“When projects aren’t governed well, poor project performance leads to organizations wasting an average of $122 million for every $1 billion spent.”
Success requires project governance throughout the project’s lifecycle. Executing a project well involves more than completing tasks. Often, poor project performance and even project failure can be traced to senior leadership. When there is lack of governance or lack of direction in that governance, projects can veer off course resulting in a waste of time, money, and resources.
One question that must be asked by the governance team at each stage of the project is whether the project manager and the project team are taking appropriate actions to keep the project on track towards success. The governance team must insist upon meaningful and transparent reporting processes to evaluate every project.
Another question that must be asked at each stage is the relative importance of the project. Organizations typically have a portfolio of ongoing projects. Because no organization has unlimited resources, it may be necessary to pause or cancel an under-performing project and reallocate constrained resources from that project to another project in the portfolio. Effective governance helps make this determination.
Project governance is concerned with how projects are performing relative to their strategic objectives. Using the traditional project management framework, here’s what effective project governance looks like in each stage of a project’s lifecycle.
The first phase of a project is initiation. This is when project leaders describe the project, set the overall project direction, and define its initial objectives.
The seeds of poor performance or failure are often planted in the initiation phase. In many cases, senior leadership does not have an effective process in place for determining whether the project should be approved. Someone may come up with what seems like a worthy idea, and the project gets approved without senior leadership asking key questions necessary to determine whether it should proceed. Instead, resources are allocated, and work begins. When the project fails because necessary governance was not applied, it’s nearly impossible to determine the exact reason for the failure. Consequently, leadership can’t learn from its mistakes.
To give the project a better chance of succeeding, governance in the initiation phase must be focused squarely on the rationale for proceeding with the project. The governance team must ask the right questions. What are the outcomes of the project? How do those outcomes benefit the organization? Is the project aligned with the organization’s strategic objectives, its goals, its values?
The key question the governance team must ask is “what is the return or value-add from our investment in the project?” Particularly when there is a portfolio of projects being considered or underway, the answer to this question will help determine which new projects are worthy of proceeding. Armed with critical knowledge of the proposed project, the governance team can make a sound decision whether the project can move on to the planning phase.
Unfortunately, many organizations don’t have a robust and disciplined process for determining when they should approve a project. This lack of rigorous analysis contributes to under-performing projects and projects that fail. It is crucial that every organization builds a structure and process for examining each proposed project, ensuring that it meets established standards before any further resources are allocated to it.
Once a project is approved based on meeting criteria meaningful to the organization, it moves into the planning phase. In this phase project leaders should be developing a clear plan to guide the team towards success. The plan must outline the scope, goals, resources, costs and schedule of the project while assigning responsibilities so that everyone involved knows what to do and what they are accountable for.
Many organizations have gaps in their planning process that can lead to the approval of projects that should have been rejected. Even though the project leaders may have created a project plan, the governance team may not know how to evaluate the quality of that plan. They may not know what to look for or what questions to ask to determine if the project should move forward.
In the Planning phase governance takes on a different role. The governance team must assure that the planning process is proceeding as expected. They should see the creation of a progressively more accurate and detailed project plan so that they are aware of exactly what the project looks like. This means that project leaders should articulate the project’s scope, duration, cost estimates, deliverables, and deadlines in a way that meets the managerial needs of the governance team.
As the Planning phase concludes, the governance team must decide whether to move forward with the project. To do this, they will examine the completed project plan. Based on their analysis, the team may decide to move forward with the project. Or, the governance team may decide that the costs, timeframe, or risks do not justify moving forward with the project.
If the project makes it through the planning phase, it enters the execution and controlling phase. Here, the execution of the project and control of the project run concurrently. It’s like taking a trip in your car. After determining that your car is road-worthy, and you have enough fuel, you are ready to go. As you drive, you are executing your trip. At the same time, you are controlling your trip by keeping an eye on the fuel gauge, following the path set by your GPS, and ensuring you will arrive when expected.
In this phase the project team executes the project. They do the work, they invest hours and expend the allocated resources. As work is completed, the project manager provides the governance team with status updates that include progress on deliverables and project metrics.
From the controlling perspective, the governance team must analyze the status updates and make any needed decisions. The key in this phase is for the team to know the metrics it should be examining to ensure that the project is performing as planned. For instance, if a status update indicates that the project is behind schedule or is over budget, the team will expect the project manager and team to take or have taken corrective action. If the corrective action is deemed insufficient, the governance team must take action themselves either through the project manager or directly.
If status updates indicate that the project is performing as expected, the governance team can remain in a monitoring role. However, when projects do not perform as expected, the governance team must determine if these projects should continue. Project status updates must provide the information the governance team needs to assess the ongoing health of the project.
An important part of this phase is recognizing when to cancel a project that has gotten badly out of control. This is a decision some governance teams may struggle with due to emotional attachment to projects. This is may be due to the perceived worthiness of the project or the amount of money already invested in the project. They may have spent a million dollars on a project and want to keep it going even though it has little hope of reaching the ROI projected in the initiation stage. The governance team must ask, “Given what this project has cost and will cost in comparison with the ROI that we expect, is it still a viable project? Should we be continuing to push this forward?” Then, they must be willing to make a tough decision.
In this phase, the project manager begins closing the project once the final product is delivered. Among other things, they wrap up the project by communicating completion to stakeholders and releasing resources to other projects.
As a part of the closing process, the project manager should report a range of metrics to the governance team. These metrics might include statements relating to the achievement of established objectives, a final comparison of costs to original estimates along with any adjusted estimates, an updated timeline to assess whether the project was completed on time, and an ROI calculation.
If the organization wants to continuously improve its project management practices, the governance team can review communications from the project manager to gain valuable insight on two levels. On the execution level, they can determine whether there are any process changes that should be made regarding how projects are carried out. Perhaps the projected ROI wasn’t achieved. Information gathered during the closing process might show that the reason was that project costs were not properly controlled, or the scope of the project expanded without appropriate scope management and governance approvals.
At the governance level, the team can determine whether they should make changes in how projects are supervised and controlled. Perhaps the project was late or over budget. The reason for this could be that corrective actions and necessary approvals were not visible to the governance team soon enough or with appropriate frequency.
By using the closing process to examine the project on both the execution and governance levels, the governance team can reflect on lessons learned so that they can improve the chances of success for future projects.
Project Management Governance Teams course correct, monitor, and report project progress.
Leadership identifies a governance team. They review and approve the project proposal and objectives.
Governance team reviews and approves the scope, goals, resources, costs and schedule of the project.
Lead project manager provides the governance team with status and metrics updates.
Project team communicates completion to governance team. Governance team evaluates the process for lessons that can be applied to governance of future projects.
It pays to have effective project execution and governance processes.
Organizations that effectively use formal project management practices waste thirteen times less money than organizations that don’t.1 Based on that figure alone, it pays to have effective project execution and governance processes.
If your organization needs assistance with project execution, FarWell is here to ensure that your project is properly initiated, planned, executed and controlled, and closed. If your organization needs governance for a project that is running into difficulties, FarWell can assess and recover the project. If your organization needs both project execution and governance, FarWell can handle both functions with an emphasis on educating your team along the way so that the project governance aspect of your organization becomes self-sustaining.
Watch our Project Management Navigator Video to learn how FarWell can help you implement governance practices that help your projects succeed. Call FarWell at (608) 807-0615 or email us to schedule a free discovery meeting.