Governance

General

The word ‘governance’ clearly derives from the practice of governing a political state by its government.

In recent years the concept of corporate governance has taken the term and applied it to the commercial world.

There are many different definitions of governance but they all include certain key elements, all of which can be adapted and applied to the governance of projects, programmes and portfolios. The goals of P3 governance are therefore to:

  • provide a system of good practice by which projects, programmes and portfolios will be managed;
  • balance the differing needs of all stakeholders;
  • monitor the actions of management to mitigate the risk of inappropriate actions;
  • clearly define roles and responsibilities and ensure they are performed by competent people;
  • ensure ethical behaviour and promote transparency.

P3 governance is a necessary component of corporate governance. This is increasingly demanded by shareholders, clients and government. Many organisations have to comply with external regulations and legislation (e.g. the UK Corporate Governance Code and Sarbanes-Oxley in the USA).

Initially, governance may appear to be another layer of managerial bureaucracy but the benefits of good governance include the optimisation of investment, avoidance of common reasons for failure and motivation of staff.

Good governance minimises the risk arising from change and will help maximise the benefits. It also promotes the continued development of the discipline and profession of project, programme, and portfolio management.

All topics within the Praxis framework contribute towards good governance. However, the key areas covered in this section are:

  • P3 management – the methods that deliver projects, programmes and portfolios.

  • Knowledge management – the organisation’s ability to capture, develop and improve its capability and maturity.

  • Life cycle – the structure underpinning delivery.

  • Capability maturity – the development of increasing levels of effectiveness and efficiency.

  • Sponsorship – the link between P3 management, strategic management and business-as-usual.

Important functions from other sections include:

  • Stakeholder management – although this is usually discussed in the context of specific projects and programmes the principles can equally be applied to stakeholders in the P3 management process;

  • Ethics – ensuring that all members of the P3 organisation act in the best interests of stakeholders.

Governance begins with the host organisation whose board must ensure that P3 management is visibly and proactively promoted.

Many different organisational structures may be created to ‘own’ P3 management (or aspects of it). Terms such as PMO (project management office), P3O (project, programme and portfolio support office), project services, centre of excellence (CoE) or community of practice (CoP) are all in common use.

The name often reflects the scope of responsibilities. For example, a project support office (PSO) provides predominantly administrative support to a project; a centre of excellence will usually concentrate on improving capability maturity and continuing professional development (CPD) while a PMO may effectively be the same as a portfolio management organisation.


Projects, programmes and portfolios

The application of the principles of governance is not dependent on a having a corporate approach. Just because a less mature organisation does not have an established P3 governance structure, projects and programmes are not exempt from applying good governance.

Where centrally driven governance is not in place, the project or programme team should take responsibility for governance themselves.

The sponsor is responsible for ensuring that governance mechanisms are in place. Periodically checking that these are being applied is referred to as assurance. This should be performed by someone external to the management team who reports directly to the sponsor.

The path to capability maturity for most organisations will start with inconsistent governance across the informal portfolio of projects and perhaps programmes.

As the organisation develops its P3 capability, programmes will be formed that include projects with different approaches to governance. Similarly, portfolios will be formed from projects and programmes with different approaches. The risk of allowing component projects or programmes to continue unchanged has to be balanced against the benefits of adopting a consistent approach across the programme or portfolio.

Some organisations will develop one portfolio comprising all the programmes and projects they undertake. The governance of the portfolio will then drive the governance of all component projects and programmes.

Large organisations may have multiple portfolios and there may be good reasons for having different governance frameworks, perhaps due to geographical, political or regulatory contexts.

However, the core values should be consistent across the organisation and compatible with organisational governance.

Governance can be tricky where two or more organisations with different cultures combine in a joint venture to run a portfolio. In cases such as this there should be carefully agreed:

  • arrangements covering decision-making and joint authority for managing contacts with owners, stakeholders and third parties;

  • business cases that reflect the apportionment of risk and reward;

  • arrangements that recognise existing governance arrangements and the technical strengths and weaknesses of the co-owners;

  • approval mechanisms that give the owners the opportunity to re-evaluate their participation;

  • procedures for reporting, independent reviews and dispute resolution.

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