CHAPTER 18
GOVERNANCE OF THE
PROJECT-BASED
ORGANIZATION
We turn our attention now to the highest level of governance, where the board of directors takes an interest in the (key, large) projects taking place within the organization, where they:
Set objectives for those (key, large) projects.
Ensure people are appropriately empowered and motivated to enact the projects.
Ensure appropriate controls are in place to ensure the projects achieve their objectives, both for the delivery of benefit and consumption of resources—they need to do this both to ensure the projects are profitable and from a compliance perspective to meet their responsibilities to their shareholders.
Traditionally, boards of directors and senior managers have ignored projects, taking a greater interest in routine operations. Projects were something taking place in the skunk works, managed by geeks. But under modern compliance regimes boards are responsible for the performance of projects, and so they have to take an interest. The United Kingdom's Association for Project Management (APM) has a special interest group (SIG) looking at the governance of project management, with specific focus on the overlap between the board and project management.1 In the next section I give an overview of key points of this guide. I then further expand on three practices it recommends: audits, health checks, and end-of-stage reviews.
18.1 GOVERNANCE OF PROJECT MANAGEMENT
The APM guide suggests the aims of good corporate governance are to ensure
A1: A clear link between corporate strategy and project objectives:
In the definition of the project (Chaps. 2 and 5)
In the benefits and project governance roles (Chap. 15)
In portfolio and program management (Chap. 16)
A2: Clear ownership and leadership from senior management (Chap. 15)
A3: Engagement with stakeholders (Chap. 4)
A4: Organizational capability (Chap. 17)
A5: Understanding of and contact with the supply industry at a senior level
A6: Evaluation of project proposals based on their value to the organization not capital cost
A7: A focus on breaking down development and implementation into manageable (Part 3)
Principles of Good Governance
In order to achieve these objectives, the guide suggests eleven principles of good governance of project management:
P1: The board of directors must assume overall responsibility for the governance of projects. They have a duty under modern compliance regimes to be able to predict future cash flows of the business, and this requires them to be able to predict outturn cost and future returns for all large projects, programs, and portfolios.
P2: Roles, responsibilities, and performance criteria for the governance of projects (and programs and portfolios) must be clearly defined (Chaps. 15 and 16).
P3: Defined governance arrangements, supported by appropriate methods and controls, must be applied throughout the project life cycle.
P4: Members of delegated authorization bodies have sufficient representation, authority, competence, and resources to take the decisions for which they are responsible. Such authorization bodies include
Project or program steering committees, including sponsor, owner, steward, and project manager (Chap. 15 and 16)
The portfolio selection committee (Chap. 16)
P5: There must be a coherent and supportive relationship between the overall corporate strategy and the project portfolio (Chap. 16).
P6: The project business case must be supported by sound and realistic data so decisions can be based on the knowledge that predictions are valid and the board can meet its duties under the compliance regimes
P7: All projects must have an approved plan with defined authorization points where the business case will be reviewed and approved. Decisions made at the authorization points must be clearly recorded. In Chaps. 1 and 15 I have shown that during the project the project governance structure must be aligned with the project; that is, the project manager must be put in control and empowered to take decisions. Senior and functional management do not like this because they are ceding control to the project manager. But by having clear authorization points, they only have to cede control between authorization points. End-of-stage reviews can be used as authorization points.
P8: There are clearly defined key performance indicators for reporting project status and for escalating risks and issues to appropriate levels (Secs. 3.2 and 16.2).
P9: The board and its delegated agents decide when independent audits of projects, programs, and management systems is required and implement such audits as required (Sec. 18.2)
P10: Project stakeholders are engaged at a level that is appropriate for their importance and in a way that fosters trust and cooperation (Chap. 4).
P11: The organization fosters a culture of continuous improvement and frank discussion and project reporting. The organization aims to be a learning organization (Secs. 17.3 and 17.4) and avoid competency traps (Sec. 17.6) especially those associated with a blame culture.
Components of the Governance of Projects
The APM guide identifies four components of the management of project management:
Portfolio direction (PD)
Project sponsorship (PS)
Project management (PM)
Disclosure and reporting (DR)
Tables 18.1, 18.2, 18.3, and 18.4 show key questions under each component and the governance principles to which they are related.
Compliance
As I have said, because of the modern compliance regime, boards of directors and senior managers have to take a much greater interest in projects and project management than they have traditionally taken.2 Many of the principles of governance listed above are consistent with and supportive of the Sarbanes-Oxley Act 2002, as shown in Table. 18.5.
TABLE 18.1 Key Questions for Portfolio Direction (PD)
| |||
| Issue | Related | Related |
| |||
PD1 | Are the organization's financial controls, financial planning, and expenditure review processes applied to both individual projects and the portfolio as a whole? | P2, P3, P5, P8 | A6 |
PD2 | Does the organization discriminate correctly between activities that should be managed as projects and other activities that should be managed as nonproject operations? | P3 |
|
PD3 | Is the organization's project portfolio aligned with its key business objectives, including those of profitability, customer service, reputation, sustainability, and growth? | P5 | A1, A6 |
PD4 | Is the project portfolio prioritised, refreshed, maintained, and pruned in such a way that the mix of projects continues to support strategy and take account of external factors? | P5, P7 |
|
PD5 | Has the organization assessed the risks associated with the project portfolio, including the risk of corporate failure? | P5, P6, P7, P8 |
|
PD6 | Is the project portfolio consistent with the organization's capacity? | P5 | A4 |
PD7 | Does the organization's engagement with project suppliers encourage a sustainable portfolio by ensuring their early involvement and by a shared understanding of the risks and rewards? | P10, P8 | A5 |
PD8 | Does the organization's engagement with its customers encourage a sustainable portfolio? | P10 | A3 |
PD9 | Does the organization's engagement with the sources of finance for its projects encourage a sustainable portfolio? | P10, P5 | A3 |
PD10 | Is organization assured that the impact of implementing its project portfolio is acceptable to its ongoing operations? | P10, P11, P5 | A3, A4 |
| |||
TABLE 18.2 Key Questions for Project Sponsorship (PS)
| |||
| Issue | Related | Related |
| |||
PS1 | Do all major projects have competent sponsors at all times? | P1, P2, P3 | A2 |
PS2 | Do project sponsors provide clear and timely? | P3, P4 | A2 |
PS3 | Do sponsors devote enough time to the project? | P4 | A2 |
PS4 | Do project sponsors ensure that project managers have access to sufficient resources with the right skills to deliver projects? | P4 | A4 |
PS5 | Do sponsors own and maintain the business case, and are they accountable for realization of benefits? | P5, P6 | A1 |
PS6 | Do project sponsors hold regular meetings with project managers and are they sufficiently aware of project status? | P7, P8 | A2 |
PS7 | Are projects closed at the appropriate time? | P7, P8 | A1 |
PS8 | Is independent advice used for appraisal of projects? | P9 |
|
PS9 | Do sponsors adequately represent the project throughout the organization? | P10 | A3 |
PS10 | Are the interests of key stakeholders, including suppliers, regulators and financiers, aligned with project success? | P10 | A3 |
| |||
TABLE 18.3 Key Questions for Project Management (PM)
| ||||
| Issue | Related | Related | |
| ||||
PM1 | Is the board assured that the organization's project management processes are appropriate for the projects that it sponsors? | P1, P3, P7, P8 | A2, A4 | |
PM2 | Do all projects have clear critical success criteria and are they used to inform decision-making? | P2, P5, P6. P7 | A1 | |
PM3 | Are key success factors identified for all projects and are they used to inform decision-making? | P2, P3, P8 | A1 | |
PM4 | Is key governance of project management roles and responsibilities clear and in place? | P2. P3 | A2 | |
PM5 | Is the board assured people responsible for project delivery, especially project managers, are clearly mandated, competent, and have the capacity to achieve satisfactory project outcomes? | P2, P4 |
| |
PM6 | Is authority delegated to the right levels, balancing efficiency and control? | P2, P3, P4 |
| |
PM7 | Are project contingencies estimated and controlled in accordance with delegated powers? | P7, P8 |
| |
PM8 | Are appropriate issue, change, and risk management practices implemented in line with adopted policies? | P8 | A7 |
|
PM9 | Are service departments and suppliers able and willing to provide key resources tailored to the needs of different projects and to provide an efficient and responsive service? | P10 | A3 | |
PM10 | Are project managers encouraged to develop opportunities for improving project outcomes? | P11 | A4 | |
| ||||
TABLE 18.4 Key Questions for Direction and Reporting (DR)
| |||
| Issue | Related principles | Related aims |
| |||
DR1 | Where responsibility for disclosure and reporting is delegated or duplicated, does the board ensure that the quality of information that it receives is not compromised? | P4 | A2 |
DR2 | Does the organization use measures for both key success drivers and key success indicators? | P5, P6, P7 | A1 |
DR3 | Does the board receive timely, relevant, and reliable information of project forecasts, including those produced for the business case at project authorization points? | P6 |
|
DR4 | Can organization distinguish between project forecasts based on targets, commitments, and expected outcomes? | P6 |
|
DR5 | Does the board receive timely, relevant, and reliable information of project progress, including the identification of risks and their management? | P7, P8 |
|
DR6 | Do project processes reduce reporting requirements to the minimum necessary? | P7, P11 |
|
DR7 | Are there threshold criteria that are used to escalate significant issues, risks, and opportunities through the organization to the board? | P8 |
|
DR8 | Does the board seek independent verification of reported project and portfolio information as appropriate? | P9 |
|
DR9 | Does the board reflect the project portfolio status in communications with key stakeholders? | P10 | A5 |
DR10 | Does the business culture encourage open and honest reporting, including being supportive of whistle blowers? | P11 |
|
| |||
Principle P9 states that the board of directors should decide when and if independent scrutiny of a project may be required. An independent review is called an audit, and is described in this section. However, project teams should also be encouraged to conduct internal reviews of themselves; they are called health checks and are described in the next section.
Purpose of Project Audits
Audits may be conducted at several points throughout a project for the following reasons:
Check that the Design is Correct. One of the primary contributing factors to the success of a project is to ensure it is correctly established and designed in the first place. This means that
The purpose of the project has been correctly identified.
The objectives set will deliver that purpose.
The new asset will achieve those objectives.
TABLE 18.5 The Principles and the Sarbanes-Oxley Act (2002)
| |||
| Section of the Act | Particular sections | Relevant principles |
| |||
106 | Foreign public accounting firms | (a) Applicability to such firms | P2, P9 |
108 | Accounting standards | (b) Recognition of standards | P3, P11 |
201 | Services outside the scope of practice of auditors | (a) Prohibited activities | P9 |
202 | Preapproval requirements | (a) Audit committee action | P9, P11 |
204 | Auditors report to audit committee | (k) Such reports | P3, P9, P11 |
302 | Corporate responsibility for financial reports | (a) Regulations required | P2, P3, P5, P6, P8, P9, P11 |
401 | Disclosure in periodic reports | (j) Off balance sheet transactions | P6, P7, P8, P9, P10, P11 |
404 | Management assessment of internal controls | (a) Rules required | P2, P3, P4, P5, P6, P7, P8, P9, P11 |
406 | Code of ethics for senior financial officers | (a) Code of ethics disclosure | P2, P3, P11 |
407 | Disclosure of audit committee financial experts | (a) Rules defining "financial expert" | P2 |
407 | Real-time issuer disclosures | (1) Real Real-time issuer disclosures | P8, P11 |
906 | Corporate responsibility for financial reports | Failure of corporate officers to certify financial reports | P2, P3, P4, P6, P8, P11 |
1102 | Tampering with record or otherwise hampering an official proceeding | ©Corrupt behaviour | P3, P11 |
| |||
The new asset is designed in accordance with the inherent assumptions.
The design information used, including any research data, is valid.
A check of the design may be conducted by a red team as described in Sec. 7.2.
Ensure the Quality of the Management Processes. A second major contributor to success is the use of qualified management processes. An audit can be conducted at any time during a project to determine whether it is being managed in accordance with best practice, and that usually means in accordance with defined procedures, perhaps as set out in a manual. Such an audit is most effective when conducted about one quarter of the way into a stage, as the pattern of management has been set by that time, but work is not so far advanced that mistakes cannot be recovered.
Learn from Past Success. If a project has gone particularly well, then a review can help to identify what contributed to success. These reviews are usually best conducted at the end of a project, although it can then be difficult to gain people's commitment as they are keen to move on. However, it is usually easier to get people to review their successes than their failures.
Avoid Past Mistakes. Likewise, if a project has gone particularly badly, then it can be instructive to determine what mistakes were made, so they can be avoided in the future. However, people can be very defensive in these circumstances (unsurprisingly).
In order to achieve these objectives, three types of project audit may be conducted.
Project Evaluation Audit. A project evaluation audit is an independent check of the feasibility or design studies. It is an enforced review of the investment appraisal as it currently stands, and the assumptions on which it is based. The auditors check the validity of the data used in the feasibility and/or design studies, and the conclusions drawn from it. Often the original design team may have been overoptimistic because they have a subjective commitment to the project. It is important that the auditors are truly independent, and that they do not share the same commitment or they may merely repeat the mistakes.
Internal Audit. An internal audit, or health check, is a quality control check of the management processes, conducted either by independent auditors or by the project team to ensure best practice is being followed, and hence that the project as defined will be delivered to quality, cost, and time. (Usually only the design or execution stages will be audited.) An audit will be conducted about one-quarter into the stage and will cover everything from progress of the work itself, to the procurement and marshalling of materials. The auditors will check
The validity of the data being gathered.
How it is being used to generate management reports.
How those reports are being used to take timely and effective action, to ensure that the project meets its quality, cost, and time targets.
Postcompletion Audit. The successes and failures of a project are reviewed in a post-completion audit. The scope of a postcompletion audit may be very similar to an internal audit, but now the auditors are checking past practice with the knowledge of how the project actually turned out. A postcompletion audit may be conducted:
As an informal review by the project manager and his or her team
At a formal debriefing meeting
At the same time as a end-of-project party (Sec. 14.4 and Example 14.4)
As a detailed review by external (independent) consultants
Conducting Audits
There is a seven-step process to conducting an internal or postcompletion audit:
Conduct Interviews. How you conduct interviews is a matter of style. You should always have some agenda of topics you wish to cover. Some people prefer to use a questionnaire, working through the questions in methodical order. My own preference is to have a list of broad topics I wish to cover. I explain them to the interviewees at the start, but then allow them free rein. Before closing the interview I ensure all topics have been covered. I find I learn more this way. Like Agatha Christie's detective, Hercule Poirot, I find nobody can spin a consistent web of deceit, so if you let them talk, they must eventually tell you the truth. If you ask a set of closed questions, it is very easy for them to be economical with the truth. The topics covered should address the standards of good practice which you are using as your basis, as described below.
Analyse Data. You should check the data being used, to determine its validity. The data gathered must be relevant, give a true representation of progress, and be processed in such a way that errors are not introduced. For data handled manually, there can be errors of transcription. These are usually unwitting, but they can be deliberate. It is the norm to find that when data is entered manually into several computer systems it does not tally. I once spoke to a project manager in a firm of engineering contractors who said it was common for project accounts and company accounts to differ by up to 5 percent, which he thought acceptable. To avoid errors of transcription, electronic means of data entry are used now.
Sample Management Reports. Reports used to monitor progress are checked to ensure they are relevant and representative of progress, and they enable the manager to spot divergences from plan easily, so that they can take quick, effective action. The reports may be used by the project manager, work package managers, or senior managers including the sponsor, champion, or steering committee.
Compare against a Standard of Best Practice. The information gathered about how the project is being managed is compared to a model or standard of best practice. Clearly, while you are conducting the early steps, you bear your model in mind. However, I find it is better to gather the information freely, because you then actually find out what is going on. If you merely ask whether the standard is being followed it is very easy to miss the gaps and it is very easy for people to mislead you. The standard of best practice may be a procedures manual used by the organization (Table. 17.2 and Figs. 17.2 and 17.3), or a diagnostic procedure prepared by a firm of consultants. The standard will be hierarchical, presenting a series of important issues and questions at each stage throughout the life cycle of a project, or against each element of work in a standard work breakdown. This enables the auditor to focus on those areas which are important to the project at hand, rather than wading through a list of irrelevant questions. Each stage of this life cycle is supported by a series of questions against each parameter.
Repeat Steps 1 to 4 as Necessary. The comparison may raise further questions about the data, or the management processes used. Alternatively, you may realize there are things which were not adequately covered during the initial interviews. You may need to return to one or more of Steps 1 to 4 until you are satisfied everything has been adequately covered. My style is to conduct a preliminary set of interviews with senior managers to try to establish their views of the problems. As a result of that initial set of interviews, and my experience of similar organizations, I draw up a more detailed audit plan covering selected topics from the audit procedure. I then work through Steps 1 to 4 according to that plan. After that first full time through, I typically have 80 percent of the information I require. One or two more selected interviews may then give me all the information I can reasonably expect to get.
Identify Strengths and Weaknesses of the Management Approach. Through comparison of the information gathered with the audit procedure, you can identify strengths and weaknesses of the management approach used on projects in the organization, either on the project being audited or in general. I always believe it is important to identify both strengths and weaknesses for two reasons:
You learn as much by reinforcing strengths as you do by eliminating weaknesses.
People are more receptive to bad news if you start by giving them good news; even when reviewing an utter disaster it can make people feel that not everything they did was wrong.
Define Opportunities for Improvement. From the strengths and weaknesses you can identify areas where improvements can be made. Clearly you should aim to eliminate weaknesses. However, the application of the good points may be patchy, and so you can look to widen their scope, or you can find ways of improving their efficiency, and thereby make their application stronger still.
Emotions
Emotions can run high during an audit by external assessors. If the purpose of an audit is to work out why a failed project went badly wrong that is almost impossible to avoid. With an internal audit, the external assessors should try to present themselves not as policemen, there to check up on the project team and find fault, but consultants there to help the team achieve a successful project. An internal audit may be conducted for several reasons including:
(a) The project is a key strategic project which must not go wrong. There is no indication that anything is wrong, but the board would like the project checked because it is better to pick up any potential problems early. The audit is preventative medicine.
(b) There is an indication that all is not well with the project, so the board of directors would like it recovered before it goes more seriously wrong, while it can still be put back on track with little additional cost.
(c) The project is in serious difficulties and the board feels it needs significant external help to recover.
Interestingly it is in the second case where the team may be the most uncooperative. In the third case they may feel guilty and actually seek help. In the first case if they understand the true purpose of the audit they may welcome it. It is in the second case where they may be most trying to hide what is going on because they feel their reputations are at stake. But that is the key. In all three cases the auditors must say they are there to help the project team, not check up on them. Everybody wants a successful project and the auditors are there to help the project team achieve that, and their reputations are best served by supporting the auditors.
An audit is a check conducted by an external group of people. The board may also require the project team to conduct a check on themselves. But doing a check on one's own performance is something which should be encouraged. It is a common syndrome to make a mistake and realize if you had spent five minutes thinking about what you were doing you may have foreseen the problem. There is a saying that when you have been chased up a tree by the alligators it is too late to drain the swamp. It is good practice to develop the habit of taking a step back from the coal face every now and again to do a self-review. This is part of the quality assurance process (Sec. 7.2). I suggest two types of health check:
The projectivity diagnostic: This reviews not an individual project but the project management capability of the organization. It is a simplified maturity model.
The project success diagnostic: This is a check on an individual project.
Both techniques are primarily qualitative. The idea is to identify areas of weakness, but also, and more importantly, to identify differences of opinion within the project team. The diagnostic questionnaires ask people to rank their views about various issues on a scale of 1 to 6. We then use simple arithmetic calculations, spreads, variances, means, and differences to highlight where differences of opinion lie, and where weaknesses in the approach to project working within the organization lie. However, these calculations are designed to focus attention, not calculate some answer, like the number 42, which will determine whether or not your project will be successful. Having undertaken the diagnostic exercise, you will want to spend as much time working on determining why differences of opinion exist and then to eliminate them, as you will spend trying to reduce the impact of areas of weakness.
The Projectivity Diagnostic
The projectivity diagnostic (Table. 18.6) can be conducted at any time to assess the health of project working in the organization, or in the start-up stages of an individual project to induct people into project-based ways of working. The concept of projectivity is used to represent an organization's ability to achieve its development objectives through project-based working. Organizations with low projectivity are unable to deliver projects effectively, and therefore consistently fail to achieve their strategic objectives. The projectivity diagnostic is designed to help you identify how well projects are established, planned, organized, executed, and controlled in your organization. There are no right or wrong answers to the questions. For some it will be a worry if the responses are not what you expect. For instance, if the majority of people say they cannot clearly see the link between organizational strategy and projects or if they think there are no established, clear principles and guidelines for project work, then that will be a cause for concern. However, this diagnostic is primarily designed to help you identify areas of agreement and disagreement in your project team (in its widest sense).
Using the Questionnaire. There are 106 questions grouped into five main problem areas. These are areas identified by Kris Grude3 as those where projects consistently fail (Sec. 3.3):
Foundation and infrastructure for project work
Planning and estimating
Organizing and cooperating
Controlling and leading
Executing and obtaining results.
The questionnaire asks people to rate each question on a scale of 1 to 6, where 1 equals false and 6 equals true. The questions are designed so that sometimes 1 indicates poor performance, and sometimes 6, so that people do not get into the habit of ticking every answer 4 to 5, but actually have to think about what the question is asking them. You should give the questionnaire to a wide variety of people within the organization:
Senior managers representing sponsors, champions, and customers
Peer groups representing professional colleagues, resource providers, users, and other stakeholders
Project workers, representing designers and implementers
Project managers
TABLE 18.6 Projectivity Diagnostic
Analysing the Results. The results can be analysed in several ways:
Within groups: When analysing the results within groups, you will see whether the group:
Agrees on the organization's performance in all areas
Thinks that the organization's performance falls short in any areas.
These can be broken down, as follows:
(a) Agreement: In looking to see whether the group agrees on the answers to questions, you will look at the spread of answers. You can record two measures of spread:
The spread S: The difference between the highest and lowest score for the group against that answer.
The variance V: Calculated as
where | x is the individual score |
| N is the number of people in the group |
| X is the mean score for that question, X = Σx/N |
Recording the answers in a spreadsheet enables you to calculate the mean, spread, and variance easily. I suggest you do not include the X, S, and V columns on the questionnaires you give to the people completing them; they are there to help you analyse the responses. Where there is a high spread, 3 or greater, at least some members of the team disagree about the response to that question. Where there is also a high variance, 2 or greater, there is fundamental disagreement among team members about the answer to the question. (A high spread but low variance indicates that only one or two members of the team disagree with the majority opinion.) The reason for any disagreement is worth exploring, and can be made part of the team-building process. I have kept the mathematics simple because we are interested in qualitative comparisons, not quantitative results or statistics. This is a qualitative exercise; the numbers are just a way of helping to focus attention. You do not need to worry about such things as confidence limits because they are not relevant here.
(b) Performance: You can analyse the results to see where they indicate poor performance. The polarity P of each question shows which end of the scale indicates good performance (1 or 6). (Again I suggest you do not include this column on the questionnaires for completion.) You can compare the average answer to each question, X to this polarity and calculate the difference D to determine where the team think the organization falls short in performance. A difference of 2 or 3 will indicate below average performance and 4 to 5 poor performance. The reason why the team think the performance is below average or poor will be more interesting than the fact that they do, and exploring the reason can again be part of the team-building process.
(c) Problem areas: By calculating the average of the differences D for all questions within each of the five problem areas, you can determine which problem areas the group considers are weaknesses of project management within the organization. Because you expect some questions to indicate acceptable performance, an average difference of 2 or 3 will indicate poor performance, and an average difference of 4 or 5 will indicate very poor performance.
Between groups: You can repeat the comparisons between groups. Primarily, you will inspect the mean answers X question by question to see whether one of the groups differs from other groups. Differences are quite likely between managers, team members, users, and so on. Exploring the reasons for differences is more important than the existence of the differences. Similarly, you can inspect the overall results on the problem areas as more of a threat than do the other groups. (Obviously, if all of the groups view one of the questions or one of the problem areas as a threat, then that will be addressed in the comparisons within groups. Here we are only looking for differences between groups.)
The Success or Failure Diagnostic
The second health check is based on the research by Wateridge4 into the success or failure of projects described in Chap. 3. The health check is contained in Table. 18.7. There are 85 questions in five parts:
helps identify appropriate success criteria for your project (Sec. 3.1). | |
helps identify what success factors you should focus on to achieve those criteria (Sec. 3.3). | |
checks you are using appropriate tools and techniques for the management of your project (Part 2). | |
checks you have an appropriate range of skills in the project team (Sec. 17.1). | |
Part 5 | helps identify how well the project is being executed and managed. |
The main emphasis again is on checking the consistency of view of all the members of the project team and stakeholders. Indeed there are no right and wrong answers to Part 1. The diagnostic can be given to a similar range of people as the projectivity diagnostic and the answers analysed in a similar way.
APM's principle P7 states that all projects must have an approved plan with authorization points and that decisions made at those authorization points must be clearly documented. I have said throughout this book that because projects are coupled systems, the governance structure of the project must be aligned with the project process. That is, the project governance team, particularly the project manager and project sponsor, must be empowered to manage the project process towards the project's outputs and outcomes. They must be empowered to take decisions in the best interests of the project and given the flexibility to deal with risk as they encounter it. Now many line managers in the functional hierarchy do not like this, and you find great resistance. But it has to be done in the best interest of the project. However, project authorization points are predefined points where corporate governance can take back control, to approve progress to date and forecasts for the forthcoming stages, before releasing power back to the project manager and project sponsor for the next stage. Many authorization points are aligned with major milestones, or end-of-stage transitions. They may be known as:
Stage-gate reviews
Tollgate reviews
End-of-stage transition
Gateway reviews
All the milestones in the P column in the milestone plan for the CRMO Rationalization Project (Fig. 5.2) are end-of-stage reviews. The PRINCE2 process has end-of-stage transitions built into it through the processes known as "Managing Stage Transition."5 Under PRINCE2, the project manager is empowered to take the project to the next stage transition as long as the project performance remains within defined tolerances. But at stage transition he or she has to seek approval from the project steering committee to proceed to the next stage. Corporate or program governance take back control at those points. Figure 1.4 and Table 8.4 illustrate end-of-stage reviews. Table. 18.8 gives a generic end-of-stage review processes.
TABLE 18.7 Success or Failure Diagnostic
| |||||||
No | Statement | Score | X | S | V | P | D |
| |||||||
Part 1: Success criteria | |||||||
1.1 | The success criteria are defined | 1 2 3 4 5 6 |
|
|
| 6 | |
1.2 | The success criteria are agreed | 1 2 3 4 5 6 |
|
|
| 6 | |
1.3 | I believe the success criteria are appropriate | 1 2 3 4 5 6 |
|
|
| 6 | |
1.4 | The project should achieve quality constraints | 1 2 3 4 5 6 |
|
|
| 6 | |
1.5 | The project should be a commercial success | 1 2 3 4 5 6 |
|
|
| 6 | |
1.6 | The users should be happy | 1 2 3 4 5 6 |
|
|
| 6 | |
1.7 | The sponsors should be happy | 1 2 3 4 5 6 |
|
|
| 6 | |
1.8 | The project team should be happy | 1 2 3 4 5 6 |
|
|
| 6 | |
1.9 | The project meets its stated objectives | 1 2 3 4 5 6 |
|
|
| 6 | |
1.10 | The system should achieve its purpose | 1 2 3 4 5 6 |
|
|
| 6 | |
1.11 | The project should be delivered on time | 1 2 3 4 5 6 |
|
|
| 6 | |
1.12 | The project should be delivered to cost | 1 2 3 4 5 6 |
|
|
| 6 | |
1.13 | The project should contribute to the organization's overall business strategy | 1 2 3 4 5 6 |
|
|
| 6 | |
1.14 | There is a clear relationship between the project and business plans and strategies | 1 2 3 4 5 6 |
|
|
| 6 | |
1.15 | The project team do not appreciate the important success criteria | 1 2 3 4 5 6 |
|
|
| 1 | |
1.16 | I am confident the project will be a success | 1 2 3 4 5 6 |
|
|
| 6 | |
1.17 | The project goals are clear to me | 1 2 3 4 5 6 |
|
|
| 6 | |
1.18 | The goals have been explained to the team | 1 2 3 4 5 6 |
|
|
| 6 | |
1.19 | I can explain the benefits of the project | 1 2 3 4 5 6 |
|
|
| 6 | |
1.20 | The project has an unrealistic completion date | 1 2 3 4 5 6 |
|
|
| 1 | |
| |||||||
| Sum | ||||||
| |||||||
Part 2: Success factors | |||||||
2.1 | Estimates for the project are realistic | 1 2 3 4 5 6 |
|
|
| 6 | |
2.2 | Project estimates are optimistic | 1 2 3 4 5 6 |
|
|
| 1 | |
2.3 | Estimates were made in consultation with the person allocated to the task | 1 2 3 4 5 6 |
|
|
| 6 | |
2.4 | The project has been planned strategically | 1 2 3 4 5 6 |
|
|
| 6 | |
2.5 | Project plans are understandable to all | 1 2 3 4 5 6 |
|
|
| 6 | |
2.6 | The project plans are often changed | 1 2 3 4 5 6 |
|
|
| 1 | |
2.7 | Plans focus on completion date and not on intermediate results/dates | 1 2 3 4 5 6 |
|
|
| 1 | |
2.8 | The project plan effectively utilizes resources | 1 2 3 4 5 6 |
|
|
| 6 | |
2.9 | I am happy with the plans and estimates | 1 2 3 4 5 6 |
|
|
| 6 | |
2.10 | The project participants are motivated well to achieve the project objectives | 1 2 3 4 5 6 |
|
|
| 6 | |
2.11 | Responsibilities are not well delegated | 1 2 3 4 5 6 |
|
|
| 1 | |
2.12 | The clients and users know their roles and responsibilities | 1 2 3 4 5 6 |
|
|
| 6 | |
2.13 | I am happy with the leadership shown by senior management | 1 2 3 4 5 6 |
|
|
| 6 | |
2.14 | I am happy with the leadership shown by project management | 1 2 3 4 5 6 | |||||
2.15 | Communication and consultation channels have been effectively set up | 1 2 3 4 5 6 |
|
|
| 6 | |
2.16 | There is poor communication between the project participants | 1 2 3 4 5 6 |
|
|
| 1 | |
2.17 | The users are involved effectively | 1 2 3 4 5 6 |
|
|
| 6 | |
2.18 | Communication channels are poor | 1 2 3 4 5 6 |
|
|
| 1 | |
2.19 | Project managers do not fully report project status to sponsors/users' teams | 1 2 3 4 5 6 |
|
|
| 1 | |
2.20 | Corrective measures are always taken in time when the project encounters problems | 1 2 3 4 5 6 |
|
|
| 6 | |
2.21 | All roles and responsibilities are well-defined | 1 2 3 4 5 6 |
|
|
| 6 | |
2.22 | All parties are committed to the plan | 1 2 3 4 5 6 |
|
|
| 6 | |
2.23 | Resources are available at the right time | 1 2 3 4 5 6 |
|
|
| 6 | |
2.24 | Procedures for handling priorities are adequate | 1 2 3 4 5 6 |
|
|
| 6 | |
2.25 | Quality assurance is not a major aspect of the projects | 1 2 3 4 5 6 |
|
|
| 1 | |
| |||||||
| Sum | ||||||
| |||||||
Part 3: Tools, techniques, and methodologies | |||||||
3.1 | Tools, techniques, and methods for planning the project are adequate | 1 2 3 4 5 6 |
|
|
| 6 | |
3.2 | Tools, techniques, and methods for controlling the project are adequate | 1 2 3 4 5 6 |
|
|
| 6 | |
3.3 | Tools, techniques, and methods for organizing the project are adequate | 1 2 3 4 5 6 |
|
|
| 6 | |
3.4 | I agree that the tools, techniques, and methods used are appropriate | 1 2 3 4 5 6 |
|
|
| 6 | |
3.5 | The development tools and methods are sufficient for the project | 1 2 3 4 5 6 |
|
|
| 6 | |
3.6 | The management tools and methods are sufficient for the project | 1 2 3 4 5 6 |
|
|
| 6 | |
3.7 | The development tools and methods are poorly applied on the project | 1 2 3 4 5 6 |
|
|
| 1 | |
3.8 | The management tools and methods are poorly applied on the project | 1 2 3 4 5 6 |
|
|
| 1 | |
3.9 | The chosen methodologies stifle creativity during the project | 1 2 3 4 5 6 |
|
|
| 1 | |
3.10 | There are established methods which are to be used | 1 2 3 4 5 6 |
|
|
| 6 | |
3.11 | These established methods are being used on this project | 1 2 3 4 5 6 |
|
|
| 6 | |
3.12 | I believe these methods are appropriate for the project | 1 2 3 4 5 6 | |||||
3.13 | There are computer-based tools available for this project | 1 2 3 4 5 6 |
|
|
| 6 | |
3.14 | Computer-based tools are being used effectively | 1 2 3 4 5 6 |
|
|
| 6 | |
3.15 | The project uses methods for assessing and managing risks | 1 2 3 4 5 6 |
|
|
| 6 | |
| |||||||
| Sum | ||||||
| |||||||
Part 4: Skills | |||||||
4.1 | There are the necessary skills available to plan the project | 1 2 3 4 5 6 |
|
|
| 6 | |
4.2 | There are the necessary skills available to organize the project | 1 2 3 4 5 6 |
|
|
| 6 | |
4.3 | There are the necessary skills available to control the project | 1 2 3 4 5 6 |
|
|
| 6 | |
4.4 | There are the necessary skills available to develop the system | 1 2 3 4 5 6 |
|
|
| 6 | |
4.5 | Project management are unable to handle fully the human relations aspects | 1 2 3 4 5 6 |
|
|
| 1 | |
4.6 | Conflicts are resolved satisfactorily | 1 2 3 4 5 6 |
|
|
| 6 | |
4.7 | The project plan overestimates the skills and competences of the team | 1 2 3 4 5 6 |
|
|
| 1 | |
4.8 | Project management is astute in dealing with the politics of the project | 1 2 3 4 5 6 |
|
|
| 6 | |
4.9 | Project management is unable to inspire others | 1 2 3 4 5 6 |
|
|
| 1 | |
4.10 | Project management is good at getting the project team working together | 1 2 3 4 5 6 |
|
|
| 6 | |
| |||||||
| Sum | ||||||
| |||||||
Part 5: Execution | |||||||
5.1 | A life cycle approach is being applied | 1 2 3 4 5 6 |
|
|
| 1 | |
5.2 | I agree with the life cycle used | 1 2 3 4 5 6 |
|
|
| 1 | |
5.3 | An effective start-up meeting was held for this project | 1 2 3 4 5 6 |
|
|
| 1 | |
5.4 | The right people are allocated to the project | 1 2 3 4 5 6 |
|
|
| 1 | |
5.5 | Project team members are carrying out appropriate activities | 1 2 3 4 5 6 |
|
|
| 1 | |
5.6 | Project resources are selected well | 1 2 3 4 5 6 |
|
|
| 1 | |
5.7 | There are no problem areas during the project | 1 2 3 4 5 6 |
|
|
| 1 | |
5.8 | I do not foresee any problem areas on the project | 1 2 3 4 5 6 |
|
|
| 1 | |
5.9 | The management of the project is excellent | 1 2 3 4 5 6 |
|
|
| 1 | |
5.10 | The project team has appropriate members at appropriate times | 1 2 3 4 5 6 |
|
|
| 1 | |
5.11 | The project risks were assessed at the outset of the project | 1 2 3 4 5 6 |
|
|
| 1 | |
5.12 | I believe that the assessments of risks are appropriate | 1 2 3 4 5 6 |
|
|
| 1 | |
5.13 | Project risks are being managed well | 1 2 3 4 5 6 |
|
|
| 1 | |
5.14 | The deliverables are fully identified | 1 2 3 4 5 6 |
|
|
| 1 | |
5.15 | The deliverables are quality assured constantly | 1 2 3 4 5 6 |
|
|
| 1 | |
| |||||||
| Sum | ||||||
| |||||||
PRINCE2 is designed for medium-sized projects. The United Kingdom government, through the Office of Government Commerce, has developed a gateway review processes for larger projects.6 There are six gateway reviews:
0. Strategic assessment
1. Business justification
2. Procurement strategy
3. Investment decision
4. Readiness to service
5. Benefits realization
TABLE 18.8 End-of-Stage Reviews
| ||||
| End of stage | |||
|
| |||
Item for review | Concept | Feasibility | Design | |
| ||||
Management | Need for performance improvement Change identified Appoint sponsor First draft of benefits map | Business plan Outputs and desired outcomes defined Appoint project manager Risks identified | Finalize business plan Appoint team | |
Design | High-level options | Identify and assess options Select preferred option | Complete design | |
Planning | High-level scheme | Milestone plan | Activity plans | |
Cost | Order of magnitude | ±30% | ±10% Risk analysis Review benefits | |
Procurement | Options considered | Contract strategy Invitation to tender (ITT) prepared | Issue ITT | |
Users | Early consultation Health, safety, and environmental (HSE) issues identified | Review user requirements HSE plan | Finalize user requirements | |
| ||||
The first takes place at the program level, which is why it is labelled 0. Whereas for PRINCE2 it is assumed the project will be managed internally, for larger projects it is assumed they will be contracted out, and so the focus of this gateway review process is on tracking the contracting process.
1. There are eleven principles of the good governance of project management:
The board of directors is overall responsible.
Roles and responsibilities for the governance of projects must be clearly defined.
Defined governance arrangements must be applied throughout the project life cycle.
Members of authorization bodies must be properly empowered.
The project portfolio must be linked to corporate strategy.
The project business case must be based on sound and realistic data.
All projects must have an approved plan, with defined end-of-stage review points; decisions made at end-of-stage reviews must be fully documented.
There must be defined criteria for reporting status and defined escalation criteria.
The board must decide when independent audit of projects is required.
Project stakeholders must be engaged at an appropriate level.
The organization must foster a culture of openness and continuous improvement (and avoid competency traps).
2. Poor governance results in
No link between corporate strategy and projects
Lack of ownership of projects and their results
Poor engagement with stakeholders
Poor enterprise project management capability
A lack of engagement with suppliers
Poor evaluation of project proposals
Lack of focus on breaking a project down into manageable steps
3. The APM model has four elements of governance
Portfolio direction (PD)
Project sponsorship (PS)
Project management (PM)
Disclosure and reporting (DR)
4. Project audits will be conducted to
Check the design.
Ensure appropriate management processes are being used.
Learn from previous successes and failures.
5. There are three types of audit:
Project evaluation audits to check the validity of the design
Internal audits to check that a project underway is sound
Postcompletion audits, usually to find why a project went wrong
6. There are seven steps in conducting an internal or postcompletion audit:
Conduct interviews.
Analyse data.
Sample management reports.
Compare against standard of best practice.
Repeat steps 1 to 4 as necessary.
Identify strengths and weaknesses.
Define opportunities for improvement.
7. Informal internal audits conducted by the project team on themselves are called health checks.
8. There are two types of health check suggested:
The projectivity diagnostic to check the working environment supports project-based management
The success or failure diagnostic to ensure the project has been established according to the principles of Chap. 4
9. End-of-stage reviews are an essential part of project governance, where the project manager and sponsor hand authority back to corporate governance to approve progression to the next stage.
1. Association for Project Management, Directing Change: A Guide to Governance of Project Management, High Wycombe, U.K.: Association for Project Management, 2004.
2. Thomas, J., Delisle, C., and Jugdev, K., Selling Project Management to Senior Executives: Framing the Moves that Matter, Newtown Square, Pa.: Project Management Institute, 2002.
3. Andersen, E.S., Grude, K.V., Haug, T., Katagiri, M., and Turner, J.R., Goal Directed Project Management, 3rd ed., London: Kogan Page/Coopers & Lybrand, 2004.
4. Wateridge, J.H., "IT projects: a basis for success," International Journal of Project Management, 13(3), 169–172, 1995.
5. Office of Government Commerce, Managing Successful Projects with PRINCE2, 4th ed., London: The Stationery Office, 2005.
6. Office of Government Commerce, The OGC Gateway™ Process: Gateway to Success, London: Office of Government Commerce, 2004.