Is Project Governance to Blame for Failed Projects?

A recent paper at the PMI Global Congress¹ reports a growing trend for project governance to be the root cause of many project failures. But is this fair? And what is meant by ‘project governance’ when allocating blame?

Project Governance is a vague term at best. The PMI suggests two different definitions, depending on the context of either project & program level or organisational level governance. Project level governance is the combination of methodologies, processes and compliance that the organisation requires for significant projects. Organisation level governance is the combination of processes and decision making above the project managers authority level aimed at ensuring that key projects deliver the strategic value expected from them.

The critical issue for many organisations is to ensure that the two levels of governance are appropriate to the projects undertaken and are aligned correctly so that they support each other. A common reason for governance contributing to project failure (or at least underperformance) is that without alignment the two levels of governance can conflict with each other and weaken the organisation’s ability to select and deliver high value project results. The PMI Practice Guide for Governance² reports that many organisations ‘do not have a consistent approach to portfolio, program, and project governance’.

In principle, the process of aligning project governance should be straightforward and can be expressed as a simple checklist in relation to significant projects:

1. Projects that enter the organisation’s portfolio have clearly defined and appropriately measured KPIs (Key Performance Indicators) that link the project’s performance to the expected contribution to the organisation’s strategy.
2. Projects are managed (defined, estimated, planned, monitored, reported, etc.) according to clearly documented, appropriately scalable and regularly audited methodologies.
3. There are clearly defined roles, responsibilities and processes for organisational governance which will mainly focus on maintaining confidence that projects will deliver the expected results as targeted in their strategy KPIs.

So, what kind of problems might we see in an organisation where governance levels are not aligned?

Firstly, projects may not be subject to a rigorous process which ensures that their expected contribution to organisational strategy is defined and measurable. Typical reasons may include: invalid assumptions (‘Of course this project will reduce production costs’); overconfidence (‘This type of project is always profitable’); or even political agendas (‘If we link the project to compliance, no-one will challenge it’). Failure to achieve the first checklist item has the potential to significantly limit the value of both project and organisation level governance. In addition, it will make it difficult to measure the effect on the overall value of the portfolio results from projects either under or over performing compared with initial expectations. Consistency of portfolio project results is an important first step to improvement of overall portfolio performance.

Even if a project enters the portfolio with a high potential of achieving the expected contribution to organisational strategy, it still needs to be managed in a controlled and consistent way. In an ideal world, all of the components of the organisation’s project management methodology would be so clearly helpful to successful project delivery that project teams would apply them simply for that reason. There are several common problems in achieving the second checklist item.  These can include:

• non-scalable processes – A ‘one size fits all’ approach that is not rigorous enough for larger, more risky or complicated projects and creates low value ‘process overheads’ for smaller, simpler ones.
• Lack of commitment from project teams – If the mandated processes or tools are too complicated, time-consuming or key staff are not trained to use them correctly, then project teams will either find short cuts or (worse still) use them incorrectly or partially, without this being apparent to governance roles outside the team. This is one of the best reasons to ensure that process design and auditing involve two-way feedback to ensure optimisation.
• Lack of support from functional staff –Some key methodology components (such as estimating, risk management and change control) assume access to, and supporting resources from, functions including finance, procurement, legal and contract management. If this support is not provided, project teams may again resort to the behaviours above.
• Lack of support from senior management – Commitment and support to required methodologies from staff will be difficult to maintain if there is not a firm, visible and consistent requirement for their use from senior management. This will sometimes need to override pressure for immediate or favourable estimates, the setting of unreasonably aggressive targets or the desire for approval of projects within the senior manager’s domain.

So, the organisation may be able to ensure strategically justified projects are selected and subsequently managed through appropriate and effective methodologies. The final hurdle is for the organisational level of governance to result in good decisions on whether to continue to support projects when the accuracy (or otherwise) of the estimates and plans becomes better understood as the life-cycle progresses – and when to require realignment if strategy, funding or other resource availability may change.

It’s important to remember that although project teams and support functions may be highly experienced and familiar with project level governance, the senior managers required to carry out organisational level governance might only do so as a small proportion of their overall responsibilities. Additionally, while detailed documentation and professional training are usually provided for project level staff – they are much less commonly available for the top-level governance teams.

Done well, organisational level governance (including stage-gate processes and steering groups) will play a key role in maximising the strategic contribution and ROI of projects. Senior staff involved will fully understand and fulfil their roles, balance suitable levels of challenge and support, and deliver accurate risk and opportunity-based decisions. Symptoms of problems with organisational level governance may include:

• Steering committees over-managing projects by introducing unplanned changes, overruling project team decisions or not being supportive of transparent risk reporting.
• Inefficient stage-gate decision meetings, resulting from insufficient information being sought or provided, lack of clear decision-making authority matrices or failure to support a suitable level of project audits and reviews pre-gate.
• Failure to measure consistency and achieve improvement in overall project delivery performance

References

1. Alie, S. S. (2015). Project governance: #1 critical success factor. Paper presented at PMI® Global Congress 2015—North America, Orlando, FL. Newtown Square, PA: Project Management Institute.
2. Governance of Portfolios, Programs, and Projects: A Practice Guide (2016).

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