Good governance of the project portfolio
Posted by APM on 24th Jun 2013
Corporate Member, Atkins, kindly hosted this event at their Hub facility, North Bristol. A good turnout of 60 members attended on a fine summers evening to understand more about the governance of the project portfolio, presented by Martin Samphire and Jo Langley, Chair and Secretary of the APM Governance SIG.
Martin introduced the work of the Governance SIG and the work that they do to promote good project management governance, including several publications, notably ‘Directing Change’, contributions to the UK Corporate Governance Code, influencing CXOs, and a governance benchmarking initiative. The SIGs aim is for organisations “to achieve change successfully with confidence and control” through good governance.
The need for good Governance - both on individual projects and organisationally - is topical with some clear examples of where it has failed, such as the West Coast Mainline re-franchising, Fire-Control, London Stock Exchange Taurus, G4S at the Olympics. Whereas the 2012 Olympics themselves were an excellent example of good governance. It is very clear that major project failure is increasingly unacceptable, both in the public sector to the tax payer, and the private sector to shareholders, and very often customers. This intolerance is supported by APM’s Vision that “All Projects Succeed”.
Martin highlighted some definitions of Project Governance, from ISO 21500, from APM and the new APM BoK. Essentially it is that component of Corporate Governance which is specifically concerned with project activities which ensures that an organisation’s project portfolio is aligned to the organisation’s objectives, is delivered efficiently, and is sustainable.
This was shown by an organisational triangle, where vision, mission and strategic objective are enabled by operations planning and BAU, and a portfolio of the right programmes and projects to deliver the required change.
Martin highlighted some key lessons, including the need for the organisation’s board to “own” governance. The board needs to select the portfolio and ensure good governance is undertaken.The board directs, approves and monitors progress to delivery of the required (strategic) benefits. Another key lesson is to have a single and competent sponsor that is held accountable by the board. Also of the OGC’s 8 top factors in project failure, 6 are clearly related to governance and the role of the board and sponsor. For example alignment with strategy and vision are not the responsibility of the project manager. Martin noted that much effort has been given to improving project manager skills, project management tools, processes, but these on their own have not improved project success rates over the last 30 years. The Governance SIG’s view is that a key driver for success is good governance with the right skills, behaviours and resources at Board and Sponsor level, which unfortunately is often not the case.
Jo then looked at the essential elements of governance of project management, including how the Project Managers are supported, with training, resources, development. She discussed the 14 principles for good governance of projects from the Directing Change guide. She specifically highlighted the need for performance criteria and metrics for the Governance of project management, that decision makers should be competent (in their project management / governance role) and have the authority and resources to make those decisions, the use of independent scrutiny and reviews, clear escalation routes for issues and risks needing decisions, and that projects are closed when they are no longer aligned with the organisation’s vision, mission and strategic objectives.
The results of a poll taken at a recent webinar were shared. The most difficult issue in organisations was agreed to be the competence, authority and resources of decision makers. Discussion between attendees confirmed this, and also stakeholder engagement and lack of trust and honest disclosure between partners.
Governance of PM involves; alignment of stakeholders, the golden thread of delegation, (where decisions are best made), when decision gates take place, clear reporting and communications, competence (the right people in the right roles), independent assurance, and leadership driving culture and the right behaviours.
Jo asked how you can improve governance. Start with an audit of your governance against the 14 principles in the Directing Change guide. Set metrics for governance, which could include speed and layers of decision making, benchmarking your metrics. Ensure the integration of governance of change with corporate governance.
The Governance SIG’s Benchmarking Group was highlighted. It has 30 participating organisations (all APM Corporate Members) working to develop and share metrics for good governance. This is work in progress, but will really help establish good practice. Metrics include portfolio churn rate, alignment with strategic objectives, tenure of sponsors, having a head of PM profession, having formal responsibility for benefits realisation, the formality of project reviews, the level of unwelcome surprises at board level. Please do contact Martin and Jo if your organisation would like to get involved.
In conclusion, good governance of the project portfolio will provide assurance at the Board level that investment is under control, risks are minimised (in particular, reputation risk), that project success rates are improved, and that staff and stakeholder relationships are improved. It is all about encouraging and supporting the right culture and behaviours, which is the responsibility of an organisation’s leadership and its Board.
The presentation slides are available below, and the Directing Change Guide and other useful documents are available for down load by members from the Web Site.
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With pressures on costs and efficiency, the trend appears to continue for ever increasing instances of co-owned projects - whether it is government-to-government, government-to-industry, industry-to-industry or other forms of joint projects. If you are involved in one of those, then the Governance of Co-Owned Projects is for you!