Governance means leadership – the steering and control that manages the assets of an organisation in the best possible way.
On an organisation-wide level, this means knowing the business goals and vision, and employing the strategies needed to get it there by:
- Defining the business case and choosing/prioritizing the right initiatives.
- Executing these initiatives, e.g. with projects and programmes.
- Making sure that the benefits from the initiatives are realised.
To succeed with this, an organisation needs to establish how decisions are made, which roles should be assigned at which decision point, and what information is needed to help take that decision.
Leading companies do this by establishing the following:
- A project policy that outlines on a company-wide level the importance of project management and how project decisions are to be managed.
- Guidelines for decision-making and structures for portfolio and project management.
- Roles and mandates within the organisation.
- Necessary documentation for making decisions including a business case the total life-cycle costs and revenues/benefits. (The project is usually a small part of the life-cycle cost.)
- Developing a business case, documenting the benefit owner and how the benefits are to be realised and measured.
- Metrics as well as actual measurements of how the company is succeeding with its initiatives.
- How to ensure continuous improvements of the processes.
Though the final responsibility for an organisation rests with the CEO, it is important to delegate and ensure that governance exists on different levels within an organisation. This is done by establishing the processes, procedures, roles and mandates for making decisions, as well as ensuring effective control within the organisation, at the same time as the CEO and the executives are governing the overall company.
The organisation’s executives assign ownership of processes or projects to specific individuals. This ownership may include having the authority to make decisions and manage in the best possible way.
While the overall responsibility resides with the exec, decisions and tasks will have been delegated to the designated owner, and effective monitoring and control will ensure that this ownership is exercised correctly.
Ownership however, means that the assigned individual becomes accountable for his or her decisions. This in turn means that a decision cannot be taken by a group – it is always the owner who is accountable for their decision.
This should be the norm in any organisation, with the possible exception of political bodies, a city council or a corporate board of directors – the bodies who take decisions by voting.
Governance in projects
From an organisational project management perspective, the word Governance could be interpreted as managing, controlling and administrating the organisation’s initiatives for changing and developing the business.
Examples of initiatives may be to develop new or modified products and services, develop new markets, or change the organisation and its support in the form of IT systems. This also applies to contractors or engineering firms who take on projects and assignments on behalf of clients.
From the perspective of the executive team, Governance includes defining and planning what should be done to achieve the strategies, long and short-term goals. It also involves evaluating and analysing different initiatives and deciding on which should be developed, in what order and when.
Once initiatives have been started they should be monitored regularly to ensure that they still contribute to the strategies and goals. Monitoring and control involves compiling information and communicating it to the different stakeholders.
Governance within project management can also be attributed to the following levels:
- Operative. The project manager decides on how to perform a project.
- Tactical. The project sponsor/owner monitors, controls and takes decisions regarding what the total project is to achieve and, not least, if the project should continue or not.
- Strategic. If the projects are grouped as a project portfolio, the portfolio owner takes decisions across its portfolio and decides which projects will be included and how they should be prioritised against each other to optimise the total result as measured against the strategies.
Finally, the executives of the organisation govern by allocating funds to different portfolios and to define goals and strategies for both portfolios and ongoing operations.
This is an excerpt from the book Governance, Project Portfolio Management and PMO – the art of creating value for organisations by Kjell Rodenstedt (currently only available in Swedish).
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