Project Governance Structures
Governance might be one of the drier subjects in project management but it’s also one of the most important. It’s the way that senior management knows that their teams are doing a good job, and it reassures them that the project is unfolding as it should. It also provides the checks and balances necessary for managers to know that money is being spent in ways that are appropriate and aligned to the business case.
Ultimately, it is the project sponsor’s responsibility to ensure that there is adequate governance, but project managers can also take an active role in this. Whatever your role, it helps to understand project governance and how it helps teams achieve their goals.
Defining Project Governance
"Governance," in project management terms, refers to the policies, processes, standards, procedures, and guidelines that determine how projects are led, run, and controlled by your organization. It is the framework within which a project progresses. It includes the financial aspects of the project, as well as the logistics, personnel, and materials related to the project.
Governance can be extensive and "heavy," with lots of bureaucracy, or "light," with minimal oversight. Managers should aim for the right level of governance for their environment and culture. Making sure your governance policies fit the purpose of the project is a key factor in ensuring that they are effective.
Governance starts at the top. In large companies, this should include a commitment to the project governance guidelines from the company board. The attitude and standards that are expected by the board members will filter down to project boards, project leaders, and teams.
Why Project Governance Matters
Your project sponsor and other key stakeholders want to know that you are spending the project budget the right way. They want to see that you are tracking your project’s progress effectively and stepping in to manage project risk as necessary—but the rationale for good project governance goes further than that.
Governance isn't just an internal issue. Governance is demanded by clients, especially those in the public sector. Governments and regulators ask (and in some cases, enforce) certain standards for certain projects. Many companies must adhere to guidance from external legislation, like Sarbanes-Oxley law, which was passed in 2002 to require that companies take certain steps to ensure accurate audits, accountability, and transparency. Strong project governance is just one small way to prove that your company operates effectively and within the specified guidelines and regulations for your industry.
Project governance also helps you:
- Improve your return on investment and track those investments effectively
- Gain buy-in for projects
- Avoid common causes for project failure by creating more opportunities to recognize them early on in the process
- Communicate more effectively
- Introduce standardization across projects, making it easier to compare the performance
- Minimize risk
- Develop and motivate staff in a structured environment
What Project Governance Looks Like
So what does good project governance look like on a project? You will recognize certain activities and qualities when a project has proper governance.
There is a disciplined project management life cycle that includes defined points for approval. These are points where the viability of the project is discussed and a decision is made as to whether to continue with the work or not.
Projects have a clear business case, and business cases have enough information to enable management teams to make the right decisions. Those decisions are adequately documented and communicated.
People working on projects have defined roles and responsibilities. Individuals that make up the project team are experienced and qualified in their relevant roles. Processes and procedures should enable project teams to review their project and to ask for independent support if required.
There is a culture of continuous learning that allows project teams to continuously improve and to discuss lessons learned in a blame-free environment.
Stakeholders are engaged and they trust the process. The governance of a project is linked to the governance structures in the organization overall. The main aim of project governance is to ensure that projects are carried out in the right way, which is intrinsically tied to the financial governance at a corporate level, corporate risk management, and more.
Project governance should fit seamlessly into your current organizational processes. In other words, don’t create a brand new financial management process when you already have one that works in other areas! Use what currently exists and tweak corporate processes to make them suitable to use in a project environment.
5 Areas of Focus for Project Governance
When you start looking into it, you’ll realize that project governance is pervasive through all the elements of project management. However, there are some key focus areas where governance is particularly relevant.
- Methodologies and processes: These help you deliver work reliably and sustainably.
- Knowledge management: This is crucial for ensuring that the organization learns from project experience. Knowledge management is essential if you want to stop making the same mistakes multiple times.
- Project management maturity: As your organizational project management matures through experience, so will your ability to deliver successfully.
- Senior-level buy-in: The commitment to project governance starts at the top. If you have management support, this will cascade down through all levels of the business and the approach to governance will be more sustainable.
- Supportive culture: A culture of support, not blame, will ensure project managers have the right environment in which to thrive. A supportive culture, led by the project management office or project director, will help project managers reach their goals and those of the project.
What to Do If There Is No Corporate Standard
Many project managers in smaller organizations find themselves running projects in an environment that is supportive, and where there is buy-in for the concept of project management, but there's a lack of formal organizational structures from which to feed off.
In that situation—which isn’t exclusive to small organizations—you’ll be designing your project governance model from scratch. If there isn’t a project governance approach that you can take off the shelf and fit your project, you’ll have to build your own.
That’s not as difficult as it might seem. Start with setting up the basics:
- Create a "roles and responsibilities" document.
- Make sure you have a project sponsor.
- Make sure you have a project board or steering group, and arrange regular meetings for which you take and distribute minutes.
- Set up a risk management process.
- Set up a change management process.
- Build points into your project schedule where you check the viability of the project against the original goals of the business case (the end of each stage of phase is the natural point to put these checks).