Governance Management - Establishing Decision Framework

Summary

One of the most important but often overlooked aspects of managing large and complex project is governance. Governance is “the alignment of project (and also program and portfolio) goals with the sponsoring organization’s strategy through sound decision-making processes on authorization, oversight, resource allocation, and change management”. Governance is the guidance that forms the boundaries of management practices by setting the projects goals, directions, limitations, and performance framework. This limit or bound can be critically important because of intricate tasks and trade-off decisions confronting complex projects. As such by limiting and guiding management processes, governance greatly simplifies the execution of project and project management processes. Designing an optimal governance framework can also greatly simplify decision-making and increase the efficiency of management processes.

For projects, there can be a multiple layer of governance. Whereas projects exist within programs and portfolios, projects are restricted by the governance at those levels. At the top most level, all project, program, and portfolio governance are guided by the organization governance. Governance can also be applied at a project component level, such as tasks and smaller teams. At those levels, governance tends to focus on the more microconsiderations of individual behaviors within a smaller team environment.

Creating an effective governance can be invaluable to projects as it simplifies decision-making and greatly enhances the overall management of complex, large, and sometimes challenging projects. This chapter on governance addresses these top three questions:

  • 1. What is project governance?
  • 2. How does it work?
  • 3- How to optimize governance framework?

Principle of Project Governance

The primary role of project governance is to make key decisions effectively. As there are many types of projects often confronting different and sometimes unique situations, establishing a good set of guidelines that work in most situations can be invaluable. As such, governance is embodied by a set of principles rather than overlaid with complicated processes, even though some processes are essential too.

Figure 19-1 shows eight commonly agreed good governance principles. For project management, a common set of principles include the strive toward transparency, responsibility, accountability, and fairness to enable successful outcomes. Here, one can see why management processes are subordinate to the general principles established by governance.

This chapter on project governance discusses four important processes:

  • 1. Initial development of project governance guidelines (Ideation and Initiation Phases)
  • 2. Planning and building governance structure and processes (Preparation Phases)
Good governance practices

Figure 19.1 Good governance practices.

  • 3- Operating governance (Implementation Phase)
  • 4. Authorizing project transition and/or closure (Transition and/or Closure Phase)

Initial Development of Project Governance Guidelines

For organizations with robust project management processes, the question of governance starts in the Ideation Phase, as ideas are developed into business cases. The project governance is typically responsible for the prioritization and authorization of business cases. At the project level, project governance starts mainly in the Initiation Phase during the development of the project charter.

For smaller to moderate size projects, the project is likely to adopt an existing governance structure and associated processes that are aligned with the organization. But for larger, complex, and high-stake projects, sponsoring organizations may wish to develop custom governance that is more fitting for the uniqueness of the project.

In the initial development of project governance guidelines, project managers work closely with sponsors and upper management to establish the guidelines that will oversee projects. Based on the four key principles of transparency, responsibility, accountability, and fairness discussed in the earlier section, project managers can then establish the specific project management processes within the other 11 project management domains (Table 19-1).

The above attributes when combined with additional guidelines such as responsiveness and inclusiveness create a project culture that encourages a certain

Table 19.1 Project Governance Plan Template

#

Section

Description

A

Basic

information

This section contains the essential information about the project including the project name, project manager, project sponsor, start and end dates, and revision history.

В

Purpose

A brief introductory statement defining the purpose of the Project Governance Plan such as: "The Project Governance Plan describes the process that will be followed to execute the Project's governance activities. Its focus is on goals, structure, roles, and responsibilities, and overall logistics of the Governance Board."

Table 19.1 (Continued) Project Governance Plan Template

#

Section

Description

c

Project

objectives

This section describes goals and objectives of project governance on the Project such as to ensure that the Project remains aligned with the organization's strategic goals and that interdependencies are managed effectively. It also discusses the role of risk management in governance activities and states the importance of adherence to key policies, procedures, and standards as applicable.

D

Organization

structure

This section describes the structure of the Governance Board.

E

Roles and responsibilities

This section lists the members of the Governance Board and specific responsibilities. It describes specific accountabilities for benefit realization, stakeholder communications, and oversight of the Project and its components.

F

Governance

decisions

This section describes the decision-making approach the Board will follow. It states how decisions will be documented and communicated to stakeholders and describes an escalation process to follow if the Board does not feel it is empowered to make certain types of decisions. In organizations with specific thresholds of approval, state them here too.

G

Meeting

schedule

This section presents an overview of the frequency of Board meetings and notes meetings may be called as needed. It describes the process to follow for meeting logistics and who can attend various meetings. Also, the Governance Board should also plan for urgent or emergency meetings.

H1

Phase gates identification

This section should identify the important phase gates in which major reviews occur. The Project team should have an ample amount of time to prepare for each of these reviews.

H2

Phase gate review

requirements

This section states the requirements for Project phase gate reviews. It describes the purpose of these reviews and the items that are covered during each review.

Table 19.1 (Continued) Project Governance Plan Template

#

Section

Description

1

Project

performance

review

requirements

This section describes the process to follow for the Board to review overall Project performance at various times. It discusses the objectives of these reviews.

J

Process to initiate new subprojects

For very large projects only. This section describes the process the Board follows to initiate new subproject activity.

к

Assessment of effectiveness

This section describes how Project governance is assessed for its effectiveness in terms of overall delivery of Project benefits and describes who is responsible for this evaluation.

L

Approvals

This section contains the approval of the Project Governance Plan by the members of the Project Board or Governance Board, and other key stakeholders as required.

Source: PMO Advisory Training Material, Copyright 2020.

approach to project implementation. Governance is often established by senior managers, even though project managers can have a significant role in shaping the ideal governance for the project.

 
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