Project Governance

Dr. David Wilson

Mr. Doug Connell

Master Research Australasia Pty Ltd

Research Objective

• To understand the nature of project

governance, its evolution, how it is related

to project management and the trends in

project management.

Definition

Based on the interviews and literature review conducted for the research

• Project governance is a framework that

sets out the structure, resources,

communication, reporting and monitoring

systems to manage a project consistent

with an organisations corporate or

strategic vision.

Sir Adrian Cadbury

• Governance is a word with a pedigree that dates back to

Chaucer and in his day the word carried with it the

connotation wise and responsible which is appropriate. It

means either the action of governing or the method of

governing and it is in the latter sense it is used with

reference to companies... A quotation which is worth

keeping in mind in this context is: “He that sits quietly at

the stern and scarce is seen to stir”.

Etymology of Governance

• Governance comes from the Greek

• To steer

• To guide

Project

Management

Corporate

Governance

Project

Governance

A synthesis of two knowledge

domains

Research design

• Literature review – project management

and corporate governance

• Project management has two significant

journals –

– International Journal of Project Management

– Project Management Journal

• Interviews with 16 project managers –

developed into 11 case studies

The Interviews

• Characteristics of a successful project?

• Trends in project management?

• Role of governance in project

management?

Characteristics of a successful

project

• Project managed as a team – no one

individual responsible

• Good communication within the team and

between all players in the project

• Establishment of a project management

office (PMO)

Other characteristics

• Risk management and acceptance

• The ability of the project manager to make changes to ensure deliverables were met

• Manage to milestones not details

• Standardised project terminology

• Regular meetings of the Project Management Office and project steering committee

• Most effort occurs in the planning stage

• Executive buy in

• Delivered business expectations

Trends in project management

• Focus on meeting client expectations

• Reduction in emphasis on iron triangle or architects triangle

• Governance

• Management of the interface between suppliers and contractors

• Involvement of stakeholders

• Projects being increasingly managed by professionally qualified project managers rather than architects or engineers

• Alignment of projects with the overall business strategy

From – existing practice To – future practice

1 Life cycle model of projects Complexity of projects – question relevance of life

cycle model

2 Projects as instrumental

processes

Projects as social processes

3 Product creation focus Value creation focus

4 Narrow concept for projects Broader conceptualisation of projects-

multidisciplinary

5 Practitioners as trained

technicians

Practitioners as reflective practitioners – learning

models

Trends in project management

Role of governance in project

management• Development and management of processes

• Guidelines and procedures

• Manage risk

• Manage change proposals

• Monitor and report on governance processes to ensure compliance

• Ensure projects on track to meet desired outcomes

• Appropriate levels of resources are allocated

• Definite levels of reporting

• Provide an overview or map of agreed process for completing a project

• Adhering to guidelines and procedures

• Full transparency

• Project structure

• Objective oversight

Gender

M/FProfession Experience Title

1 F Civil Engineering /

Academic

Systems

Engineering- gas and

fuel, waste water

treatment

Civil Engineer

2 F Architect and Project

Management

Information Systems

– Telco.

Project Manager

3 F Procurement Government Manager/Analyst

4 M Academic Corporate

Governance

Research Fellow

5 M Information Systems Information Systems Project Manager

6 M Civil Engineer Construction -

engineering

Director and project

manager

7 M Town Planner Land-use and

development

Director / strategic

planner

8 M Mechanical Engineer Materials Handling Project Manager

9 M Information Systems Information Systems Project Manager

10 M Postal Systems Major Projects Director

11 M Economist Government Analyst – project

review

12 M Finance Government Director

13 M Project Manager Project Management Director and project

manager

14 M Economist Government Director

15 M Government / Finance Government Director

16 M Civil Engineer Government/Private

Sector

Director and Project

Manger

Interviews

Conducted in

Victoria and NSW

Dr. Peter Verhezen

Governance

Expert - Advisor

World’s best practice on

governance• Lay solid foundations for management and oversight

• Recognise and publish the respective roles and responsibilities of board and management.

• Structure the board to add value

• Have a board of an effective composition, size and commitment to adequately discharge its responsibilities and duties.

• Promote ethical and responsible decision-making

• Actively promote ethical and responsible decision-making.

• Safeguard integrity in financial reporting

• Have a structure to independently verify and safeguard the integrity of the company’s financial reporting.

• Make timely and balanced disclosure

• Promote timely and balanced disclosure of all material matters concerning the company.

• Report the rights of shareholders

• Respect the rights of shareholders and facilitate the effective exercise of those rights.

• Recognise and manage risk

• Establish a sound system of risk oversight and manage and internal control.

• Encourage enhanced performance.

• Fairly review and actively encourage enhanced board and management effectiveness.

• Remunerate fairly and responsibility

• Ensure that the level and composition of remuneration is sufficient and reasonable and that its relationship to corporate and individual performance is defined.

• Recognise the legitimate interests of stakeholders

• Recognise the legal and other obligations to all legitimate stakeholders.

Project Governance

Construction Information systems

Generic Project Governance Model

Cabinet

Responsible Minister

Secretary or Deputy Secretary of

Department

Project ManagersSteering

Committee

Communication between

Minister and Project

Manager must be

quick and direct.

Governance

project governance needs to

determine the following

• Set strategic direction.

• Set and monitor levels of performance especially

related to public sector accountability.

• Provide finance and control financial returns.

• Provide technical expertise through centres of

excellence.

• Provide an audit function.

• Control risk exposure.

Time Forecast Completion Detail

• % to complete • End Date

• Planned % • Actual • Planned • Actual

• Cost – cash-flow to date • Final Forecast Cost

• Planned $X • Actual $Y • Planned $X • Actual

$Y

What to ask as a member of a

governance committee - basics

What are the current risks and

Issues?

How will the risks and issues be

Mitigated? Who is responsible?

Governance Cycle

Project Concept

Crisis / problem /

Need for solution

Selection of Board

To manage project

Initial meeting and briefing

Set procedures

Monthly meetings

Project Completion –

Review governance process

Meta Questions

• Why is this project being developed?

• What are the project objectives – these include

time and cost but are broader and relate to the

reason for the project? What problem is being

solved? What is being improved

• What is the political reality or political

environment within which the project will exist?

What strategies are in place to manage the

politics that will invariably exist?

More questions

• Is a total cost approach being used in the evaluation or selection process? Total cost includes not only the economic costs but triple bottom line plus one.

• Has some sort of cost benefit analysis been conducted? This might be part of a business case.

• Has a risk analysis and risk mitigation process been conducted?

• Does the project align with broader government objectives?

• Is a governance model in place for this project? What is it?

The basics

• Who is the sponsor?

• Who will own the project?

• What is or are the deliverables?

• Who is delivering the project?

A successful governance

committee

• the most important attribute that a project governance meeting must establish is free and open disclosure and reporting. A governance committee should encourage the project manager to present a true picture of the status of a project at regular meetings. To achieve this, a committee must develop an environment of trust, respect and support with the project manager.

Crisis /

problem /

Need for

solution

Context

A Governance Design Model / Learning Based

Stakeholders

Inception

Project Concept

Selection of Board

Initial Meeting

of Board

Final Meeting

Lessons

Knowledge

Management

Publish / Seminars

Set procedures

Training for Board

- Simulations / gaming

Selection Committee

skill set / representation

Board size / balance

Governance Meetings

* Board only

* with Project Manager

Review of Board

function