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Project Governance

Project governance can be regarded as a subset of corporate governance in relation to project activities; its precise scope, however, has as yet not been clearly established. According to Abu Hassim et al. (2011), project governance is a new concept and has only recently been explored by practitioners and researchers. They maintained that early studies have not provided theoretical frameworks to demonstrate the nature of project governance. Being an immature discipline requires researchers to approach the topic in a holistic manner by exploring underlying issues and developing models that are useful for practice.

One approach is to translate the generic principles of corporate governance to project governance. This would cover the expectations for conformance and performance at the project level. Senior management is used to the principle-based approach in their responsibility for corporate governance. Furthermore, principles provide the flexibility that allows them to use their judgements to design and implement effective and efficient processes and structures.

Williams et al. (2010) provided some guidance for constructing a more specific project governance framework by satisfying three main goals:

• Choose the right project. In today's turbulent environment organisations are advised to adopt a flexible, complementary and collaborative approach to project governance to gain most benefits from projects they initiate. Such an arrangement would enable organisations to realise value from projects instead of restraining their contribution by emphasising project control.

• Deliver projects efficiently. Project governance requires the alignment of project activities with organisational activities. It can therefore be viewed as a set of formal principles, structures and processes for undertaking and managing projects within the broader principles of corporate governance.

• Ensure that chosen projects can be sustained. Project governance should be perceived as an ongoing collaborative network structure between project and corporate management.

Behaviour-oriented view of project governance

Figure 3.2 Behaviour-oriented view of project governance

In a further approach project governance is closely aligned with project management. The approach can be behaviour- or outcome-oriented (Mueller, 2009). With the former, the organisation depends on the project adhering to established guidelines and relies on the team's competency to conform to standards and policies. In addition to project management are the processes for managing the project portfolio and programmes and the Project Management Office (PMO). They have different objectives. Project portfolio management aims to choose the right projects for the organisation; project programme management seeks to deliver them effectively as a set of projects, and the PMO sustains projects by prescribing standards and best practice. These activities can be linked to the aims of corporate governance and the activities of project management as shown in Figure 3.2.

By contrast, the outcome-oriented perspective provides the project team with flexibility as long as agreed project objectives are achieved. Project management is perceived as a core competency within the organisation and project managers play a key role in project governance. According to Abu Hassim et al. (2011) the essential requirements are transparency (by providing a tangible and understandable link between what is being done, how it is being done and the project outcome), accountability (for project management) and establishing relationships (between internal and external parties). Williams et al. (2010) concurred with the criteria of transparency but defined it as being open to scrutiny and being candid about decision-making, and added learning and willingness to change. Figure 3.3 provides an overview of the outcome- oriented view of project governance.

PROJECT GOVERNANCE VERSUS PROJECT MANAGEMENT

The differentiation between project governance and management is not always dear. For example, research by Marnewick and Labuschagne (2011) found that the terms are used interchangeably. On the other hand, Sharma et al. (2009) emphasised that project governance and project management are closely related but not identical. Peterson (2003) separated the concepts in terms of their scope and focus.

Traditionally, a distinction is made between management and governance. Management focuses on the current and internal aspects of the organisation (i.e. efficiency), while governance focuses on the dual demands of future and external requirements (i.e. effediveness). This view can be applied to projects. Projed management takes a narrow perspective of managing the internal activities of a spedfic project at a spedfic moment in time. By contrast, project governance takes a broader perspedive by identifying projects that best meet market needs as they arise.

Outcome-oriented view of project governance

Figure 3.3 Outcome-oriented view of project governance

The primary role of project management is to deliver the objectives of the project on time and within budget as a matter of efficiency ('doing things right'). Project governance seeks to achieve organisational objectives effectively ('doing the right things') and is measured by business success criteria, such as increased profits or market share. It has evolved to a broad, strategic approach while project management has a narrow, operational approach. Project governance requires skills in organisational leadership to achieve its objectives and is carried out by executive management who report to the board of directors. Project management requires skills of a technical nature, such as project scheduling, and is carried out by middle management who report to senior management. Table 3.1 summarises the features that distinguish project management from project governance.

Table 3.1 Distinction between project management and project governance

Dimensions

Project Management

Project Governance

Scope

Narrow, internal, current

Broad, external, future

Primary role

Deliver project objectives efficiently

Deliver organisational objectives effectively

Outcomes

Project deliverables

Business performance

Measures

On time and budget

Business success

Focus on

Technical issues

Strategic issues

Skill required

Project management

Organisational leadership

Responsibility of

Middle management

Executive management

Responsible to

Executive management

Board of directors

Compliance with

Project management standards

Governance principles

In summary, project governance is concerned with project completion but goes beyond this by also considering overall business success. Due to its newness, organisations may find project governance to be weak but project management to be strong (Sharma et al. 2009). Project management has been practised over many years and its tools and techniques are mature. This is not the case with project governance, where processes and structures are still evolving.

Checklist: How Well Established is Project Governance?

• How well is the concept of project governance understood?

• Has the scope of project governance been determined?

• Do principles of project governance exist in written form?

• How were project governance principles developed?

• How are project governance principles disclosed?

• Do the principles of corporate governance provide guidance to project governance?

• Does project governance aim to select the 'right' projects?

• Does project governance deliver projects efficiently?

• Does project governance sustain the chosen projects?

• Do project governance activities include internal and external stakeholders?

• Is project governance distinguished from project management?

• Are the differences understood?

• Does project governance support business objectives?

 
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