421-502 Engineering Project ImplementationOrganisation & Governance Requirements for a Civil Infrastructure ProjectLecture 1Organisation & Governance Prepared by Peter Bishop C.P.Eng.421-502 Engineering Project ImplementationGovernance & Organisation 1Definitions:Governance is the process of managing & controlling a project with proper checks & balances at all stages. Who will approve this pipe connection ?421-502 Engineering Project ImplementationGovernance & Organisation 1Definitions:The governance process must take into account the requirements of all key stakeholders to ensure that the project delivers optimum outcomes including those of the project owner.We will incorporate your requirements into the approval process421-502 Engineering Project ImplementationGovernance & Organisation 1Definitions:The primary stakeholder is the project owner & one of its objectives is to ensure that the project is accepted by key stakeholders. (accepted by, not necessarilyacceptable to)They havent used our good idea !!421-502 Engineering Project ImplementationGovernance & Organisation 1Establishing Good Governance: The Owner (Project Manager) can initiate the governance process by setting up an appropriate organisation structure involving relevant stakeholders. The governance (managing & controlling process) is superimposed by defining the relationship between participants (stakeholders) in the proposed organisation for project implementation; This relationship can be a defined and applied by law, by contract or by mutual agreement;421-502 Engineering Project ImplementationGovernance & Organisation 1Typical Contract Organisation for a Project Owner/PrincipalConstruction SuperintendentSpecialist Technical AdvisorsPrincipal DesignerSuppliers & Sub-contractorsConstruction ContractorBankerDesign ReviewerAccountant LawyerInsurerExternal Stakeholders AExternal Stakeholders BInformal Obligation Statutory obligationIndividual contracts421-502 Engineering Project ImplementationGovernance & Organisation 1Conventional Project Management Organisation:StakeholdersOwner/Principal & Project ManagerSuppliers & Sub-contractorsSpecialist Technical AdvisorsPrincipal DesignersManagerContract SuperintendentConstruction Contractors ManagerOwners Advisors421-502 Engineering Project ImplementationGovernance & Organisation 1Alliance Project Management OrganisationSuppliers & Sub-contractorsSpecialist Technical AdvisorsOwner/PrincipalLawyerInsurerAccountantBankerIndependent AuditorAllianceAgreementSub-AlliancePartnersProject ManagerPrincipalDesignerOwner/Principal Construction ContractorStakeholders421-502 Engineering Project ImplementationGovernance & Organisation 1Governance Control Measures:The governance process can be used to applymandatory requirements or discretionaryrequirements. For example: A contractual obligation is a mandatory form of governance;A statutory obligation is a mandatory form of governance such as environmental legislation, or OH&S legislation;A Steering Committee or Community Reference Group can provide opinions that are used to provide confidence that the Project direction is generally satisfactory. 421-502 Engineering Project ImplementationGovernance & Organisation 1Governance Controls :The governance process is provided by participants having powers or authorisations within the organisation to:Increasing Power of ActionDirectApproveCertifyEndorseRecommendCheckReviewAdvise421-502 Engineering Project ImplementationGovernance & Organisation 1Governance Controls (contd) :A direction is a binding and high level control measure reserved for the most impactive issues during implementation. (Board of Directors).Approval is the most powerful process in the governance arrangement & is reserved for major financial & technical gateways during implementation.Certification is a powerful control involving a professional signing off (personal or corporate liability) that a process or outcome complies with contractual or statutory obligations.421-502 Engineering Project ImplementationGovernance & Organisation 1Governance :It is important to include governance gateways along the delivery path of the Project.Why ?421-502 Engineering Project ImplementationGovernance & Organisation 10123456Degree of ImpactImpacts of Change During Project Development & Project DeliveryStrategy or Pre-feasibilityBusiness Case Feasibility Procurement Construction CommissioningAbility to make a change to the project scope421-502 Engineering Project ImplementationGovernance & Organisation 10123456Degree of ImpactImpacts of Change During Project Development & Project DeliveryStrategy or Pre-feasibilityBusiness Case Feasibility Procurement Construction CommissioningAbility to make a change to the project scopeCost to make a change to the project scope421-502 Engineering Project ImplementationGovernance & Organisation 1The time needed to exercise the governance controls can be time consuming and may slow down the implementation by having too many gateways ; Approval Bottle-neckRecommendationRequestForApprovalReview Comments421-502 Engineering Project ImplementationGovernance & Organisation 1Delegation:This can be improved by delegating the powers (authorisations) to lower levels in the organisation.The delegated powers may be to certify or approve matters up to a certain value, risk level, or complexity. The delegation may also be to empower less experienced personnel to review, check and recommend certification or approval.421-502 Engineering Project ImplementationGovernance & Organisation 1Governance Action Examples Authorisation Above $1Mor High Risk LevelAuthorisation below $1M or Low Risk Level Delegated to:Direct: Owner's Board of Directors Owner's General ManagerApprove: Example 1, Change of Project ScopeOwner's General Manager Project ManagerApprove: Example 2, An increase in the depth of foundationsConstruction Manager Senior Engineer for Foundation AreaApprove: Example 3, An extension of time to a critical program activityContract Superintendent Superintendents RepresentativeCertify: Example 1, Contractors monthly payment from the OwnerContract Superintendent Superintendents Representative421-502 Engineering Project ImplementationGovernance & Organisation 1Governance Action Examples (contd) Authorisation Above $1Mor High Risk LevelAuthorisation below $1M or Low Risk Level Delegated to:Endorse or Recommend: Example 1, The design of a crane foundation.Contractors temporary works designer.Sub-contractor responsible for crane supply and erection.Endorse or Recommend: Example 2, A change to the project cash-flow.Project Construction Finance ManagerSite Cost EngineerCheck: Example 1, A claim from a Contractor for extra costs from the OwnerSuperintendents RepresentativeSite EngineerCheck: Example 2, A change to the quality standard of material.Chief Design Engineer Senior Engineer for each discipline.Review, comment & advise High Credibility Specialist Recognised Specialist421-502 Engineering Project ImplementationGovernance & Organisation 1Governance for External Stakeholders: The lecture about stakeholders describes how to determine the importance of particular stakeholders in the organisation. based on a simple risk assessment (mapping) process. Using the stakeholder map and the implementation work breakdown structure, the organisation can be developed to engage the stakeholders to the degree warranted by their importance to the achievement of the Owners project objectives. The governance for internal stakeholders is usually more definitive than for some external stakeholders.421-502 Engineering Project ImplementationGovernance & Organisation 1External Stakeholders:The Project Owner may wish particular external stakeholders to review and comment on some proposed decisions. Governance can be applied to this involvement by forming the stakeholders into a "Steering Committee that may represent several interest groups. The Steering Committees decisions may have sufficient weight to influence project decisions or even the direction of the project.421-502 Engineering Project ImplementationGovernance & Organisation 1External Stakeholders (contd):The comments from an external stakeholder may be taken by the Project Owner as an opinion to be considered on its merits and adopted or not based on a judgement of associated risks and benefits.421-502 Engineering Project ImplementationGovernance & Organisation 1Conflict of Interest:Individuals may adversely affect project implementation because of personal or corporate interests that are different from those of the project organisation or different from those of others in the organisation.The organisation and governance arrangements must avoid conflicts of interest and they must include methods to manage conflicts of interest if they arise. 421-502 Engineering Project ImplementationGovernance & Organisation 1Conflict of Interest (contd):Conflicts of interest are dealt with at the time of entering into a contract arrangement (contractual obligations);Less rigorous agreements with committees or advisors( voluntary members particularly) are less explicit in the conflict of interest obligations.Typically committee members will be asked to sign a confidentiality agreement and a conflict of interest statement.Actions by organisation members may not show a blatant conflict of interest but behaviour may adversely influence others in the organisation.421-502 Engineering Project ImplementationGovernance & Organisation 1Documentation of Governance Arrangements:To implement effective governance, the roles and responsibilities of all members of the organisation must be clearly documented, including the relationship between each.The project management plan must include:roles and responsibilities;Authority levels; Dispute resolution method;Reporting obligations.Reference documents (contracts, agreements, statutes)421-502 Engineering Project ImplementationGovernance & Organisation 1Governance Role of the Professional Engineer:As a professional Engineer, you may be operating in a project organisation as an employee of the Owner, or as an employee of one of the entities participating as a service provider or as an external stakeholder.Your employment conditions will include obligations to your employer including respect for confidentiality and notification of any conflict of interest risks.Project- specific responsibilities may be added to your employee obligations.421-502 Engineering Project ImplementationGovernance & Organisation 1Governance Role of the Professional Engineer:Owner/Principal & Project Manager **Suppliers & Sub-contractors **Specialist Technical Advisors**Principal DesignersManager**Contract Superintendent **Construction Contractors Manager **Owners Advisors****ProfessionalEngineerStakeholders **421-502 Engineering Project ImplementationGovernance & Organisation 1Governance Role of the Professional Engineer:In all roles in the organisation you will be expected to behave ethically as an individual professional engineer.End of Lecture 1I am notaProfessional Engineer