Five Key Characteristics of Good Project Governance: Towards Better Decision Making

Five Key Characteristics of Good Project Governance: Towards Better Decision Making

Effective project governance is in demand now more than ever before. According to studies, more than 80% of investors now are willing to pay a share price premium for well-governed organizations. Why? Because Governance addresses the needs to establish structure, hierarchy, sponsorship, ownership, accountability and communication to support enhanced consistency in execution, ownership and delivery. When governance is working correctly, decision-making is no longer the stalling point and the organization performs at an optimal level.

Decisions are the coin of the realm in business. Every success, every mishap, every opportunity seized or missed stems from a decision someone made or failed to make. Yet, in many firms, decisions routinely stall inside the organization, hurting the entire company’s performance. The culprit? Ambiguity over who’s accountable for the decisions. (Harvard Business Review by Rogers and Blenko, 2006)

There are multiple definitions available for ‘Governance’:

  • UNESCAP defines ‘Good Governance’ as the ‘Process of decision-making‘ and ‘Process by which decisions are implemented (or not implemented)’.
  • As per Turner (2006), governance of a project involves a set of relationships between the project’s management, its sponsor (or executive board), its owner, and other stakeholders. Project Governance provides the structure through which the objectives of the project are set, and the means of attaining those objectives and monitoring performance are determined.

Very generic definitions? Let us then go through some more details of Governance concept to understand it well. There are 3 levels of ‘Governance’ in any organization:

a)     Executive layer: This layer is considered as the highest level of Governance addressing the ownership, accountability and strategic alignment of initiatives with the organizational goals and identifies the corporate governance.

b)     Context/Execution layer: This layer sets up the context in which project is being executed and addresses two main components: (i) Establishing right infrastructure of program and portfolio management to link projects to corporate strategy, which ensures the right projects are executed. (ii) To make sure that organization has the capability to deliver the projects successfully so that projects are done right.

This layer mainly identifies the project governance and includes the decision and analysis boards, which take adjustment and corrections from Executive layer and understand the needs for adjustment and correction from the Delivery layer. This layer also takes into consideration partners, vendors and third-party participants in your programs and projects.

c)     Delivery/Individual project layer: This is the lowest working layer where set project objectives are actually executed and attained. Resources at this level are the daily work efforts owners. At this level, program and project management office (PMO) are responsible for the collection and accumulation of the data that support performance reporting. It is critical to keep a daily understanding of decisions, risks, issues and activities that will ultimately impact the delivery of initiative’s outcome. The main stakeholders at this level are Project managers, Technical architects/Engineers and PMO resources.

This three-layered structure, enables linking Project Governance to Corporate Governance and delivery capability. In a way Project governance is the bridging mechanism between corporate governance and project management.

So, how do you ensure that you have an appropriate project governance model and it is good enough per above definitions? Here are the key governance characteristics, identified by United Nations ESCAP, for achieving good governance:

Project Governance Characteristic #1: Sponsorship and Accountability

Recent research has shown that project failure is often not directly attributable to the performance of project managers and project teams. Sometimes, project failure is caused by contextual factors, such as the breakdown of sponsor governance and support.  Project sponsor holds a critical position of power being the Governor who owns the business case and provides a link between project and organization’s management, leading ultimately to the Executive Board.

Weak sponsorship not only in terms of resources but also in providing clear and timely direction, investing required time to the projects they sponsor and appropriate project management experience to have good understanding of their own role, are the common problems seen in sponsor governance failures. Your project/initiative should have a solid buy-in from the sponsor (can be executive management) and should be aligned to the organizational goals to make it a success.

Clear definition of roles and responsibility brings accountability. Who is accountable to who varies, depending on whether the decisions or actions are taken internal or external to function/organization.  In general each defined role is accountable to those who will be affected by its decisions or actions.

Project Governance Characteristic #2: Transparent with well-defined communication channels

Transparency means the decisions taken and the enforcement done is in an open and easily understood way. It means that information is freely available and directly accessible to those who will be affected by such decisions and their enforcement. It also means that enough information is provided and that it is provided in clear and concise forms and  through the right medium of communication.

Accountability (Characteristic #1) cannot be enforced without transparency.

Communication is the vehicle that powers the entire governance model. Establishing structured communications will maintain linkages throughout the three levels of governance and assure that the organizational strategy, mission, vision, and desired outcomes are maintained and aligned with the execution. This alignment can provide assurance to the organization, knowing that the outcomes of the performing initiatives are meeting its goals, as the predefined process provides the proper oversight to the responsible people. Well defined PMO (Project management office) reporting process to communicate on the initiative performance across three layers of governance plays a key role here.

Project Governance Characteristic #3: Responsive, Effective and Efficient

Good governance requires that institutions and processes try to serve all stakeholders within a reasonable timeframe and produce results that meet the needs of stakeholders while making best use of resources at their disposal i.e. decision making processes, to be supported by timely, reliable and relevant information. The requirement for timely information indicates that the reporting effort should be minimized. And reliability of information should be ensured by exposing correct current project status. Efficient project management and PMO processes are very significant to maintain the integrity of the information used to keep Project dashboards up-to-date for keeping stakeholders informed about the progress, metrics, performance, change requests and results of the project/initiative.

Project Governance Characteristic #4: Participatory, Equitable and Inclusive

Participation is a key to good governance and as such needs to be communicated and organized. At project level governance, main participants can be the Sponsor, Middle management, PMO, Project manager, Third party vendors, Partners and Customer. Ensure that all the participants feel that they have a stake in the decisions and do not feel excluded from decisions taken. Since there are several actors and as many view points, good Governance requires mediation of the different interests to reach a broad consensus. Communication of the consensus reached, to all stake holders, should be done in transparent and timely way. In general for project governance, your PMO is a crucial body for defining and managing project processes to deliver the business case outcome, defining how the project will be monitored and controlled and in keeping stakeholders involved as well as informed.

Project Governance Characteristics #5: Follow a rule of law.

During the decision-making process, law of land should never be ignored and to ensure that, good Governance requires fair legal frameworks that are enforced impartially. This is where a good understanding of contracts and agreements with customers becomes important. Accessibility to these and project terms and conditions need to be in place along with well-defined guidelines for dos and don’ts.  All decisions also need to be made considering the mission, vision and values of the organization so that the spirit in those words is reflected in all the action on the ground.

With knowledge of these characteristics, it is clear that governance is an ideal which is difficult to achieve in totality; however, actions must be taken to work towards this ideal with the aim of making it a reality because as Napoleon Bonaparte said – Nothing is more difficult, and therefore precious, than being able to decide.

So, review your current project management governance model, see if these characteristics are well-built in and if there is room for improvement. I hope that these characteristics can serve as guidelines for you to make your project a model for Good Governance.

What are your experiences with project management governance and what challenges have you faced in good governance model establishment? Please share with us so that we can learn more from your experiences.

References:

http://www.unescap.org

Eamonn V. Kelly(2010) , “ The principles of effective project governance” retrieved from http://www.pmi.org

Picture Courtesy: http://dilbert.com/strips/comic/2009-09-06/

Five Keys to set up a Successful Project Management Office – Business Operations Performance Management

Five Keys to set up a Successful Project Management Office – Business Operations Performance Management

[vc_row][vc_column][vc_column_text]Basically, there are two types of animals: animals and animals that have no brains; they are called plants. They don’t need a nervous system because they don’t move actively; they don’t pull up their roots and run in a forest fire! Anything that moves actively requires a nervous system; otherwise it would come to a quick death ~ Rodolfo Llinas, a neuroscientist from New York University School of Medicine.

An established Project Management Office (PMO) within an organization is the Central Nervous System of the organization. The PMO helps to optimize resource utilization across projects and initiatives, improve program execution which rises above organization barriers, enhance visibility and accountability and be better prepared from an information and knowledge perspective to anticipate and react to change. The Project Management Institute (PMI) Program Management Office Community of Practice (CoP) views the PMO as a strategic driver for organizational excellence and seeks to enhance the practices of execution management, organizational governance, and strategic change leadership.

Is establishing such a central nervous system within an organization a challenge? Yes, it is. In absence of crisply defined PMO goals, the risk is that the PMO can just end up increasing the workload for project managers without delivering on any of its stated objectives. As a result, PMO acceptability can get reduced and it can become just a reactive function within the organization, an incomplete nervous system with degraded reflexes and inability to anticipate external events.

So if you are lucky enough to have a senior / executive sponsorship mandating the requirement of a PMO, here are the five key factors to be considered to establish a PMO that truly rocks and becomes a strategic tool in keeping implementers and decision makers moving toward consistent and predictable business focused goals and objectives:

Key Factor #1 Clear Scope and Purpose of PMO – Lack of clear boundaries and objectives associated with the PMO, may result in overloaded PMO team and the disappointed customers. There are almost as many varieties of PMO as there are companies. There are strong PMOs and weak PMOs. Some companies rely on the PMO to be responsible for all areas of project management and project execution. Other companies only want the PMO to provide a consolidated reporting view of all the projects in the organization. Before you can jump in and start up a PMO, you must first gain clarity and agreement on what you are doing and why. Communicate this information to clients, stakeholders and your own staff so that everyone starts off with a common set of expectations. Second, provide a framework for the PMO to guide decision-making in the future. Along with the clear definition of which projects you will support, make sure that there are clear definitions of which services are and are NOT provided for all your customers.

Key Factor #2: Do not use the “One size fits all” approach – Implementing a PMO by exactly what books say without considering the organization in which it operates is not a very wise thing to do. Having a centralized source of information, templates and project management methodologies certainly brings value to the organization. However, forcing these to all types of projects (large, medium, complex, small) in organization may result in poor Project Manager willingness for their usage. A proper framework in place, with respect to project management models which allow tailoring of these templates and methodologies according to specific project/customer’s need, is the key for success here.

Key Factor #3: Define Data Requirements based on “need” and not “want” – Be careful of the data load that you put on the project managers, focus on being an enabler function and not an overhead. In most of the companies with a PMO, the perceptions of employees are more biased to it being an overhead rather than a useful service. One of the reasons for that is too complex requirement for the project managers to produce data which is very rarely used or even useful. The main focus of any project delivery is around Scope, Schedule, Budget & Resources, Quality and Customer satisfaction. A well defined metrics/dashboards for these important parameters can encourage PM to report the project status in correct and timely manner. This also aligns with PM’s usual activities for project tracking in day to day life and does not create additional bandwidth stretch for PMs. Project reporting can be around:  Status (red, yellow, green)—overall, as well as for risks, budget, scope, status trend, planned v s. actual budget, planned vs. actual time, business case forecasts vs. actual results, customer satisfaction survey results. How you further present reports depends on your audience, their needs, and the resulting actions your audience should take. Knowing your audience is very important here because the breadth and level of detail differs by audience. At higher levels, such as an executive board, reports should be broader in nature with less depth and frequency than at the business unit levels, for example. Business unit audiences desire more detailed information specifically focused to that business unit. However, the supporting detail should be available at all levels, especially for projects that may be in trouble, such as those with high budget or time overruns.

Key Factor #4 Metrics reporting – Data accuracy and completeness – If Reporting is a key dimension of the PMO, data accuracy and completeness is in turn a key dimension of reporting. According to Bryan Maizlish and Robert Handler (2005), “Research indicates that 90% of all business decisions are sub-optimal because of data quality. Ironically the biggest data quality complaint does not pertain to the accuracy of the data but the completeness of the data”. Accuracy and completeness is required for both simple and complex reports. For example, one of the most standard, simpler reports in PMO relates to the “health” of the programs in terms of project status (red, yellow, green). If the status of a project has not been updated in a timely manner, then the resulting program health report will be inaccurate leading to dated decisions. A suggestion here is to offer a service only if you have the proper tools to support it. Microsoft Excel is an excellent tool, still, there is only so much that you can offer in terms of analysis and forecasts if your project’s data are collected in an Excel file. Manual reports with embedded macros are good workarounds, but they are very time consuming and subject to mistakes. In addition, budgets and resources are really tough to manage manually in a consolidated and consistent manner, especially when your PMO is working on a global level. Have appropriate Project Management tools established based on your organization needs.

Key Factor # 5 Build a Strong marketing and communication strategy to drive PMO acceptance – Communicate, communicate, and communicate! There is no such thing as over-selling. Selling and re-selling the strategic project management office is necessary to gaining and sustaining the buy-in across all organizational levels. When you are setting up the PMO and do not have accomplishments to talk about yet, focus on building awareness about the PMO – its purpose, impact and benefits. The communication plan should include as audience, not only the executive and steering committee members and the stakeholders, but also the internal and external communities. Create a central repository for PMO documents, inform stakeholders the information is there and make sure that the information is easily accessible. Poor or non-existing marketing and communications revolving around the goal of the office and the services it provides, is one of the reasons for unsuccessful PMO setups.

So, to summarize, setup your PMO with well thought out strategies so that like a central nervous system, it can improve your organizational reflexes and performance. Such PMOs can enable your organization to get better/faster/cheaper and achieve more predictable results for their chosen projects.

What are your experiences with PMO setup in your organizations? What challenges have you faced in PMO establishment? Please share so that we can learn from your experiences.

Today’s guest post is from Kavita Verma, PMP who is the Director – Global Program Office at a leading IT services company. She is a dynamic and outcome-oriented Program Manager with a fulfilling career spanning over 10 years of extensive industry experience in full software life cycle of requirements definition, architecture, design, prototyping, product implementation, integration and testing of Embedded Mobile Application and Platform Middleware.[/vc_column_text][/vc_column][/vc_row]