management, and the development sector. The proposed Project Governance Model consist of six modules of project governance constituted by six key responsibilities. The six key responsibilities are firstly outlined by the objective at which the key responsibility is aiming at and then a model based on a theoretical foundation and best practices, is developed.

1. System Management
   The first and most basic key responsibility is system management. System management refers to the systematic understanding of project governance. It lays the systematic foundation for understanding and possible influencing the wider environment, and for the managing of the project. Therefore, the other key responsibilities all build on the system management and the system understanding gained from it. The elements of system management are divided into two; system thinking as an integrated part of the project culture and a way to approach the solution of complex problems, and the use of a system model based on holistic thinking.
2. Mission Management
   The second key responsibility is mission management. Mission management is about the governance board directing, controlling and supporting the strategy, structure and cultural elements of a project its management. The tasks within mission management is divided between strategy, structure and culture.
3. Integrity Management
   Integrity management regards the normative aspects of a project. It is suggested to apply a combined approach of recognition ethics and discourse ethical guidelines to asses and resolve challenges threatening the integrity of the project. The recognition ethics is about communicative attitude, interest for legitimate action, differentiated responsibility, and public binding, while discourse ethical guidelines concerns emotional recognition, legal and political recognition, and solidarity.
4. Extended Stakeholder Management
   The objective of extended stakeholder management is to identify, manage and monitor the many stakeholder involved in a project. It is connected with most of the other key responsibilities, since stakeholder management is important in all aspects of a project. A model for stakeholder management is presented with the following four steps:
   1. Stakeholder identification
   2. Stakeholder classification and assessment
   3. Stakeholder actions
   4. Stakeholder monitoring
5. Risk Management
   Risk management is identified as one of the key responsibilities of project governance. Therefore, risk management focuses on “the task of the governance board and the top management to define an integrated, future-oriented risk management concept”. In this model the concept is adapted to the context of development projects. The developed model for risk management is divided in four processes:
   1. Risk identification and assessment
   2. Risk migration processes
   3. Risk down-side planning
   4. Risk monitoring and controlling
6. Audit Management
   The final key responsibility is audit management, which in this book is proposed to be a part of project governance with identical objectives to those known in corporate governance:
   1. Direction and control of internal and external auditing
   2. Assessment of financial reports and temporary reports
   3. Legal compliance
   4. Communication with audit-relevant key stakeholders

The audit function is a part of the organisational control function, and risk management and ethical compliance are sometimes also included in audit functions. Furthermore, different tasks within the presented objectives to ensure audit management at the project governance level is given in the Project Governance Model.

This section only touches the tip of the iceberg of the Project Governance Model. It is suggested to look at the annotated bibliography for additional information of models and tasks, and guidance of implementing this model.

[edit] Limitations

The main limitation of project governance is the lack of a clear definition of the concept.^[2] This creates the question of what good governance is. This article provides three different approaches to implement governance at the project level, but it is up to the individual organisations to interpret the methods and make them fit their needs. Governance structures and processes are only the tools needed to achieve good governance; they do not represent good governance. ^[8]

One of the main goals of project governance is to create frameworks which are accountable and more visible. However, this may increase fear and resistance for the people involved, and thus in practice accountability could cause frustration for managers and generate confusion within organisations.^[8] Furthermore, it has been argued that a focus on tools and frameworks is insufficient to guarantee effective project governance. ^[8] If governance is not well implemented and communicated in an organisation, misunderstandings regarding governance being about process and control arise. For example, conflict may occur when the same people have an organisational responsibility for ensuring that the project meets its objectives and for overseeing the same processes. Therefore, the need for clearly defined roles, responsibilities and relationships between governance and the project management is important.

[edit] Annotated bibliography

This article searches to give an overview of governance at the project level and present different methods and guides for implementing governance. For additional information it is recommended to visit these three sources.

Governance of Portfolios, Programs, and Projects: A Practice Guide by PMI (2016)^[3] This practice guide is a complementary document to PMI’s standards and provides more detailed information and further understanding of governance in relation to both projects, programs, and portfolios. Furthermore, it provides guidance to organisations and practitioners on how to implement and enhance governance on projects, programs, and portfolios.

Directing Change – A guide to governance of project management by APM (2011)^[4] This guide provides information on how organisations should oversee the management of projects. It explains how good governance requirements apply to the direction and management of the organisations project portfolio. The guide lists principles of how to avoid project failure that the directors should adopt and questions that they should ask. The guide can be used internationally and by both the public, private or a third sector.

Project Governance - Implementing Corporate Governance and Business Ethics in Nonprofit Organizations by Patrick S. Renz (2007)^[5] This book presents a Project Governance Model that is a conclusion of several studies, theoretical groundwork, and best practises. It goes through the process of implementing governance and is targeted non-profit organisations and development projects. The book is very thorough and provides plenty of additional information and detailed examples of the six modules in the Project Governance Model, which is only summarised in this article.

[edit] References

1. ↑ ^{1.0 1.1 1.2 1.3} Project Management Institute (2017). A guide to the Project Management. Body of Knowledge (PMBOK guide). 6th Edition, PMI
2. ↑ ^{2.0 2.1 2.2 2.3} Kelly, É. V. (2010). Governance rules! The principles of effective project governance. Paper presented at PMI® Global Congress 2010—North America, Washington, DC. Newtown Square, PA: Project Management Institute.
3. ↑ ^{3.00 3.01 3.02 3.03 3.04 3.05 3.06 3.07 3.08 3.09 3.10 3.11 3.12 3.13 3.14 3.15} Project Management Institute (2016). Governance of Portfolios, Programs, and Projects: A Practice Guide. PMI
4. ↑ ^{4.0 4.1 4.2 4.3 4.4 4.5} Association for Project Management (2011). Directing Change – A guide to governance of project management. 2nd edition, APM
5. ↑ ^{5.0 5.1 5.2 5.3 5.4} Renz, Patrick S. (2007). Project Governance - Implementing Corporate Governance and Business Ethics in Nonprofit Organizations. Physica-Verlag HD
6. ↑ ^{6.0 6.1} AXELOS (2017). Managing Successful Projects with PRINCE2. 6th edition, TSO (The Stationery Office)
7. ↑ Müller, Ralf (2011). Project Governance. Volume 12, Issue 5, Upgrade: The European Journal for the Informatics Professional
8. ↑ ^{8.0 8.1 8.2} Too, Eric G. and Weaver, Patrick (2013). The management of project management: A conceptual framework for project governance. International Journal of Project Management