1.7 Explain why aspects of Project Management Governance are required

Corporate Governance

- involves a set of relationships between a company’s management, its board, its shareholders and other stakeholders.

- it also provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined.

The Direct Change Guide helps the board of directors:

1. Assure themselves and others that robust governance requirements are applied across the projects managed in their organisations.

2. Optimise their portfolio of projects. 

3. Avoid many common failures in project and programme performance.

4. Motivate their staff, customers, and suppliers on the basis of better communication. 

5. Minimise the risks to the organisation arising from projects.

6. Maximise the benefits to be realised from projects.

7. Assure the continued development of the organisation.

Project Governance - subset of Corporate Governance

-Most of the day-to-day management of projects lies outside the domain of Corporate Governance.

Project Governance Diagram

Governance of Project Management Principles (1-7)

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 cultures, 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 project portfolio and the business strategy and policies, for example ethics and sustainability.

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

Governance of Project Management Principles (8-13)
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

Governance Components

1. Portfolio Direction -This component seeks to ensure that all projects are identified within the one, sustainable portfolio. This portfolio should be evaluated and directed mindful of the organisation’s aims, constraints, resources, and capacity for change.

2. Project Sponsorship - This component seeks to ensure that project sponsorship is the effective link between the organisation’s senior executive body and the management of each project. The sponsoring role has decision making, directing, and representational accountabilities.

3. Project Management Capability -This component seeks to ensure that the teams responsible for projects are capable of achieving the objectives that are defined at project approval points and use that capability to improve governance and outcomes.

4. Disclosure and Reporting -This component seeks to ensure that the content of project reports will provide timely, relevant, and reliable information that supports the organisation’s decision making processes, without fostering a culture of micro-management.

Common Causes of Failure

1.  Lack of clear link with key strategic priorities.

2. Lack of clear senior management and, in government projects, ministerial ownership and leadership. 

3. Lack of effective engagement with stakeholders. 

4. Lack of skills and proven approach to project and risk management.

5. Lack of understanding of, or contact with, supply industry at senior levels.

6. Evaluation of proposals driven by initial price, rather than long-term value for money.

7. Too little attention to breaking down development and implementation into manageable steps

How is Project Governance Supported

❑ Authorisations

❑ Consistency

❑ Continual Improvement (lessons learned)

❑ Business Case

❑ Roles

❑ Reporting and recording