Good organisational governance – make it happen!

When an organisation manages numerous projects and programmes within one or more portfolios, ensuring that an integrated and efficient portfolio, programme and project governance structure exists can be a challenge. Since good organisational governance requires projects and programmes within a portfolio to remain continually linked to the organisational vision, strategic objectives and value proposition that enable successful strategic execution.

It ensures the organisation answers the respective strategic and value questions of “are we doing the right things” and “are we realising the financial benefits” from its capital investment using finite funds and people resources. As such, it requires a governance model that enhances senior management’s ability to implement an integrated portfolio, programme and project governance structure through defined roles and accountabilities that are mutually understood and agreed. It should also enable informed and timely decision making as well as improve information flow, quality and transparency to key stakeholders, particularly the programme and project teams.

Effective organisational governance (through portfolio, programme and project boards) looks at how the delivery of initiatives is aligned with the strategic direction of the organisation. It considers how the start-up and closure controls are applied to initiatives and how strategic alignment is maintained during the initiative’s lifecycle. There are similarities between the characteristics required for good management control and organisational governance, but their interpretation is different. Organisational governance is about having the right initiatives running, while management control is about running them the right way with sufficient control points to pause, reflect and improve strategic execution.

Governance Transparency Model

To enable good organisational governance, organisations need to establish an integrated portfolio, programme and project board structure that is accountable for changing the organisation ideally based on the transparency model. However, it’s important to recognise that accountability is a personal choice. You need to want to be accountable - for good organisational governance that enables successful strategy implementation. To help combat this, the transparency model focuses on seven key elements - motivation, disclosure, stakeholder participation, relevance, clarity, credibility and accuracy. So let’s explore the true intent of these good organisational governance elements that encompasses all portfolio, programme and project boards. They are:

1. Motivation- Act in a manner that is ethical and consistent with broader business, user and supplier stakeholder interests. This means more than just avoiding potential corrupt or dishonest conduct. It involves proactively demonstrating that any investment decision making is robust and the outcome beyond reproach - acting in such a way that there can be no perception of undue bias, influence and/or lack of integrity.
2. Disclosure- Share transparently all organisational investment decisions at a portfolio, programme and project level. People should be able to follow and understand the capital investment decision-making process. This means that they are able to clearly see how and why a decision was made – what information, advice and consultation was considered, and by whom together with what applicable policies or standards was followed (where required).
3. Stakeholder participation- Portfolio, programme and project boards cover stakeholder management through appropriate user and supplier group representation by one or two people that covers their collective influence, interests and concerns. Good representation requires the advocate to ask group opinion and provides opportunity to make recommendations so they can be part of the actual decision-making process. It does not blur the core purpose of capital investment decision making with stakeholder management.
4. Relevance- To ensure relevancy, decision making authority is delegated to the lowest appropriate level to enable timeliness of capital investment decision making. That is, only one accountable role should exist at each portfolio, programme and project board level. It is an important tenet that is often forgotten when structuring and integrating portfolio, programme and project boards that enables effective operational, tactical and strategic decisions.
5. Clarity- Portfolio, programme and project information should be easily obtainable and understood. For portfolio management offices supporting the main investment board, the portfolio management process should be easily accessible and understandable so new ideas from across the organisation to resolve business problems can be continually categorised and prioritised on its merits against the totality of inflight investments. Programmes and projects that no longer align to strategic intent, or are underperforming or simply no longer provide continuing value to the customer should be stopped; so the money saved can be used to start better placed pipeline initiatives.
6. Credibility- All programmes or projects have clear and realistic tolerances (or constraints) for time, cost, scope, risk, prioritised benefits and quality (criteria) within a defined range rather than point value, particularly for the tranche or management stage in which the initiative must stay within. So when making continued investment decisions, these parameters are taken into consideration when assessing success in the delivery of outputs, capabilities, outcomes, benefits and/or value to the customer. Credibility therefore is earned when a project/program culture exists that enables transparent and honest reporting to the project, programme and portfolio boards so these governance authorities can act confidently, when direction and decision is required.
7. Accuracy- Denotes a single source of truth for project information and is a concept that any organisation can apply as part of its knowledge management process.  It ensures that everyone in the organisation from the project and programme boards up to the portfolio board uses the same data and data sources when protecting value and making continued investment decisions. It requires everyone involved, starting with the project, then the programme and finally portfolio level roles, to accurately capture data and report transparently. It presumes a mature open environment exists with a culture of collaboration, communication and safety is actively pursued rather than the allocation of blame for any perceived failures or inaction.

In summary, successful business change does not happen in isolation without effective organisational governance supported by a culture of transparency and trust. For organisational governance to be effective, it must be simplified and minimalist rather than bureaucratic and complex. Portfolios, programmes and projects accountable for changing the organisation require clarity to exist about what capital investment decisions are made, by whom, where, when and what criteria is used. So when speed and quality of decision making is required, having an integrated and efficient organisational governance model is absolutely crucial to strategy execution.

Effective organisational governance, therefore, can only be successful where escalation paths with defined limits are clearly defined so performance deviations can be referred to the next tier of governance in a timely manner. In bringing people along the good organisational governance journey to discover an improved way of establishing and operating organisational governance structures, it’s important to ensure the portfolio, programme and project governance boards reflects and does not duplicate the corporate governance structure.

References

1. Forest Landowner's Association (2018) Transparency Model, accessed 16 Feb 2021, <https://www.forestlandowners.com/foundation/confidence-trust/transparency-model/>
2. Axelos Global Best Practice (2013), Portfolio, programme and project offices, 2nd edition, The Stationery Shop, Norwich.
3. Culture Crossing (2016), Creating a culture of accountability. Available at: https://youtu.be/Qe323dmrJ0g (Accessed 10 February 2021)
4. Garland, R. (2011). Capital investment governance: The integrated governance of projects, programmes and portfolios. Stationary Office. Available here.