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Project governance is the management framework within which project decisions are made. Projectgovernance is a critical element of any project since while the accountabilities and responsibilitiesassociated with an organizations business as usual activities are laid down in their organizationalgovernance arrangements, seldom does an equivalent framework exist to govern the development ofits capital investments (projects). For instance, the organization chart provides a good indication ofwho in the organization is responsible for any particular operational activity the organizationconducts. But unless an organization has specifically developed a project governance policy, no such

chart is likely to exist for project development activity.

Therefore, the role of project governance is to provide a decision making framework that is logical,robust and repeatable to govern an organizations capital investments. In this way, an organizationwill have a structured approach to conducting both its business as usual activities and its businesschange, or project, activities.

Three pillars of project governance

The decision making framework is supported by three pillars:

y StructureThis refers to the governance committee structure. As well as there being a Project Board or ProjectSteering Committee, the broader governance environment may include various stakeholder groupsand perhaps user groups. Additionally, there may be a Program Board, governing a group of relatedprojects of which this is one, and possibly some form of portfolio decision making group. Thedecision rights of all these committees and how they relate must be laid down in policy andprocedural documentation. In this way, the projects governance can be integrated within the widergovernance arena.

y PeopleThe effectiveness of the committee structure is dependent upon the people that populate the variousgovernance committees. Committee membership is determined by the nature of the project - other

factors come into play when determining membership of program and portfolio boards - which inturn determine which organizational roles, should be represented on the committee.

y InformationThis concerns the information that informs decision makers and consists of regular reports on theproject, issues and risks that have been escalated by the Project Manager and certain key documents

that describe the project, foremost of which is the business case.

Core project governance principles

Project governance frameworks should be based around a number of core principles in order to

ensure their effectiveness.

Principle 1: Ensure a single point of accountability for the success of the project

The most fundamental project accountability is accountability for the success of the project. A projectwithout a clear understanding of who assumes accountability for its success has no clear leadership.With no clear accountability for project success, there is no one person driving the solution of thedifficult issues that beset all projects at some point in their life. It also slows the project during thecrucial project initiation phase since there is no one person to take the important decisions necessary

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to place the project on a firm footing. The concept of a single point of accountability is the first

principle of effective project governance.

However, it is not enough to nominate someone to be accountable the right person must be madeaccountable. There are two aspects to this. The accountable person must hold sufficient authoritywithin the organization to ensure they are empowered to make the decisions necessary for theprojects success. Beyond this however is the fact that the right person from the correct area within theorganization be held accountable. If the wrong person is selected, the project is no better placed thanif no one was accountable for its success. The single person who will assume accountability for the

success of the project is the subject of Principle 2.

Principle 2: Service delivery ownership determines project ownership

Organizations deliver services and utilize assets as platforms for the delivery of these services. It istherefore critical that the assets delivered by the project meet the service delivery needs of theorganization. If the project outputs do not support service delivery needs, as detailed in the businesscase, to be met in full, the project has to some degree failed it has not achieved optimum value formoney.

The only sure method of ensuring project outputs meet service delivery needs is for ownership of theproject and its business case to reflect service delivery ownership. This is the second principle ofeffective project governance.

The organization chart is normally sufficient to identify who in the organization is accountable for thedelivery of the service that the project will enable. It is important that the project owner, in theirservice delivery role, is as close to the service being delivered as possible. The corollary to this is thatthe ownership of the project does not reside with those delivering the asset. While the asset may becentral to the provision of the services, it does not in itself constitute the service. This concept hasimplications in important aspects of the project. For instance, a service delivery focus necessitates awhole-of-life cost perspective since the service itself will have an associated ongoing, post-project,operational cost. A service delivery focus also recognizes that at commissioning the asset mustintegrate into the existing service regime. On the other hand if a project is viewed as delivering an

asset, the focus is on the capital cost of the asset and operational costs become a secondaryconsideration as does serviceability of the outcome.

The intention therefore is to determine the ownership of the project by identifying the owner of theservice the project will deliver. This approach places the business at the heart of project delivery.While the business may be unable to deliver the project without assistance, it never-the-less is in therole of primary project decision maker, albeit supported as necessary by project delivery specialists.

This ensures the project governance framework maintains a service delivery focus.

Principles 1 and 2 are focused on the project's major stakeholder the owner of the project. Projectshave many stakeholders and an effective project governance framework must address their needs.

The next principle deals with the manner in which this should occur.

Principle 3: Ensure separation of stakeholder management and project decision making activities

The decision making effectiveness of a committee can be thought of as being inversely proportional toits size. Not only can large committees fail to make timely decisions, those it does make are often ill

considered because of the particular group dynamics at play.

As project decision making forums grow in size, they tend to morph into stakeholder managementgroups. When numbers increase, the detailed understanding of each attendee of the critical projectissues reduces. Many of those present attend not to make decisions but as a way of finding out what

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is happening on the project. Not only is there insufficient time for each person to make their point,but those with the most valid input must compete for time and influence with those with only aperipheral involvement in the project. Further not all present will have the same level ofunderstanding of the issues and so time is wasted bringing everyone up to speed on the particularissues being discussed. Hence, to all intents and purposes, large project committees are constitutedmore as a stakeholder management forum than a project decision making forum. This is a major issuewhen the project is depending upon the committee to make timely decisions.

There is no question that activities, project decision making and stakeholder management, areessential to the success of the project. The issue is that they are two separate activities and need to betreated as such. This is the third principle of effective project governance. If this separation can beachieved, it will avoid clogging the decision making forum with numerous stakeholders byconstraining its membership to only those select stakeholders absolutely central to its success.

There is always the concern that this solution will lead to a further problem if disgruntledstakeholders do not consider their needs are being met. Whatever stakeholder managementmechanism that is put in place must adequately address the needs of all project stakeholders. It willneed to capture their input and views and address their concerns to their satisfaction. This can beachieved in part by chairing of any key stakeholder groups by the chair of the Project Board. Thisensures that stakeholders have the project owner (or SRO) to champion their issues and concerns

within the Project Board.

Principle 4: Ensure separation of project governance and organizational governance structures

Project governance structures are established precisely because it is recognized that organizationstructures do not provide the necessary framework to deliver a project. Projects require flexibility andspeed of decision making and the hierarchical mechanisms associated with organization charts do notenable this. Project governance structures overcome this by drawing the key decision makers out ofthe organization structure and placing them in a forum thereby avoiding the serial decision making

process associated with hierarchies.

Consequently, the project governance framework established for a project should remain separate

from the organization structure. It is recognized that the organization has valid requirements in termsof reporting and stakeholder involvement. However dedicated reporting mechanisms established bythe project can address the former and the project governance framework must itself address thelatter. What should be avoided is the situation where the decisions of the steering committee orproject board are required to be ratified by one or more persons in the organization outside of that

project decision making forum. This is the final principle of effective project governance.

Adoption of this principle will minimize multi layered decision making and the time delays andinefficiencies associated with it. It will ensure a project decision making body empowered to makedecisions in a timely manner.