Governance Newsletter No. 5 – Winter 2015


IntroductionColin Parker - Editor

Welcome to the fifth edition of the APM Governance SIG newsletter. The objective of the newsletter is to keep SIG members up to date regarding the activities of the SIG and related developments in the world of governance - and the feedback to our previous editions was extremely positive - thanks to those that provided the feedback.



This is your newsletter – please keep the feedback coming and help to shape the content, style and focus - if you have any comments on the topics covered, would like to contribute an article to a future edition, or raise an issue please complete the feedback sheet contact us.


Stay connected with the Governance SIG



From the Chairman

Martin Samphire

Welcome to the first newsletter of 2015. I wish you a healthy and happy 2015. I look forward to meeting many of you at our GovSIG events during the year. And please do persuade your colleagues to join the SIG so they can get a copy of this newsletter and advice of events – contact Catherine Bowles.

Reflecting on 2014 - it was a progressive year for governance. A number of surveys and research showed beyond doubt that good governance is THE critical success factor in project success.

So governance is even more topical and will remain so for years to come. Since the last Newsletter the GovSIG has continued to be active:

  • We delved into the governance issues that came out of the 2014 PwC Global Survey of 3PM (see below)
  • We continue to develop the update to the Co-Directing Change publication, which will be published during 2015
  • We delivered inspiring workshops on governance at the “APM Presents” event last October
  • In September we shared lessons from Network Rail’s deployment of sponsoring and benefits tracking
  • In December we heard about the governance lessons learnt from CrossRail (see below).

We look forward to much more in 2015 and I hope that you have a productive and rewarding year. We:

  • are developing a new guide for the governance of Agile projects – Agile Governance - and are updating Co-Directing Change. Both to be published this year (see below)
  • will be having a series of interesting sharing and case study evenings throughout the year starting with the NAO at the end of February
  • are looking to broaden the pool of talent to join the Committee and will be holding a briefing for interested new talent
  • will be holding a full day conference in September.
Update on CDC fresh

Co-Directing Change (CDC) refresh
The update to the CDC guide is nearing completion. It has undergone wide consultation and will undergo a reader/user review by interested parties on Wednesday 11th February and will then be reviewed by a pilot group from both industry and public sector organisations. One of the delays has been the need to clarify some issues surrounding potential conflict of interests and duties that may occur when a director of a co-owning organisation is also appointed as a director of a legal entity to deliver a co-owned project.

We are looking for senior reviewers to join the pilot group for this updated guide – please do get in touch with James Simons if you are a sponsor of a co-owned project and would like to get involved in the review.

Agile Governance Guide
The Governance SIG plans to launch a (slim) ‘Agile Governance’ guide in 2015. It will provide guidance to Main Board, executive directors, and senior management of private, public and third-sector organisations and their advisors, auditors, those in professional services, and consulting organisations. It will cover when to use or not use Agile approaches, specific interventions to gain confidence from, and control, agile projects, programmes or portfolios. It will also allude to agile behaviours that can be used to support and encourage effective agile working.

APM is looking for volunteers to take part in a reader review – please contact James Simons for more details.

Brian Wernham, Governance SIG Committee Member


PwC PPM Global Survey 2014: ‘Insights and Trends into Current Programme and Portfolio Management’
contributed by Amerjit Walia

 


PwC kindly hosted a Governance SIG event in July 2014 – thanks again go to James Lowe and Karl Reilly and his colleagues for organising, facilitating and providing great facilities. It was really good to see the positive engagement we’ve had with PwC over the past year or two continue to develop.

PwC carries out a biennial survey on the current state of project management. PwC’s Fourth Global Survey received 3025 responses across 110 countries and 47 industry sectors. The objectives were to assess the latest trends, challenges and opportunities relating to the management of portfolios, programmes and projects.

The evening focused upon the findings from the survey and how they related to governance of project management. The findings were analysed against the key headings from the Directing Change publication. Some of the highlight findings are shown below.

Looking at Portfolio Direction, we gained some insight into the different perspectives of C-suite and other employees.





As benefits should drive projects, this is an area where more attention is needed in organisations for better governance.  Executives should be demanding that benefits baselines are developed and forecasts monitored against.


Good governance requires open and transparent reporting.  The key message here is that the C-Suite wants conciseness in verbal (oral) reports and exception reports rather than ‘war and peace’.
 
The 5 key messages that came from the survey were very much aimed at the Board or Executive level – in their role at the apex of governance:

1. Optimise their portfolio of change / projects to maximise added value - successful organisations do that
2. Governance needs to be more flexible to respond quicker to changing circumstances – and encourage bravery in the team
3. Encourage your people – provide the right tools and resources
4. Connect better and align with the those delivering
5. Measure and address the harsh facts to maintain direction.

For a copy of the Directing Change Guide (APM members only) please follow this link.
 
For a copy of the survey go to - www.pwc.com/ppmsurvey

 
Martin Samphire - Chairman Governance SIG


HS3 – Governance Aspects

Background
Within the 2014 National Infrastructure Plan, the government has announced the creation of Transport for the North (TfN), a new body comprising representatives of the main northern city regions. TfN will develop proposals for improvements in rail links within and between those cities, to significantly improve rail passenger journey times across the region. The proposal, which is to be known as High Speed 3 (HS3), will be based on improving east-west rail links using both existing and new rail infrastructure. Initial costs of HS3 have been estimated at £15bn, with delivery to be completed by 2030.
 
TfN, working with the government, is tasked with producing a comprehensive transport strategy for the north, including options, costs and a delivery timetable for HS3. The body will produce an interim report in March 2015.

The broad strategic principles driving HS3 have already been revealed in outline, both by politicians and by local civic leaders (particularly through ‘A Proposition for an Interconnected North’ published by One North, an association of northern city councils, in July 2014). Together they support the concept of the Northern Powerhouse, of which HS3 forms a part.
The principles are:

  • Completion of the existing rail electrification programme between northern cities
  • A tunnelled new trans-Pennine route linking east and west, allowing 125mph services
  • Improved connectivity with other modes of transport, especially airports, and with HS2
  • Improved timings and quality of service throughout, including new trains
  • Greater capacity, including freight.
Governance Issues

No organisational structure for HS3 has been announced, but it is clear that many stakeholders will be involved. Even at this early stage, the issues of programme governance are considerable, and are compounded by the involvement of numerous public sector organisations including Department for Transport, HM Treasury, TfN, One North, Local Enterprise Partnerships, Passenger Transport Executives, Network Rail, and city and local councils.

Given its national strategic nature, the HS3 programme may be established as a delivery body independent of its parties and possessing its own structures and delegated powers, as with the Olympics and Crossrail. In addition, the principles of good governance of the management of projects and programmes will still be valid in governing the relationships between the parties and the programme.

Assuming that HS3 becomes a partnership, co-owned by the parties, the major challenge in this initial phase of the programme will be to establish the governance structures which will be needed to develop the programme and to see it to its delivery phase. The essential components of the governance structures, which are set out by the APM Governance SIG in ‘Co-Directing Change’, are:
  • Alignment between the parties, for a sound basis for multi-ownership of the programme
  • Sponsorship of the programme within the owning organisations
  • The team responsible for managing the programme should be capable of achieving the defined objectives
  • Disclosure and reporting both supports the programme without compromising effectiveness, and complies with the parties’ governance codes, including independent assurance
  • There should be clarity about the benefits and potential risks of the programme, including where these change
  • Arrangements should be in place to cover parties joining the programme, and subsequent changes including leaving.
The government and the other parties can call on experience of delivery of successful major projects, to guide HS3. These include the 2012 Olympics (although it might be best to draw a veil over cost estimating), T5 and, so far, Crossrail. Lessons learned from previous projects (such as the FiRE Control project, which according to the NAO wasted £469m) should be applied, and provision should be made at an early stage to control against the expected benefits on which the business case will have been approved.

Peter Deary MAPM, Committee Member, Governance SIG

Around the World of Governance

Lord Browne...
recently stepped down from his role as the most senior business advisor to government. He has, though, voiced his high regard for good governance, project thinking and inclusive approach to leadership. He singled out the need to inject more private sector rigour into the design of major projects.

The PMI Pulse Survey of 2014 ….
highlighted core governance issues and suggested that organisations might assign a Chief Strategy Officer (CSO) to oversee strategy development supported by a high performing PMO - after all, strategic change happens through programmes and projects. The survey went on to report some interesting governance statistics:

  • High-performing organizations successfully complete 89% of their projects, while low performers complete only 36% successfully. This difference in success results in high-performing organizations wasting nearly 12 times less than low performers.
  • Projects and programs that are aligned to an organization’s strategy are completed successfully more often than projects that are misaligned (48% versus 71%).
  • Just 42 % of organisations report having high alignment of projects to strategy.
  • Actively engaged sponsors is the top driver of project success. Despite this fewer than two in three projects have actively engaged sponsors
  • High benefits realisation maturity is inextricably linked to the success of projects - and strategic initiatives. Despite this, fewer than one in five (17%) organisations report high benefits realisation maturity.
Margaret Hodge MP addressed a conference on “Governing Mega Projects”...
on 16th October. The conference was hosted by University of Central Lancashire (UCLAN) and focused on governing mega-projects, which included insight and presentations from academics, practitioners, consultants and even politicians!
The conference looked at the challenges and approaches to governing highly complex projects and how they contribute to public value. Lots of the sessions explored what was meant by a mega-project, governance and public value. The conference looked at projects such as the Apollo Moon Landings, The 2012 Olympic Games and Nuclear
De-Commissioning.

A common occurrence through the conference was the reference to APM derived guidance - the APM BoK v6 (definition of governance), Directing Change (principles of the governance of project management) and
Co-Directing Change (how to govern multi-owned projects, which is a common factor in mega-projects). The event was well represented by APM corporate members too with Sellafield Ltd and Outperform UK Ltd among corporate members who shared insight into the topic.

The highlight of the event though was a video address by Margaret Hodge MP, the current Chair of the Public Accounts Committee (PAC). She shared her thoughts on why many publicly funded projects struggle and what can be done to remedy them. Issues included the lack of skills and experience of senior civil servants to lead mega-projects, the practice where senior civil servants rarely stay in the same post for more than 2 years (continuity of project sponsors is a key factor in success) and a lack of appropriate data to monitor project progress. Remedies included getting better involvement of the private sector through increased competency to commission work, improved transparency (e.g. making private sector organisations who deliver public projects subject to the Freedom Of Information act), improved ethical standards by contractors and proper competition.


Andy Murray Committee Member, APM Governance SIG

CrossRail Governance

“Governance of projects matters because there is a strong correlation between good governance and project success” said Martin Buck, Crossrail Transition and Strategy Director speaking at the APM Governance SIG meeting on 17 December 2014. Martin gave plenty of food for thought to the large audience that attended.  More detail and photographs can be viewed at the GovSIG blog.
                                         
Crossrail is often cited as one of Europe’s largest projects. Having spent more than 3 years being considered by parliament through a ‘hybrid bill’, permission was finally granted in July 2008 and the main phases of the project started in 2009. The project is being delivered by Crossrail Ltd (CRL), a fully owned subsidiary of TfL.
                                                 
Critical to the success of the project is the governance arrangements to enable CRL to make decisions on behalf of funders and stakeholders. The project has gained much praise from both industry and government, with a report from the National Audit Office (NAO) recently commending the management approaches adopted by CRL. Read the NAO report here http://www.nao.org.uk/wp-content/uploads/2014/01/Crossrail.pdf

Martin stated that for major infrastructure projects good governance is about achieving a balance between the natural desire of sponsor(s) to retain control, and the need of the delivery team to have sufficient freedom to allow it to manage the risk to meet the project objectives.

Martin spoke of the five areas of governance to consider in designing the model for a project:

1. Where does accountability (and risk) lie?
2. Authority levels – who has the authority to commit what?
3. Alignment - Are the project objectives and goals aligned with business success and benefits?
4. Disclosure - How is the project reported on and communicated to the key stakeholders?
5. Scale and complexity – are these matched?

One of the core principles of the governance structure for Crossrail is the clear separation of the sponsor group (or commissioning body), the delivery body (or executing body) and the users.  This is vital as some organisations, e.g. TFL, have a role in each of these elements so clarity of reporting and accountability line is essential.  CRL has put prominence on core governance principles.

A novel part of the governance structure was the signing of a Project Sponsor Agreement (between the two funders), followed by a Project Development Agreement (between the Sponsoring Group and the Delivery Body) and a Stakeholder Agreement.  This triangulation was built on the previous governance model used by the Channel Tunnel project.  These agreements brought the key parties together for the project.

The key governance lessons learned to date include:

1. Be clear of the importance of governance for project success
2. Clarity of governance structure and roles
3. Sponsorship Agreements and their importance in relationship building and commitment
4. Provide funding certainty
5. Autonomy and delegation of power to manage risk and take decisions – but mature over time
6. Project champions both political and financial
7. Disclosure and transparency.

Andy Murray, Committee Member Governance SIG
Amerjit Walia, Committee Member Governance SIG


Book Reviews



‘The Blunders of our Governments’, Authors: Anthony King and Ivor Crewe













Oneworld Publications, September 2013
Paperback Revised Edition – September 2014


Blunder: a stupid or careless mistake. This book, written by the distinguished political observers Anthony King and Ivor Crewe, catalogues some of the blunders our governments have made over the past three decades, many of which have related to projects. In the case of projects, the common factor is that problems have occurred where project governance is most vulnerable, at the interface between political policy and management of the project. They identify the failings of the systems of government which have allowed such blunders to arise and to run unchecked.

The authors are not politically biased – for every Metronet fiasco under the last Labour government, they record a Poll Tax under the previous Conservative administration; and they make the point that governments of both parties appear to blunder in much the same way. Blunders are not confined to the public sector – they give the examples of Lehman Brothers, or the the break-up of GEC, caused by the successors to Arnold Weinstock from the 1980’s onwards.

As causes of blunders, the authors have identified cultural and operational disconnects, group think, and prejudices and pragmatism in the category of ‘Human errors’. In the category of ‘System failures’ they point to a lack of accountability, the wonderfully-named ‘asymmetries of expertise’, and deficits of deliberation. In particular, they point out that

‘...to put it politely, the performance of successive British governments in negotiating contracts and managing projects has not been entirely satisfactory’.

Tellingly, they note that many projects appear not to have been thought of in that sense; and that even where they were, they were not professionally governed or managed as such. Hanging over these is the influence of HM Treasury, and politicians not understanding what good governance looks like - either giving insufficient support and direction, or micro-managing schemes.

The Major Projects Authority and the Implementation Unit have been established, and it is to be seen whether they are better able to protect governments against the consequences of their own actions, and achieve project benefits. The authors recognise the virtue of the idea by which policies can be scrutinised before the implementation processes begin - to review the practicality of proposed policy.

There have been successes: HS1, London 2012 and Crossrail (so far) come to mind, noting that politicians had (in effect) been excluded from being involved in the management of these schemes through suitable governance structures, good leadership, and strong sponsorship arrangements.

The best place to read this book is from behind the sofa, with your hands over your eyes. By naming one of the section headings ‘Horror stories’, the authors acknowledge that Stephen King should have been invited to contribute!

Peter Deary MAPM, Committee Member Governance SIG

GovSIG - What's On?
When What
Wednesday 11th February Review of latest draft of Co-Directing Change (London)
Thursday 9th February Agile Governance - a sneak preview of the new slim quide from GovSIG (Edinburgh)
Wednesday 25th February Lessons of governance from the NAO (London)
Wednesday 11th March "Meet the Committee" (London)
Tuesday 24th March Agile Governance (Leeds)

Comments and feedback

The Governance SIG would appreciate any comments or feedback you have on our newsletter – let us know whether it was useful, and what you’d like to see in future editions. Email the newsletter editor.

Unsubscribe

Association for Project Management
Ibis House, Summerleys Road
Princes Risborough
Bucks, HP27 9LE

t: 0845 458 1944
f: 0845 458 8807
e: info@apm.org.uk
w: www.apm.org.uk