Climate change

In todays tough economic climate governance is more than good management of projects and programmes; its an absolute requirement for business success, says J. LeRoy Ward of ESI International.

The recession has tightened the financial belt for most organisations around the world, profit and non-profit alike. With budget restraints at the forefront for most executives, many have charted a path to increased reliance on project management to ensure the success of projects essential to producing great products, improving customer satisfaction and driving revenue and profit growth. With this growing reliance on strategic project management processes has come a growing awareness of the value of project and programme governance as key to placing the principles and practices of project management at the heart of the organisations culture.

According to John Bartlett, the author of Managing Programmes of Business Change, the challenge of governance in a project management culture is that managements direct involvement in decision-making has fallen dramatically in recent years. Thankfully, the art of governance and, yes it is indeed an art will ensure that the projects, programmes and other initiatives that consume valuable time and resources will keep the organisation on the right strategic track. However, to employ the practice of governance within programme management, one must first understand exactly what it is and the three critical elements that form the building blocks of its success.

Identify

Governance is about providing a structure of operations to complete two objectives: create and manage a portfolio of projects as well as manage and control the individual projects once they have commenced. Governance also requires its owners to identify how they are going to implement the discipline of project management in a systemised, methodical and standardised approach.

Governance is a best practice in project and programme management, and as such, must be structured and supported by executive management or be doomed to fail. It almost never succeeds as a grassroots effort. The mechanism in which governance in industries from energy to IT, from retail to financial sectors typically occurs is through a Programme Management Office (PMO). In fact, a vast majority of PMOs are responsible for the process of project governance. Some PMOs have this responsibility at the outset, whilst others evolve into the role simply because no other organisation was doing it, and it needed to be done. More enlightened organisations realise that the PMO is the primary means to spearhead the building of a strong, professional culture of project management and that governance is a key part of that professional culture.

Governance is more than good management. According to Bartlett, Its about maintaining due diligence, integrity and controls within a programme or project. Its concerned with collecting data, decision-making, approvals and compliances. Furthermore, he says governance is about balancing risk and about communication. Peter Taylor, author of The Lazy Project Manager, contends that governance is difficult to define, likely because it tends to evolve over time. Governance is how we govern, how we focus, how we structure and how we organise any sort of engagement, be it a project, programme or full-out portfolio. But its not rigid. While the principles stay, over time, governance must be flexible and evolve, says Taylor.

Governance is a multi-faceted process that is central to the good management of projects and programmes. For example, governance not only focuses on overall continuous improvement in project management practices, it also ensures that the people doing the tough job of managing projects have the right skills and tools to be successful. Looked at from another perspective, you probably wouldnt want to live in a country without a strong governance structure, so why would you want to manage a project without one?

Leverage

There are three central themes that matter most when leveraging governance to drive a project/programme management culture:

Project managers should not just advocate governance for governances sake. The practice is about outcomes and performance. When a programme has structure, it leads to better decision-making, which results in better project outcomes.

An in-depth study of the governance model helps to pinpoint why governance has value. A global manufacturing company investigated and found that governance could improve risk mitigation. For this company, governance provided a clear delineation about who to turn to when a problem presented itself and who was responsible for actually solving the problem. In a governance model where roles are accurately identified and filled, such as this, problems are solved without needless escalation.

Governance is the vehicle in which you change a culture. Much to the chagrin of some executives, change does not just happen by instructing or demanding it of people. Anthropologists have long observed that if you want to change a culture, change the environment. Governance is part of the project management environment.

Increasingly, companies are managing their change through programmes. This facilitates the creation of a holistic change and governance structure, says Bartlett. Within each change element, governance elements need to be specified. These elements may include change control, financial tolerances, contractual compliances or negotiation protocol.

Governance must be embraced as part of an overall change management structure. Governance itself builds the culture of change management, says Bartlett. If you want people to perform or behave in a certain way, first you must put into place what they need to provoke that behavior. Just telling people to change doesnt work, but rather a culture will change when the environment in which that culture exists changes the people within it.

Governance can provide a career path for project managers. At its core, governance is about business management, not just project management. The best governance is conducted by professionals who have come up through the ranks and have the scars to prove they have been effective project managers. As such, governance responsibility provides a natural, and important, growth path for project and programme managers in any organisation. This is the best type of succession planning, the kind that naturally evolves.

Says Taylor: Governance provides a mechanism that lays out the necessary training, skills and experience that are required of a project manager. The model certainly provides clear footing for a given career path.

Focus

Its important to recognise that some companies have operated under a project management culture for some time yet are relatively new to using a structured governance model. Taylor challenges that companies opting to add a formal governance structure after the fact are in for a tough time.

It will be difficult, says Taylor. Theres a good chance the initiative will likely be met by restraint, especially from the project managers who will claim their way works fine and they need not change. When positioned and communicated well, and if supported by senior management, organisations can successfully persuade project managers to embrace a structured governance approach.

Lets look at a global manufacturing company that overcame such intractable challenges when it added governance to an already existing programme. This organisations senior leadership saw an opportunity for governance in its project management approach, one of four fundamental capabilities leaders identified to stay competitive. Unfortunately, almost one third of its projects didnt meet minimum requirements for project governance.

Accordingly, the organisation identified two actions to accelerate the development of a project-centric culture across the enterprise: namely, enhance the competence of those practising project management, and improve the project management infrastructure (i.e., tools, techniques, etc). According to one executive, the company focused on project governance to encourage a common approach while delivering greater understanding of how to focus on strategy, value proposition and managing risks.

Governance workshops, using actual projects, were conducted to help implement the practice. Senior leaders participated in the sessions describing to the participants why great project governance was essential to achieving the organisations goals and objectives. The workshops were a success. Thanks to the infusion of governance, said one executive, our focus is much clearer now and we are steadily improving the quality of our project management at all levels.

Other companies that are relatively new to structured project management practices are afforded a great opportunity to develop a governance model in concert with launching a project management programme. One noteworthy example of such an organisation is ASML, the worlds largest manufacturer of lithographic systems based in The Netherlands and recognised worldwide for its product excellence. Before 2007, ASML had no agreed project management methodology in place. When it launched one, the model included governance from the outset.

According to David Davies, programme manager of ASMLs PAS business unit, the launch plan included a three-day, programmeplanning workshop, followed by a three-day project control workshop. During kick off, we agreed upon working procedures for reporting, change control, stakeholder, risk and issue management, said Davies. When told that the oversight elements were part of the process, everyone listened.

Not surprisingly, the earlier an organisation establishes a governance structure into place, the better off it will be. There will certainly be a lesser number of problems and behaviours to fix later. Plus, it allows the placement of something from the get-go, even if its loosely structured initially. A rough governance model can always be refined over time and is, frankly, preferable to not having one at all.

Benefit

The concept of governance is not new to project and programme management. Why, then, is it important now? Primarily because the corporate pocketbook has tightened, and companies need to ensure they are working on the right projects, in the right way, at the right time. If money, time and human resources are scarce, then PMOs and companies must select the highest yielding projects. Proper governance today can have a substantial, and positive, impact on the ability of organisations to meet their goals. Because it is more consequential than ever before, many organisations are taking a very hard look at how they are conducting project and programme management governance is very much a part of that.

Davies concludes: One of governances challenges is creating a truly end-to-end control, from strategy to benefit. Can project management exist without governance? Yes. But in its absence, the person who screams the loudest is heard and attended to, whether or not their solution is the best. Furthermore, without governance the climate is chaotic. When an organisation doesnt have a good understanding of the time, money or resources its spending, its on a slow track to optimal success. Neither of these scenarios supports the rise of a successful organisation as required by todays tough economic climate.

• J. LeRoy Ward is executive vice president at ESI International. He has 30+ years of expertise in project and programme management. For more information, visit http://www.esi-intl.com/