Project Governance has been neglected yet a governance team can destroy more value in five minutes than a project team can destroy in five weeks.

Poorly understood, poorly supported and poorly executed it is not surprising that more projects fail due to poor project governance than poor project management.

Yet while we invest millions in project management we invest next to nothing in project governance.

Even getting people to agree what ‘project governance’ is, is a challenge.

Governance support materials are sparse and usually superficial. Not helped by executives insisting they only want “the questions I need to ask,” not understanding they need much more to be effective.

So, after 20 plus years in project governance roles and over 12 years teaching, coaching and supporting executives in governance, we are providing a world-first solution that will revolutionize project governance knowledge.

THE TOP™ PROJECT GOVERNANCE KNOWLEDGE CENTER

You can find out more here.

This is both a comprehensive resource center for executives in project governance roles and a support base for those accountable for project governance performance in their organizations.

The Project Governance Knowledge Center provides the direction, information and support required to move project governance from being a potential liability to being a key driver of success.

Whether you want to confirm your understanding of project governance, build you personal competency in a governance role or develop your organization’s governance capability – this Knowledge Center will equip and support you. It is designed by executives for executives.

For example, it provides

• Charters, checklists and cheat-sheets (Tools and templates)
• Answers to frequently asked questions (FAQs)
• Short videos on how to deal with specific topics – such as “What to do if your project goes red” (Education Programs)
• Short guides on how to assess business cases, govern risk and more than 20 other topics (Guides)
• Practical frameworks that explain why projects fail, plus others that change how projects are viewed, approached and delivered (Frameworks)
• Articles on project governance – topic specific (eg How to champion your project) and some story based (eg Death by 1000 cuts) (Topics)
• Lessons to be learned – such as The Tale of Two Projects – that shows how easy it is to in good faith oversee a failure and what good project governance (and project delivery) looks like. (Topics)
• Easy-to-read books on important topics such as getting the best out of consultants – Consultants.CON (Topics).

Executives know all they need to know — at least they think they need to convey the impression that they know all they need to know. And, to get to an executive position you need to have some sort of track record and experience.

But, when it comes to projects and project governance this model falls down. Being a Sponsor or Steering Committee/Project Board member is not like any line management role. It is partially hands off and partially hands on. It has full accountability (for the delivery of the business outcomes, benefits and value) but not full control (of all of the elements involved in their delivery). It is part way between being an overseeing board member and an involved manager.

Project governance is a complex role that is certainly not intuitive. Even ex-project managers do not understand the governance role well as it is a very different way of thinking to being a project manager. (Just as being a board member is a different role to being a line executive.)

Yet, educating executives on their project governance role and how to perform it effectively is rarely done. Why?

Executives are reluctant to put their hand up for help, as they believe they should know enough, everyone else seems to be coping with the role and they appear to be muddling through no worse than anyone else.

Project, program and portfolio managers are reluctant to say to tell executives that they need to be trained in the role. So nothing happens.

But things do happen. Projects continue to fail (on one or more dimensions) while being ‘governed’ by otherwise competent executives. When the causes of project failure are analysed, inadequate project governance is always in the top 3 reasons for failure (above inadequate project management).

So, by burying our heads in the sand, we continue to allow poor project governance to destroy projects week in and week out.

I often point out to governance teams that they can destroy a project’s value and intent in 5 minutes; whereas it can take a project team 5 months to achieve the same result!

However, we have found over the past 13 years that when you do teach executives about project governance, their confidence in the role increases, their performance improves and poor projects are called out by their governance teams.

But when educating executives you are not dealing with a blank canvass. Each executive will know something about project governance and, therefore, there is a danger that the training is seen to be teaching them things they already know. Hence the need for the 40-40-20 rule. This rule says:

• We know you know 40% of what you need to know about project governance.
• We know you think you know another 40% about project governance that may or may not be correct – this knowledge needs to be confirmed or corrected.
• We know you don’t know 20% of what you need to know about project governance but none of us know what that 20% is.
• Therefore, as we go through this training, you’ll hear things you already know; you’ll hear things that confirm or correct what you think you know; and you’ll be given some new insights into important dimensions of project governance.

This frames the education as building on their existing knowledge, that there is up to 60% of potential new or correcting knowledge, and allows them to hear the elements they already know without dismissing the whole training as teaching them what they already knew.

To help you meet the need to educate executives or, if you are an executive to educate you directly, we are launching a world first Project Governance Knowledge Center next week. The first and only one of its type in the world.

Stay tuned.

The project is finalizing the business case.

It has no clear definition of the desired business outcomes.

It has no process definition of its requirements – just a list of functions and features.

The solution was selected on the basis of others in the industry are using it so it must be okay.

The configuration selected prevents progressive delivery, delaying the benefits to post implementation.

The benefits that have been identified are mostly spurious and only intended to get the business case past the board.

Even at this stage it is quite clear that the cost to deliver will double before the project is delivered.

Attempts to improve the situation fall on deaf ears.

The project team point to the reputable consulting firm involved as proof that all must be okay. The consulting firm can see years of fees ahead and they are not going to ‘rock the boat’.

The governance team are merely focused on getting the business case approved, “Then we’ll look at the issues.” But they won’t.

Instead, after approval all will be fine for a while during the start up of the development phase. The cash burn rate will increase as the number of project staff increase, but that’s expected.

Later, after a few months, a few scope changes will start appearing.

Expectations will be progressively managed down.

Then real issues and delays will arise.

The governance team will panic and totally focus on cost containment and achieving ‘something’ for the monies invested.

The focus of the project team will be on cutting scope to meet some revised ‘latest’ schedule.

Eventually ‘something’ will be delivered, installed and implemented. Workarounds will be created to cope with the shortfalls of the system.

Some if not all of the systems to be replaced will be found to need to be retained.

No one will be looking for any benefits.

This is the common view of three independent consultants from three different firms with knowledge of the client and their project. 

So, When should this disaster in waiting be called out? Respond on the Blog.

Featured publication

Understanding Project Governance
Only $9.95 | Buy Now 

Business project governance is still more ‘not understood’ than misunderstood yet it is critical to project success.

In this succinct Guide 26 areas of project governance are discussed to emphasize its importance and describe what happens when it is not done effectively.

An essential introduction to anyone looking at or being appointed to a project governance role. Basically, a comprehensive primer on project governance.

Who should read:

• Project Sponsors/Owners/Executives – to understand the scope and nature of their role
• Steering Committee/Board/Governance team members – to understand the scope and nature of their role
• PPMOs – to understand how project governance roles and how they need to be established and support
• Project Investment Committees – to understand what to expect from governance teams
• Project Practitioners – to understand the true roles of governance teams
• Auditors – to understand the true roles of governance teams.

More information

They say that there are three types of manager – those that make things happen, those that watch things happen and those that ask, “What happened?”

I recently watched a governance team in action (or should that be ‘inaction’?)

The project was not going well. The governance team, made up of senior managers from across the country, was moaning and groaning, blaming and complaining.

“The project’s not going well.”

“We’re not going to be successful.”

“We’re not getting the results we need.” And so on.

A group of ‘watchers’ – watching the project fail while spending their time complaining about it. This is typical of too many project governance committees. Made up of senior managers with vast knowledge and experience, authority and power; but all they do is watch and moan as the project sinks deeper towards failure.

Then, suddenly, one member of the committee said, “Failure is not an option; we’ve got to make it succeed! Now what can each of us individually do to ensure the project is successful?”

This notion of taking action, of actually doing something about it, of making something happen, seemed to strike the rest of the committee like a novel idea, even a radical idea. But they caught the fever and actually started coming up with ideas that would address some of the project’s problems.

Too often, governance committees are essentially passive. They’ll make a decision if you ask them, but they are not actively looking to take action to ensure the project’s success. They’d rather complain and blame; moan and groan and continue watching.

If they do this long enough they’ll join the ranks of those that ask, “What happened?”

In our governance training we emphasize that governance is about two things above all else – the delivery of desired business outcomes and benefits, and taking action. Project governance is not for watchers.

What governance role are you (or your governance team) performing on your project?

If they’re watching what’s happening, you need to educate them that (and how) they should be making things happen.

© Jed Simms, Australia, 2010

This week a slight divergence into the world of Governance.

If your organization wants to be sure that it is making the most appropriate use of IT, in the most appropriate way, and is protected against the risk of failure, Governance of IT will be of interest to you.

Governance of IT is a topic of significant importance for Board and Executive levels as they recognize the importance of IT to their organizations and move to effectively direct and control it.

Mark Toomey has been the pioneer behind firstly the Australian Standard for governance of IT and now the international standard. He also publishes a regular newsletter on the topic.

He has just published his latest newsletter which he has agreed to make available to you all. If you go to http://www.infonomics.com.au/Newsletter.htm you can sign up for this newsletter and access real thought leadership in this important area.

Mark also has a book coming out soon on Governance of IT which you can find out about by subscribing to his newsletter service.

Jed Simms

When the last economic downturn hit, companies responded by ‘downsizing’, ‘rightsizing’ or some other euphemism for reducing staff numbers.

This time, this option is not so readily available as the ‘surplus’ staff is no longer there.

Companies are going to have to be smarter in how they reduce costs and remain ‘fit’ to survive.

So, how fit is your organisation? Companies currently appear in good corporate health – but this is often a veneer of damaged sinews and muscles, a damaged corporate innovative capability, which has only been sustained by the overall business boom.

So how do you ensure you are fit for success?

Cost cutting as a marketing issue

Reducing costs without a customer focus is, potentially, cutting your competitive edge.

Cost cutting is not about having the lowest cost but the highest margin.  It is, therefore, a marketing issue. If you are going to tackle waste, you need to define what value is, because the opposite to waste is value.   And you can only define value from the end-customer’s perspective.

Only when you really know what doesn’t add value to your customer can you start asking “How can we get rid of that?”  Otherwise you can be cutting costs and, potentially, customer value simultaneously.

Cost cutting as a strategic issue

Any company can cut costs, doing so does not necessarily give a customer advantage.

Customer advantage grows when your entire system of corporate activities aligns with and meets your customers’ needs and values.  How all this fits together also determines your differentiation in the customers’ eyes and ultimately your profitability.

When you cut costs you change how your company works and fits together. If this is done without a strategic perspective this can result in the loss of your differentiation, your customer advantage.

Cost cutting as a value-delivery issue

Sometimes an organization’s focus is too internal.  Internal cost savings are achieved at the expense of suppliers who then go on to increase their prices eliminating the claimed cost benefits.

Any cost-cutting exercise must track the cost impacts right through the value chain, from your supplier to your customer.  This will allow you to ensure that any costs cut are eliminated and not just moved around in the value chain.

Distinguish between quick fixes and long term solutions

‘Slash and burn’ cost-cutting measures can make you thinner but not necessarily fitter.   Yet it is well-developed fitness that makes for lasting health and competitive success.

Repeated studies have shown that radical cost cutting has resulted in a deterioration of corporate performance over the next 2 or so years, achieving only short-term transitory gains.

You need to shift the focus to simplifying the business, eliminating waste and enabling growth. Then the opportunity is to create a ‘win-win’ with your staff. You can harness your staff’s energies and knowledge and use their skills to make your firm smarter at delivering customer value.

Cost cutting as the acid test of your innovativeness

Innovation can be a major enabler of reduced costs. Finding simpler ways of doing business and delivering value are core to your future corporate “fitness”.

Unfortunately, some of the first casualties of cost-cutting exercises are often the creators, innovators and improvers – the R&D departments, the organisation-improvement sections, the corporate analysts and the trainers. Those people that enable innovation.

When innovative and improver sections are seen as “fat” and then cut their organisations can become so anorexic that they are unable to create or seize new opportunities. In fast moving industries, these creative resources are often the difference between success and threatened survival.

Distinguish between fat and reserves

Don’t cut too deep. No organisation can maintain a sprint for the length of a marathon. You can ask for a major effort to achieve some major goals, but after a while the energy and enthusiasm will fade.

Your cost-reduction (“fitness”) programme must leave enough resources to both achieve the cost-reduction goals and then go on improving and cutting costs further.

Keeping the right focus

The key is to focus on the processes not the numbers. You need to focus on how cost-effectively you can generate customer value (“fitness”) not how you can reduce the headcount numbers (“weight loss”).

Too often managers (and consultants) wish to improve the numbers in the accounts, ignoring the unmeasured dynamics of the organisation. ‘Savings’ made in one area then have damaging and costly implications for other parts of the organisation or for your customers.

Focus on the end game — generating customer value at lower cost and more profitably. The loss of one or two customers can be far more damaging to your profitability than the savings made from a reduction in headcount.

In survival mode, measure customer value, organisational alignment, capability to change, sales margins and profitability — these are what really count.

Exploit IT effectively

Technology is a potential source of innovation. It can create new ways of doing business, eliminate existing constraints and deliver increased value to your customers at lower cost.

But IT is too often is the cause of greater angst, costs and service failures.

IT will only increase value if the business has the capability to harness its power and potential – and can manage its effective implementation. In the next few years this IT-management capability is likely to be a key differentiator between the winners and losers.

Survive and prosper

During the recent boom times many companies increased their costs again. Now is the time to take action so as to maintain your capability to generate and deliver customer value (fitness).

You should aim to avoid the ‘cost-increase—cost-cutting’ cycle and, in so doing, profit greatly while your competitors struggle with their mis-conceived cost-cutting programmes.

Originally published in 2004 as Thought Leader briefing number 120 and based on a UK Management article

As many of you will know, I’ve been pioneering Project Governance since the late 1990s.

In the past year I’ve completely revamped and extended our Project Governance program. This complete program is now available under “Business Project Governance” at www.project-sponsor.com.

The program consists of a series of “Understanding …” Guides to educate executives as to the need for their governance roles, their accountabilities and success drivers; and a series of “How to …” Guides that spell out how to govern a project or program and how to, for example, manage the Steering Committee and Project Manager.

Each “How to …” Guide is built around a process — the process of governing project set-up or defining project policies or managing project managers. This gives each Guide a structure and framework rather than just being a collection of points and issues.

These Guides have also been revamped to be applicable to and useful for governing construction projects (whereas the previous version was heavily IT-focused). This increases the program’s flexibility and usefulness.

These Guides are designed to be provided to Project Sponsors and Project Steering Committee members to help them understand and perform their roles knowledgeably and effectively. While some of the content is ‘known’ (really or thought to be) there are always many dimensions that are new and contribute directly to the success of a project.

Other people who have found these Guides useful include project managers, auditors and Board members.

Our research found that poor project governance will destroy at least 10% of the project’s value and can allow the project to fail completely (even if it is finished). My Guides address this value-loss risk.

The full, revised Project Governance program consists of:
Understanding Project Governance
A quick overview of the 24 key governance areas that details what goes wrong when any area is poorly performed. A primer on the topic of “what is project governance?” (more information)

Understanding Business Project Leadership
A quick overview as to the need for and impact of business leadership on projects. Includes the required Sponsor commitment and charter. A primer for project sponsors. (more information)

How to be a successful Project Sponsor
A review of the Sponsor’s accountabilities and the differences between a good and poor project sponsor. The base guide for project sponsors. (more information)

Understanding “Why am I here?”
A quick overview of the need for and role of the Project Steering Committee and how it impacts the project. Includes the Steering Committee commitment and charter. A primer for project steering committee members. (more information)

How to be a more effective Project Steering Committee member
A review of the Steering Committee’s accountabilities and the differences between good and poor performance. The base guide for Project Steering Committees.

How to govern project set up
The first of the project oversight/governance guides that details where and how to get involved during the critical project set up stage (ie up to the business case approval). These “How to govern …” Guides are for all of the project governance team. (more information)

How to govern project planning
The second of the project oversight/governance guides that details what questions to ask and how to ensure the project plans are appropriate during the project’s planning stage. (more information)

How to govern project delivery
The third of the project oversight/governance guides that details the governance roles, concerns and required actions during the design and delivery stages. (more information)

How to govern project closure and beyond
The final of the project oversight/governance guides that details how and when to close down the project and how to continue governing until the final outcomes and benefits are realized. (more information)

How to manage your Project Steering Committee
A quick guide for Sponsors as to the role of Steering Committee, how to select its members, manage it and measure its performance. (more information)

How to manage your Project Manager
A quick guide to the role of the Project Manager, how to select one matched to your project’s requirements, manage them and measure their performance. (more information)

How to control your systems costs
A specific guide for systems projects that enables business executives to, understanding the trade-offs, specify the 12 key design criteria that impact development and ongoing systems costs. (more information)

How to define your project policies
A specific guide to agreeing and implementing a series of project and technology-related policies so that there is no confusion at the detail level as to what is required and who has the requisite authorities in relation to project delivery. A customisable policy document is also provided. (more information)

Why IT projects are different
A quick guide to the seven essential differences between IT and other types of projects (especially construction) which makes them more complex and more prone to failure. An essential guide for all non-IT executives and board members.
In addition, each of these Guides is supplied with bonus material whose value often outstrips the price of the Guide itself. (more information)

Plus, there is also a Project Governance Resource Library that is continually updated and added to that further enhances the value and usefulness of the Project Governance Program.

And, for those who don’t yet have an effective governance program in your organization, I have also created a “How to establish effective project governance structures” guide to enable you to plan, design and establish the necessary levels of governance.

Coming soon is a complete governance education program and full-scale project delivery competency development program.

To find out more and acquire each of these Guides go to www.valuedeliverymanagement.com.

If you have any questions or comments, contact me at jed_simms@capability.com.au.

Imagine being asked to hold a jelly in your hands.

So there it is, wobbling a bit, but relatively stable. Provided you don’t make any sudden movements, the jelly should stay in place. Some may melt and be lost through your fingers, but with a light touch and a steady hand the jelly should be okay.

But what if you got worried about the jelly — that is wobbling, that it might slip out of your hands, that the amount seeping away through your fingers could turn into a flood — would you tighten your grip?
What would happen if you did tighten your grip? Picture yourself gripping the jelly. Would you actually have better control?

The jelly might stop wobbling, but you’re likely to be losing much of the jelly through your fingers. The more you grip the jelly, the more you’ll lose.

Yet, this is how many organizations manage project costs. They get worried about a bit of wobbling in the costs here and there, that some funds are seeping away and so try to exert greater control over the costs in ways that can quickly become counter-productive.

The tighter they control the costs the more the costs seem to seep away.

What we have found, as we have reviewed how different organizations manage projects, is that those with the most focus on costs tend to have the most cost overruns or projects that result in increased costs!

Short-term decisions are made to ‘save costs’ which then cost more down stream. The business decides to skimp on resource costs and then finds either the project is extending out (with the associated cash burn) or is suffering from quality problems that increase subsequent operational costs.

When cost management is seen as an end in itself the tendency to grip too hard is too often seen.

Particularly in a governance role, think of cost management in terms of jelly management — it needs a light touch, no sudden movements and will wobble. But, if you try to control it by gripping too hard, costs are likely to seep away.

Jed Simms

What do you think? Record your comments below.

Projects can be likened to trains. If you want to be going northeast but set off on rails leading northwest, you can’t easily just turn right and correct your course. You often have to go back to the start and realign your project.

(This explains why a problem project is always a problem project regardless of how many ‘rescue’ attempts are made.)

When I do health checks and find projects in trouble the root causes can often be tracked back to the early stages of the project. How it was set up, how it was categorized (eg as an “IT project”) and how it was pursued.

Mistakes made at this early initiation, set up, commencement stage will come to haunt a project in later times. And, there is often no remedy later other than (almost) starting again.

In our video “Understanding how projects are condemned to completion” (Understanding how projects are condemned to completion” will be available on valuedeliverymanagement.com by May 10th, 2008) we take you through a real 30 month project so you can see how it started off on the wrong foot and then made one decision after another that progressively destroyed more and more value with the full involvement and support of the project leadership and governance teams. Had different decisions been made at the start of this project, a very different result would have been delivered.

Project set up and initiation is a critical part of value delivery management. Yet it is too often seen as just organizing the resources, building a business case and generally getting the project up and running.

But, at this time, fundamental assumptions and decisions are being made that will colour the whole project. You are, in effect, deciding the ‘rails’ your project will run on. And, while in the very early days you can move across from one set of rails to another, once the project gets momentum your options as to how the project goes, where and what it can deliver are increasingly limited.

The greatest danger at project set up is the desire for visible action — producing a plan, a business case, a technical specification, or whatever. (Project managers can be great deliverers, ever keen to deliver something. In a recent discussion to identify what exactly a division wanted to achieve with a new initiative, 10 minutes into the discussion the project manager was listing ‘deliverables’ and ‘actions’ long before we’d decided where we were trying to go!)

Those in charge of project set up should think of a building project. If you buy a block of land and then start designing your house, you’ll come back to that block of land in three months and nothing will have happened on the site. Meanwhile, the house is designed, costed and submitted for council approval; the materials and building staff have been organized and any unexpected problems with the job have been discovered and dealt with. Now, you’re ready to go. Now, you’ve defined clearly what ‘set of rails’ you want to be on.

So, before you rush into your project, take the time to define your business requirements, design your solution and identify all of the possible options, approaches and risks. Then select which ‘set of rails’ will deliver you the best results. (The Governance Guide “How to govern your project’s set up” will be available from www.valuedeliverymanagement.com by May 2nd.)

Don’t be railroaded down the wrong tracks from the start.

Post your comments on our blog at valuedeliverymanagement.com

Delivery of a project is not the only measure of success that has to be met. There are three different but complementary measures of success — and all three must be met for a project to be deemed fully successful. This triangle of success measures can be illustrated as follows:

The Project team’s measures of success relate to the successful delivery of its agreed business outcomes, benefits and value within the time, cost and resource constraints defined.

Too often project managers want to be only measured on ‘on time/budget and to specification’ measures. This is inadequate. Projects don’t exist to just be delivered, they exist to deliver business outcomes that have benefits and value. While some of the business value will be realized after the project has finished, there is always some value that can be realized as part of the project’s activities.

Therefore, ‘on time/budget and to specification’ become the constraint measures on the project, not its measures of success, per se. Success is measured in terms of the project’s delivery of the level of business outcomes specified for the project.

But, even this will not be sufficient to be considered a ‘success’ without the other two sets of measures.

The Business’ measures of success often relate to the project’s impacts on business-as-usual and operational performance. Are the new roles meaningful? Do the staff have a career path? Is the workload too onerous? Was the transition too disjointed and mismanaged causing a loss in productivity?

Business management are concerned with the ongoing delivery of their business processes and outputs. Projects should improve these but can, if their detailed operational requirements are not considered, reduce the business’ ability to deliver. This is what the business is watching for and is wary of.

Therefore, to be considered a ‘success’ in business terms, the project must deliver outcomes that improve operational performance on all dimensions. This is an aspect of project planning that is rarely considered. “What will life be like after this project has been implemented?” It is often useful to develop indicative “days in the life of …” scenarios to focus the project team on the detailed aspects of the “life” they are creating.

The Governance team’s measures of success revolve around the delivery and realization of the project’s value — the reason why the project was commissioned. If the project does not improve the organization in some measurable way, then it is a failure. Realizing the expected business outcomes, benefits and value in full and delivering the expected return on investment is the key governance measures of success.

This entails taking the project’s outcomes and then working with the business to deliver the final business outcomes and all of their associated benefits and value. So the governance team’s measures of success go beyond the project into the post-project timeframe when many of the benefits will be realized or optimised.

Hence ‘the success triangle’ — and the need to meet all three sets of ‘success measures’ for a project to be deemed fully successful. However, when we review most projects only a subset of the project measures of success have usually been defined. This is not good enough — all three measures of success are required.

Do you know all of the components of your three sets of success measures? Go to valuedeliverymanagement.com for our new “Understanding Project Success” Guide.