Project Governance (in relation to project management)
Abstract
Project governance is a rather new concept. Many of the authors cited in this literature review offer definitions of the concept. While these definitions differ from each other, they all include organizational strategy and alignment of goals among the stakeholders of a project These authors also discuss the benefits, purpose and approaches to project governance.
Introduction
Project governance is a rather new concept in project management. It can be described as a context that gives structure, tools, processes and decisiveness to a project. The decisions made using project governance are based on knowledge and experience of prior projects rather than snap decisions aimed at soothing the project sponsor, placating project team members, or keeping the project progressing regardless of cost overruns. Project governance gives each project a logical framework based on the organizational goals of the company tasked with completing the project. That structured approach may sound simple enough to describe or define, but it is more complex than it seems as this literature review reveals.
Definition of Project Governance
Many of the authors of the articles used in this literature review felt it necessary to offer a definition of governance, and the definitions offered differed from each other to some extent, although some of them cited another source for their definition. For instance, Joslin and Müller (2015) of the International Journal of Project Management cite the definition provided by Müller, et al. (2013): “‘Corporate governance encompasses all work done in an organization, and thus governs the work in traditional line organizations, plus the work done in temporary organizations, such as projects’” (Joslin & Müller, 2015, p. 1378). These authors also cite the Organization for Economic Cooperation and Development (OECD) (2004) for a definition. That definition is: “Involving a set of relationships between a company's management, its board, its shareholders and other stakeholders […] and should provide proper incentives for the board and management to pursue objectives that are in the interests of the company and its shareholders and should facilitate effective monitoring” (Joslin & Müller, 2015, p. 1378). One may assume that governance then includes incentivizing and monitoring. Yet other authors provide other definitions: Badewi (2015) and Ahola, Ruusaka, Artto, and Kujala (2014) both authors writing in the International Journal of Project Management, say, “Project governance deals with the internal control of individual projects, such as the level of flexibility in applying [project management] PM tools, techniques and roles, the governance of projects is a way of selecting, coordinating and controlling projects such as programme/portfolio management” (Badewi, 2015, p. 4; Ahola, Ruuska, Artto, & Kujala, 2014); Sirisomboonuk, Gu, Cao, and Burns (2018) of the International Journal of Project Management define project governance as “the framework, functions, and processes that guide project management activities in order to create a unique product, service, or result and meet organizational strategic and operational goals’” (Sirisomboonsuk, Gu, Cao, & Burns, 2018, p. 288). These definitions add selecting, coordinating, controlling and guiding to the activities of project governance.
Derakhshan, Turner, and Mancini (2019) of the International Journal of Project Management use a description from Williamson (1979) that says governance is “the engagement of two actors in an economic transaction that requires them to monitor and control the transaction, protect the interests of each party, and reach the most efficient share of values. They cite the definition that Müller et al., (2016) offer, “that project governance describes the interactions between project participants and the mechanisms adopted [that] can heavily influence the engagement of the stakeholders and their trust in the project” (Derakhshan, Turner, & Mancini, 2019, p. 98). These two definitions focus on the interactions rather than the activities of project governance. From these varying definitions and descriptions, it is clear that project governance is a more complex and richer concept than what its name implies—the dominance of a project. Yet all the definitions share the view that governance is about organizational strategy and alignment of goals among the stakeholders of a project.
Part of what makes the definition of project governance important is the concept that goes along with the word. Khan, et al. (2019) of Administrative Sciences explains that the word “governance” comes from the Greek wordk “Kubernao” or “to steer.” For Kahn, et al. (2019) that results in the word meaning the directing of policies, management and activities with the authority, responsibility and credibility to provide governance. The focus of most definitions is socioeconomic interactions among stakeholders in projects (Khan, et al., 2019, p. 1). This section ends with this definition because it seems to encompass the concepts of the others and is a comprehensive description of the processes used in project governance.
Purpose of Governance
One purpose of project governance is oversight throughout a project’s life cycle so there is a consistent approach to control of the project and providing better odds of successful completion (Joslin & Müller, 2015, p. 1378). If project governance is done well, it can help to steer the project through uncertainties and unexpected events. Because most projects come about as solutions to unique social and environmental needs, project governance can help to ensure that they are successful (Khan, et al., 2019, p. 2). For instance, Badewi (2015) compares project management and benefits management. He says they both deliver value to the organization in terms of investment initiatives, yet they have different methods for achieving their objectives. Governance can combine the two aspects of a project in what Badewi (2015) calls “Project benefits governance,” which increases the chances of success (Badewi, 2015, p. 2). Badewi (2015) also points out the importance of the ability to organize through a proper project governance for realizing project benefits (Badewi, 2015, p. 3). Organization is important in a project and it can help to ensure success.
One purpose for having project governance is to have effective governance during a change. Project governance can help to derive the benefits from the change, but a single person should be in charge of orchestrating the benefits of change. “From the governance perspective, assigning a role of accountability for realising benefits from intended projects is perceived as critical for capturing these benefits” (Badewi, 2015, p. 4). That does not mean that project governance is always a one-person role, however.
Project governance has the purpose of improving project performance through focus on each aspect of the project and applying proper governance to each. That is how projects come in on budget, on time and satisfactorily completed. Sirisomboonsuk, Gu, Cao, and Burns (2018) bring in IT governance as another important aspect of project governance. “The firm's project performance will be improved when there was a match between the firm's IT governance and project governance. . . . Organizations should view IT governance beyond merely IT management in operations. . . . and should implement both IT governance and project governance as driving forces to achieve superior project performance” (Sirisomboonsuk, Gu, Cao, & Burns, 2018, p. 297). IT is always important, but the necessity of alignment between project governance and IT governance for success indicates that alignment between other aspects of the project and its governance is also important.
Project governance brings about organizational learning. Derakhshan, Turner, and Mancini (2019) say that an “ influential aspect of the governance structure on success is in the organizational learning. That is about organizations increasing their ability to explore both failures and successes and to learn from these sources of knowledge” (Derakhshan, Turner, & Mancini, 2019, p. 103). This idea of learning from project governance means that projects are done the right way because of governance. Value is increased for the organizations who used project governance especially for the internal stakeholders, but because of that increase in knowledge, external stakeholders also benefit. Each time a project is successful, the organization learns about which projects to accept in the future, how to complete the projects more efficiently and effectively, and how to improve the performance of and toward stakeholders. Ahola, Ruuska, Artto, and Kujala (2014) agree that one of the main purposes of project governance is to create learning opportunities within the organization. With governance, all aspects of a project are scrutinized and the positive and negative characteristics are assessed. This is how learning takes place. Ahola, Ruuska, Artto, and Kujala (2014) say that if the project manager was left with the task of governance of the project, then he or she may prioritize the interests of the project or his or her own interests over the interests of the organization. These authors call the avoidance of such things one of the “main features of project governance” (Ahola, Ruuska, Artto, & Kujala, 2014, p. 1328). Other purposes of project governance they find important include “shared coordination, control, and safeguarding mechanisms” and align[ment]with both internal (e.g. organizational capabilities, etc.) and external contingencies (regulatory practices, etc.)” (Ahola, Ruuska, Artto, & Kujala, 2014, p. 1328). Project governance has other purposes too, but it also has many benefits to both the organization who uses it and for the external stakeholders who are involved in the projects with which the organization is tasked.
The Benefits of a Governance Strategy in Project Management
Governance occurs at different levels because there are many different types of projects and the objectives of those projects may be better obtained with different focuses. In other words, project governance takes place in context. Corporate governance is always present, but project governance can vary from project to project. It influences the way projects are managed because governance provides structure by determining which projects are selected, who manages them and to whom the progress is reported (Joslin & Müller, 2015, p. 1381). Of course, the project governance is determined by the organization’s vision, mission and culture. Project governance should not engage in practices that the organization does not also endorse (Badewi, 2015, p. 7). So, project governance can be looked at as a way to promote organizational values in every project that is done.
Another benefit of project governance is that it balances the economic objectives of the organization with the social objectives of the organization. Müller, Zhai, Wang, and Shao (2016) of the International Journal of Project Management explain, “Understanding of governance as mainly a control function is indicative of an underlying agency perspective, which aims to reduce the risk of hazards through formal control mechanism” (Müller, Zhai, Wang, & Shao, 2016, p. 959). Project governance is a way to control budgets and make clients happier so that they return to the organization in the future. The need for economic control comes about because in some projects there are numerous independent stakeholders who may not be looking out for what is best for the organization. Governance can help to protect company assets and resources, control the spending, and offer ways to adapt projects to the bottom line (Ahola, Ruuska, Artto, & Kujala, 2014, pp. 1321-1322). Many may believe that the person putting up the cash is going to also be the one who takes on the project governance, but that is not always the case.
Governance is related to ownership sometimes. Derakhshan, Turner, and Mancini (2019) say, “The purpose of governance is narrowed to the management of the relationship between the project sponsor and the stewards (project managers) who are responsible for guiding the organization to reach its aims” (Derakhshan, Turner, & Mancini, 2019, p. 102). This is true; the project sponsor or owner may have a role in governance. However, there are many different types of owners of projects, which adds to the complexity of what project governance includes. Volden and Andersen (2018) of the International Journal of Managing Projects in Business talk about the ambiguity involved in the roles of project ownership and project governance. For instance, “in large public projects, the government may be seen as the owner, ultimately on behalf of all citizens. Similarly, in private projects, the board of directors is the project owner on behalf of all shareholders. . . . The role of project owner may be delegated from the true owners to individuals or groups, so-called “governance agents,” according to clear instructions defined by the project governance scheme” (Volden & Andersen, 2018, p. 179). In a government project, the owners (the pubic) has little effect on the governance of the project. While ultimately the owner of a privately sponsored project may have the final say, the project governance scheme ensures that none of the stakeholders can be taken advantage of by other stakeholders.
Approaches to Project Governance
The many definitions and benefits of project governance demonstrate the complexity inherit in it, but they also demonstrate that there are few universally shared views about what project governance really is (Ahola, Ruuska, Artto, & Kujala, 2014, p. 1321). That, of course, is another layer of complexity to explore. The various approaches to project governance can be seen as different attitudes or mentalities toward project governance.
The word “governmentality” combines the words governance and mentality. It is what “governors think about governing” according to Müller, Zhai, Wang, and Shao (2016). This is another aspect to governance that helps to explain its complexity. Governmentality can range from a more laissez faire sort of attitude to an authoritarian governmentality. Müller, Zhai, Wang, and Shao (2016) list the various types including authoritarian governmentality which often enforces process compliance and uses rigid governance structures. These are often used in major public investment projects. Liberal governmentality stresses outcome control although it can use flexible governance structures, such as those necessary for customer delivery projects. Neo-liberal governmentality aims for team members' corresponding values and ideologies with that of the project sponsor so that there is more self-control within governance structures. An example of this is in community-governed open source development projects (Müller, Zhai, Wang, & Shao, 2016, p. 960). These various types of approaches to governance correspond to management mentalities also.
Some authors talk about the recent advent of project governance mentality. For instance, Samset and Volden (2016) of the International Journal of Project Management say that for the field of project governance to become more well-known and respected, it will have to find a way to mix the complexities or regulations, economic means and information in improved governance management (Samset & Volden, 2016, p. 25). One way that Samset and Volden (2016) suggest that improved governance management can take place is through a concept program that offers ten paradoxes designed to help classify approaches to project governance. These paradoxes include: “1. how success is understood 2. the significance of front end management 3. early information overflow 4. the opportunity space 5. strategic alignment 6. cost estimation 7. disregarded analyses of costs and benefits 8. “predict and provide” 9. perverse incentives 10. myopic decisions” (Samset & Volden, 2016, p. 4). Each of these paradoxes represent an approach to validate project governance.
These paradoxes reveal two types of issues associated with project completion, those associated with the efficiency of project completion including delays and cost overruns and those association with the project’s strategic success—what Samset and Volden (2016) call “choosing the wrong concept” (Samset & Volden, 2016, p. 26). Project governance should be concerned with choosing the right concept, or approach. This may include considering not just the project’s sponsor or the people who complete the work on the project, but also society and the environment. Samset and Volden (2016) say that problems with strategic success can usually be traced back to the preparatory phase of the project. Project governance ensures that the preparation is thorough and informative because it encompasses the entire project from conception to completion. While project governance is also highly concerned about the economic aspect of the project, it is also deeply concerned about the success of the other aspects because satisfying clients is important for future economic concerns.
Other writers such as Bekker (2015) of Procedia - Social and Behavioral Sciences have identified specific approaches to project governance. Bekker (2015) labels thes approaches “schools of thought” because they are called the single-firm school, multi-firm school and large capital school (Bekker, 2015, p. 2). The single-firm school applies to governance of internal organizational projects with a technical aspect. For instance, some single-firm school projects include IT projects, capital expansion, business improvement, and restructuring projects for example. The multi-firm school refers to governance related to two or more organizations that have contracts on the same project. The governance usually takes place on a technical and strategic level. The large capital school is concerned with projects for temporary organizations, or forming their own entity and creating governance ideologies for that organization (Bekker, 2015, p. 2). While these types of designations for project governance may make the concept of governance easier to discuss, they also add to the complexity of the project governance concept.
Conclusion
Project governance may sound like an easy term to understand, but the concepts behind it are many. Project governance is oversight, yes, but it is much more than just oversight. It also includes consideration of all facets of a project. Project governance has many purposes and offers many benefits to organizations who use it. While there are several approaches to project governance, the main concern of the practice should be mutual agreement during the project and satisfaction upon its completion.
References
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