How Governance Can Help an Organization Add Value

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Organizational leadership who recognizes the value of establishing a project management program within their culture will gain a significant edge over their competitors who can’t. Project Management Offices (PMO) in any organization should be modeled to fit the culture, achieve business needs and be aligned with the leadership vision to be successful. This form of governance can add significant value to an organization, if set up correctly.

Let’s look at how a PMO can add governance and the benefits they offer to the organization.

governance when managing a project

A model PMO should:

  • champion the demonstration of the value of the project management profession
  • effect the bottom line
  • establish cross organizational relationships to foster partnerships to achieve change
  • help realize return on investment
  • establish a competitive edge for the organization
  • create repeatable best practices
  • instill motivation for a high performing organization

A PMO model may consists of a a variety of project manager roles—PMO Manager, Program & Project Managers (PM)—along with support staff in order to manage the organization’s projects. Thus it must have some form of “authority.” The organization will continue to manage projects ineffectively if no governance structure is setup. The ole adage “You can’t manage it, if you can’t measure it,” is true especially in a PMO.

Setting up Authority for the PMO

Now, I did not say, that projects can’t be managed and succeed without governance. If the PMO were to have more “authority,” it would be able to better leverage the true value it has to offer. Perhaps, the words we might be referring to for governance come in the form of a policy, executive order or management memo, which basically says: “The PMO will perform X functions, PM will manage all projects, standard methodologies will be used, all projects will be reported to the PMO by submitting project management plans and lessons learned, etc.”

A PMO will struggle to show quantifiable “value” if it has no authority over the organization buying in to participate to gather data a Project Manager must have to implement its most powerful program or branch: “Portfolio Management.”

I argue that most, not all, projects have some information technology element to them. A PMO Project Manager may manage or collaborate to manage the project and/or product management lifecycle of a project. Effective governance of one or more PMOs in an organizations will be done through partnership between the Business and Information Technology (IT) teams.

Jeff Kaplan wrote an excellent book called Strategic IT Portfolio Management which provides executives with the tools to: illuminate, assess and improve existing practices; design a governance structure and allocate appropriate decision rights; ensure centralized control with decentralized execution; increase collaboration between business-unit and IT leadership; and instill a culture of continuous improvement and innovation.

Wikipedia states that IT Portfolio management is distinct from IT financial management in that it has an explicitly directive, strategic goal in determining what to continue investing in versus what to divest from. PMOs and Portfolio Management done right will add value.

What is Governance?

The definitions of governance much less project governance are wide and varied. 

  • Rodney Turner (2006) suggests that governance of a project involves a set of relationships between the project’s management, its sponsor (or executive board), its owner, and other stakeholders.” Turner’s definition quoted in an abstract called Governance Rules! by Éamonn V. Kelly.
  • Glen B. Alleman, in a presentation called Project Governancedefines “Project Governance as the framework which ensures the project has been correctly conceived and is being executed in accordance with best project management practice within the wide framework of the first of the organizations governance processes. Effective project governance ensures projects deliver the value expected of them. An appropriate governance framework ensures that all expenditure is appropriate for the risks being tackled.”    

PMI Reports on the Value of Project Management

The Project Management Institute’s (PMI) recently released a comprehensive report for 2015 “Pulse of the Profession; Capturing the Value of Project Management.” It is an annual benchmark report for organization, project, program, and portfolio management. 

First the good news: over half of all organizations globally (55%) fully understand the value of project management (high performing). These high performing organizations that embed a project management mindset in their culture create a sustainable competitive advantage of which two-thirds of projects are successful. The needle has not shifted on this data since 2012; clearly there is room for improvement. 

The Governance Gaps

Project executives, sponsors and project managers are challenged managing performance with today’s organizational complexity, disruption in IT impacting the business enterprise and rapid organizational change to meet consumer demand for products and services. Our economic recovery is at a tipping point but over the last two years, Project Management Institute’s (PMI) Pulse of the Profession report suggests project governance has not improved. Unfortunately, the bad news is that approximately one third (36%) of all organizations fully understand the value of project management (low performing).

Why is project and portfolio governance so hard to get right? According to PMI’s “Pulse of the Profession Report: Capturing the Value of Project Management,” many organizations today still don’t understand the value of project management as an essential business capability of implementing strategic initiatives which are projects and programs. In fact; data in PMI’s report indicate that for the last two years still shows that “$109 million for every $1 billion spent on projects/programs is still being wasted due to poor project performance.”   

You may need to take a hard look at your organization, programs and portfolio practices, process and culture. Are you focusing on the right approach and strategy to align your project, program and portfolio? Below are some of the common signs and symptoms that your governance approach and strategy are not in alignment.

  • Lack of clear link between project and strategic plan initiatives, including key performance indicators
  • Lack of clear senior management and leadership
  • Lack of effective engagement with stakeholders
  • Lack of skills and proven approach to project management and risk management

Path Forward for Improvement

In my research through PMI Pulse of the Profession for 2015, three themes emerged that forecast the path for organizations to improve governance at all layers from project, program to portfolio. 

Theme One:  Fundamental and Foundational Best Practices

The core of this transformation demonstration by high performing organizations is fundamental and foundational practices.  Overall the fundamentals begin with culture, talent and processes and adopting these best practices below will support excellence in project, program and portfolio management: 

  • Fully understanding the value of project management
  • Having actively engaged executive sponsors
  • Aligning projects to strategy
  • Developing and maintaining project management talent
  • Establishing a well-aligned and effective PMO (project management office)
  • Using standardized project management practices throughout the organization
  • Knowledge transfer
  • Risk Management
  • Agile
  • Benefits realization

Theme Two: Organizational Agility

Project management is creating value by delivering results and outcomes through people. Organizations should focus on their ability to lead change, adapt to changes in the marketplace and tie that back to their organizations strategic vision. Organizations will derive greater project success and create a competitive sustainable advantage over other competitors in the marketplace by adopting these best practices below:

  • Knowledge transfer
  • Risk Management
  • Agile
  • Benefits realization

Theme Three: Reduce Organizational Complexity

Performance will be your differentiator to navigate complexity. These three areas of focus will be the keys to your success to make the chaos simple:

  • Grow a culture focused on project/program management including sponsor engagement
  • Grow your internal talent and focus on leadership skills
  • Improved communication with all stakeholder groups

Clearly, these three themes reflect a need for governance with a strategic approach, project/program managers and sponsor involvement from concept to delivery and reduce complexity; simplify the framework for your projects and programs. 

Views from the PM Community

During my research I reached out to a few project management thought leaders on twitter to get the pulse from our community. 

Todd Williams, author and blogger wrote a recent blog post titled “Executives and Project Success” that talks about a project drift (loss of focus, transparency, engagement) that can occur called The Shiny Ball Syndrome”:

“Simply put, governance exists so that project executives (sponsor, PMO Director, program management, CEO) focus should be to monitor and guide the project so value is delivered while the project manager leads the project team to deliver the approved scope and schedule that meet customer needs.”

It’s clear that there is a gap, I’ll call it a gray area, it’s the elephant in the room no-one wants to talk about. Executives and project managers’ roles could not be more different and when the dynamics of the organization and project executive team are not in sync projects and portfolios suffer failures and waste. 

Trevor Nelson, Board Chair of PM4NGO (Project Management for Non-Government Organizations) also echoed these sentiments: 

“All too often we hear stories of failed projects, or projects that ran off the rails and it was too late to course-correct. Upon further review we rarely find that these events just ‘happened’. There were always signs along the way that the project was starting to fall into trouble, but they went ignored or unheeded.  More rigor into what governance is, why we do it, and how we do it will go a long way in improving project results.” 

Robert Kelly, of Kelly Project Solutions,; also brought up the fact that organizations “may not be hiring project management talent and may lose perception of value. Until we close the gap in hiring process we will continue to swim upstream.”

Project management will create value by delivering results and outcomes through people.  High performing global organizations are setting an example for delivering value and sharing their best practices.  It’s been my experience and philosophy that projects are a place for innovation, change and leadership that may include failure and success along the way.  Failure is our driver to innovate, drive change aligned with strategic goals and use our leadership to experiment, learn, change and improve within the boundaries of the corporate culture.

One thing that’s certain, you need tools to have governance over your project, and ProjectManager.com offers you the best suite of software features to address the various fronts you’re constantly working on. See for yourself by taking a free 30-day trial run.

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