The Framework of Project Governance

Abstract

Project governance is the establishment of organizational comprehension and circumstances under which delivering and organizing successful projects. Establishing project governance for all projects is an essential element in defining responsibilities and accountabilities in organizational control. Project governance provides a framework for consistent, robust and repeatable decision making. Hence, this offers a structured approach towards assuring businesses to conduct project activities, "business as usual" activities, as well as organizational changes. Project success is the primary objective of all projects; thus the systematic application of suitable methods and a stable relationship with project governance is of vital importance to reach an optimal project success. According to the research article "Project Governance – The Definition and Leadership Dilemma"; a majority of authors on project governance have a background in project management, where they attempt to create the project governance framework through a bottom-up approach. Due to a variety of projects in the industry, the range of stakeholders interest, different values and types, and complexity spectrum, the bottom-up strategy has its limitations when providing concise guidance to managers when executing and enforcing project governance. Based on these observations, the objective of this article sections into three parts; firstly the big idea of project governance will be described including the three pillars of project governance. Secondly, three different approaches towards project governance will be identified along with the core principles. Lastly, the limitations concerning the different approach towards project governance will be analyzed.

The Big Idea

According to the PMBOK® guide, the oversight of project governance aligns with the organization's governance model, which includes the project life-cycle. The project governance framework provides structure, processes, decision-making models and tools for the project manager and team members to manage the project while supporting and controlling the project for successful delivery. A project's governance defines and fits within the broader context of the portfolio, program, or organization sponsoring it but is separate from organizational management. Project governance involves stakeholders, as well as documented policies, procedures, and standards; responsibilities; and authorities. The project sponsor is also required in the project governance, which is the person who authorizes the project, makes executive decisions, solves problems and conflicts beyond the authority of the project manager. Additionally, the project steering committee or board, which provide senior level guidance to the project, are also involved in the project governance.

Three Pillars of Project Governance

Structure

The structure of project governance refers to the governance committee structure and the project steering committee. The broader governance environment includes various stakeholders and user groups. In some cases, there is a programmed board managing a group of related projects which form a portfolio decision-making group. These committees must lay down policy and procedure in which decision rights and how they relate are clearly documented.

People

The effective structure of the governance committee depends on the people participating in the committees. The nature of the project determines the committee's membership. In regards to programmer and portfolio boards, other factors come into play when determining the memberships which in turn determine which organizational roles should be represented on the committee.

Information

The project manager escalates information that informs decision makers, the governance committee, and consists of regular reports on the project, issues, and risks. These key documents describe the project and the business case.

Practical Guidlines

Three Different Approaches

The journey which defines and applies project governance fuels the growing frustration of substantial capital project failure and the realization that project management at a technical and operational level should be complemented and supported at strategic and institutional management levels. The theoretical definition of project governance depends on the various authors with technical backgrounds, areas of practice or research fields. Three primary categories of project governance were identified according to the research article "Project Governance – The Definition and Leadership Dilemma." The first project category analysis single firm governance plan when choosing and managing internal projects. The second category examines multi-firm projects where various companies engage in contractual arrangements. The third category considers projects that involve multiple interconnected participants relying on the presence of one supreme hierarchical authority, usually the lead sponsor. These three categories of projects include a diverse collection of participants with opposing interests and agendas towards the management and outcome of the projects. In the second categorization of projects, project management in an institutional context could be viewed in three functional levels which are the following:

• Level 1: Technical -> which is delivery oriented with a priority towards tools that are used, practices, management and control of project activities.
• Level 2: Strategic -> managing projects as organizational and holistic entities, that expand the domain to include their front-end development and definition. This ensures alignment with the project's sponsor objectives, leadership, contracting strategy and influencing stakeholders.
• Level 3: Institutional -> managing the institutional context with an external, global environment.

The categorization of these commonalities forms the basis of the three project governance "school of thought" specifically the; single-firm school, multi-firm school, and the large capital school.

Single-Firm School

The application of project governance in this category is driven by projects in a single and autonomous company. Usually, practitioners in this category are IT companies and organizations involved with internal projects with minimal external client engagements. The levels of project governance are at a strategic and technical level due to its top-down nature. IT project management relates to selecting correct internal projects and that they are implemented according to company's standards. In the single-firm school, the project value is of secondary nature whereas large capital projects could reside under the category if projects are under the organization's single control, influence, and authority. Corporate governance could handle the project governance only with the sponsor as a separate corporate entity.

Multi-Firm School

The multi-firm school focuses on the relationship between different organizations engaging in single or multiple projects. According to the article, the three critical project management perspectives, particularly socio-technical, organization, environment and project management perspectives contain no formal framework for analyzing and managing the interest differences between different participating organizations.

Limitations

Limitations of the framework will be discussed.