Project Governance

Abstract Project governance has become popular in the workplaces, as it addresses lack of accountability in project performance. Project governance is mostly associated with information technology projects; project–based firm develop as a result of management. Today, due to the advancing technology, many firms rely on projects in order to be innovative.Advertising We will write a custom assessment sample on Project Governance specifically for you for only $16.05 $11/page Learn More Flexibility is therefore needed in order to allow firms to combine skills and capabilities. This paper elaborates more on project governance, its importance, challenges, and different mechanisms associated with project governance. The paper further elaborates project governance structure in detail and the role of the steering committee and that of the project manager. This research aims at conveying an understanding on the importance of effective project governance, whi ch will contribute to the success of a project other than a failure. Every firm should incorporate project governance, as it assists in monitoring and making firm decisions. Indeed, firms that do not have project governance are mostly associated with fraud and mal-practice. Project Governance Project governance can be described as a framework in which decisions regarding projects are made. According to Renz (2007, p19), â€Å"project governance is a process-oriented system by which projects are strategically directed, intergratively managed, and holistically controlled, in an entrepreneurial and ethically reflected way, appropriate to the singular, time-wise limited, interdisciplinary and complex context.† Normally, management is effective in developing projects that represent organizational structure. Project governance contributes towards solving information and knowledge issues, as it proposes towards the system of strategically directing and controlling projects that invo lve operational and governance level. In addition, project governance provides a structure that aids in meeting objectives of the project, how to obtain the objectives, and how to monitor performance in the place of work (Turner, 2007, p.104). The level of governance must be clearly defined, which is the managerial level that controls the resources in a project. Therefore, the absence of governance in any organization can be interpreted as mismanagement that is equal to fraud. Moreover, good project governance includes an effective mode of communication and an effective assignment of duties and responsibilities.Advertising Looking for assessment on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Project Governance Mechanisms Project governance is associated with an organization process of sharing decisions concerning projects and monitoring those projects. According to (Vallabhaneni, 2009, n.d), â€Å"project governance mechanisms include establishing a project steering committee and project oversight board and conducting a project management audit.† This committee reviews an organization’s functions, but focuses on a specific project at a time. It reviews the scope, impact, funding, challenges, costs, benefits, progress and solves problems that are related to the project. Most development organizations have adopted project governance; however, effective project governance is important, as it is associated with several mechanisms. These mechanisms encourage behavior that should be consistent with an organization’s values, norms, and strategy and mission (PM4DEV, 2008, p.108). The main objective of project governance is to establish effective levels of authority and decision-making, whereby, people and policies are involved in order to provide a framework for decision-making. The roles and responsibilities for the employees involved in a project are defined, and their level of in teraction and co-ordination are considered. An organization management team is held responsible for implementing and supporting a governance structure before the project starts. It is important for management to document the roles and responsibilities; this project governance document should assist in the definition of the decision-making structure, role, and duties of the stakeholders, and the processes involved in the project. According to PM4DEV (2008, p109), some organizations have a standing project governance, which means that the committee overseas all projects, thus defining the decision making structure. According to Nickerson Zenger (2004 p7), markets, authority based hierarchies and consensus based hierarchies are the mechanisms of project governance. Further, they explain how they relate to decision rights, communication channels, and incentives to motivate search in an organization.Advertising We will write a custom assessment sample on Project Governance specific ally for you for only $16.05 $11/page Learn More In the market mechanism, a manager decides on how to create knowledge and the best way of utilizing the knowledge and when to disperse the knowledge. Therefore, marketing governance determines the search for valuable information. Due to the prices present in a market, incentives are provided in order to motivate the search for the needed solutions. Each problem requires a solution, which is yielded from a decision made, thus leading to a marketable solution that will be of benefit to an organization. Nickerson Zenger (2004 p7) state that â€Å"markets provide high-powered incentive that motivate actor to pursue trials that expand their knowledge or the sale of products and services based on that knowledge.† The sharing of knowledge on a particular project requires a common language, which is used to communicate; however, markets do not provide strong incentive that formulates a common language. The aut hor further explains that markets have failed as project governance mechanisms, since problems have become more complex. Markets are seen to discourage information sharing rather that a promoter in knowledge sharing; indeed, markets incentives only benefit an individual, other that majority of people. In addition, market incentives do not work towards implementing a common language that would ensure effective sharing of information. However, markets are efficient in finding solutions to organizational problems, but they fail due to ineffective knowledge sharing method. Authority–based hierarchy is a key to decision making and aids in transfer of knowledge. Therefore, in problem solving, authority is necessary in managing of knowledge sharing. In addition, employees grant a manager the authority he needs, and as a result, they attain their wages. Therefore, the knowledge employees receive at the workplace earn them wages for their performance. Authority does not automatically imply presence of expertise; therefore, in case authority is exercised in absence of knowledge, the authority is ineffective. However, authority-based hierarchy is effective when searching for solutions to organizational problems (Nickerson Zenger, 2004, p.9).Advertising Looking for assessment on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Consensus–based hierarchy supports knowledge transfer within the organization by educating each other on the knowledge acquired, thus forming a clear direction on the choice of project and how to solve the associated problems. In addition, the control and monitoring mechanisms, include tools that support the planning and implementation of projects, and monitor thee activities to ensure that the initial project objectives are met (Robinson H, et al, 2010 p76). Project governance involves major decision-making, whereby, a project manager has to make some key decisions that pertain to the project. Nevertheless, those issues that the project manager cannot handle may be referred to the project board. Moreover, project governance may impact positively on customers and suppliers in that, a customer is required to be more involved in the project, thus accepting project ownership. When organizations face an increase in capital works, there is need to increase resourcing in the suppli er on business. Decision-making Effective project governance yields to quality decision making, as the project decisions are aligned with the organizational objectives. In addition, proper allocation of resources is ensured across all project; the presence of an effective project governance results to stable and clear decisions. Nevertheless, when a project is in its initiation stage, it requires project governance that will assist is overseeing and controlling the project. Managers should be able to asses the project progress, but ineffective decision-making may lead to failure of the project. According to Kerzner Sponholtz (2011, p.19), â€Å"governance relates to decisions that define expectations, accountability, responsibility, granting of power, and verifying of performance.† Therefore, governance allows effective and efficient decisions to take place in a project. However, due to the large committees involved in project governance, decision-making appears to be slow, as every member wants his /her interests to be considered. Dynamics of Leadership Behavior A leader’s presence is important in any business; therefore, when a firm is dealing with project, it is important for them to acknowledge a project manager that will oversee the process of the project from its initiation stage to its final stage. Leadership in a project is very important, as a certain type of leadership style could lead to either the success or failure of a project. However, culture, customs, and the nature of project may influence the management style used. Autocratic style of leadership involves decision-making process only among the senior management; as a result, the employees are expected to abide by the management decisions. Communication channel follows a downward approach, whereby, orders and instructions are passed from the top leaders to the subordinates. This style of leadership is advantageous as the direction of a project remains constant and decisions are similar, thus portraying a well-managed project (PM4DEV, 2008 p107). The paternalistic style of leadership involves a manager making decision with the employee’s interests in mind, rather than giving all the attention to the project only. The manager takes the initiative of explaining all the decisions regarding the project to the employees. There is the presence of employee motivation in this type of leadership as opposed to autocratic style. This type of leadership creates a sense of loyalty from the employees as their social needs are met. However, the employees assigned to the project may become more dependants on their manager, such that, in case the manager makes wrong decisions, they completely loose faith in him. The democratic style of leadership involves both the leader and the employees in that, the employees take part in decision-making process. Where quality decisions are required, the style of leadership is effective, since employees, opinions are inclusive. Lai ssez-faire requires the manager’s role to be marginal, such that employees have specific areas in which they manage within the project. The communication channel is equal in both sides; however, not much is communicated, thus resulting to poor management of the project. This results from staff lack of direction and focus; hence, the project image is affected. Organizational Structure According to Robinson et al (2010 p75), â€Å"an effective organizational structure defines the reporting structure, lines of accountability, project manager’s role, and responsibilities within a project team.† Therefore, there is need for a good governance structure and mechanisms that is used for making decisions and reporting on project plans among others. To enhance effective project delivery through accountability, strategic goals should be clear to the senior management; thus, they are capable of overseeing project programmes, hence being in a position of managing projects ris k before they affect the capability of the project. At the project level, departmental priorities must be understood, thus making it easier for the staff to identify and manage risks. A project team needs clear definition of their role and responsibilities and a vision. A reporting structure in any organization elaborates how power and control run throughout the organization. Therefore, the reporting structure provides a clear accountability and decision-making. An organizational structure may consist of co-ordinate work streams and the project team reporting to a team manager while he reports to the project board or the project steering committee. A complex organizational structure may make the process of decision making difficult and long. A reliable approval system ensures that there is a good coordination between different project teams within the organization. Moreover, the control and monitoring mechanism spot arising risks and find mitigating measures before they completely c orrupt the project. According to Robinson et al. (2010, p89), project controls keep the project according to plan, regarding time and within the budget. Each project needs an appropriate level of control, as too much control may be unmanageable, while minimal control yields to high costs to the project. Therefore, a control system should be simple and robust; that will ensure that project developments align with the organizational objectives. Project Governance Structure Project governance structure entails a framework that is used to govern a particular project; it includes â€Å"a number of committees and their roles with agreed responsibilities and decision-making rules† (Muller, 2009). Any changes in budgets or schedules are represented to the project governance structure body, such as the project steering committee, which plays a vital role in the planning and directing the project. The project governance structure needs the project steering committee in order to survive in terms of sufficient budget to deliverables. The project steering committee makes vital decisions concerning the governance structure and includes senior managers who monitor and give strategic direction to the team involved in the project, as well as to the stakeholders. The committee also gives recommendations pertaining to the project and holds discussions on strategies and arising opportunities for the project. They also review and approve project development strategies and resolve conflicts between stakeholders. An effective project governance structure is very important in an organization; however, leaders of a project may determine the effectiveness of a project governance structure. Realistic expectations should be set regarding the project governance, since these expectations determine its success. The project steering group should develop collaboration with the project manager in order to ensure that the project objectives are clear to both parties, which would result t o the success of the project. When both parties embrace flexibility and solidarity and ensure that there are proper communication channels, there is a high possibility for a project to prosper. Nevertheless, the steering committee expects the project manager to follow the project’s methodology in a rigorous and flexible manner. Both parties should be flexible, and open communication and mutual understanding should be their key goals. Therefore, a project manager should be given authority to handle the daily arising issues regarding the project, without necessarily having to involve the steering committee (Muller, 2009, p.78). However, when a project gets too difficult, trust in the manager’s competence is normally lost; therefore the steering committee may decide to replace the project manager. In some cases, the two parties fail to communicate through video conferencing or via traveling as a measure of reducing cost, however, they agree on communicating only when crit ical issues arises. Therefore, communication between the two parties is reduced and this could lead to loss of clarity of the project’s objective. Hence, effective working relationships may be lost and this could be the downfall of the project. Communication is a vital factor when dealing with any business; lack of effective communication could lead to misaligning of the organization’s objectives by the project manager, thus resulting to failure in projects. Therefore, there should be a clear exchange of information between both parties. It is however important for the project manager to understand the steering committee requirements towards the project, including its objectives, priorities and specifications. Incase of any danger, a project manager should alert the committee on time, so that the problem can be attended to as fast as possible (Muller, 2009 p80). An example of a governance structure (Treasury board of Canada secretariat, 2008) Challenges associated wit h project governance According to World Bank (2009, p.40), project governance is usually associated with frequent changes in the project team, which could interfere with the accomplishment of the project. Lack of resources and frequent reliance on advisers for decision-making results in the organization spending a lot of money. Due to an effective delegation of power, decision-making takes longer as all the decisions have to be referred to the senior management. Poor management of resources may also arise from interference from external advisers due to the big size of the project committee; indeed, it is often impossible to organize a meeting that each member will be present in. According to Garland (2009, p.113), organizations are faced with different challenges when implementing project governance framework. When implementing new project governance, some changes are evident in the organization. The project governance has the duty of ensuring that project deliveries are on time, th us strengthening the relationship. Nevertheless, an organization may be reluctant to delegate full authority to the project board, due to fear of not receiving all the information concerning the project. Recommendation For any organization to achieve an effective project governance structure, the management must ensure that there is accountability for the success of the project. A project with a clear understanding of who assumes responsibility for its success has a clear leadership, however, when a project does not have a clear accountability for its success, there is no clear guidance to attain solutions for difficult situations. Secondly, the â€Å"assets delivered by the project meet the service delivery needs of the organisation,† to meet its value for money (Garland, 2009). Failure to meet these needs deems the project as a failure, since service delivery ownership determine the project ownership. Thirdly, there should be a separation of stakeholder management from the decision-making activities. Large committees may fail to make quick decisions, but politics are involved, in that, some stakeholders may feel that their needs were not met. Therefore, any induced mechanism must meet the needs of the stakeholders. Fourthly, project governance should be separated from organizational governance structures. Project governance is mainly established with an aim of providing a framework for the project. Since projects need flexible and quick decisions, project governance ensures that key decision makers are placed in a forum, thus ensuring a quick decision making process, one that is not associated with hierarchies. Conclusion Introducing project governance in an organization will probably cause some changes; hence, it is important for the management to identify those areas that will be greatly affected by project governance in order to induce methods that can manage such areas, so that they may result to success. After introducing project governance, it i s important to introduce mechanisms that will contribute to accountability and transparency. Governance is a solution for organizations, but it requires the support of the organization’s executives. Nevertheless, lack of effective project governance may lead to a project failure, hence, loss of incentives that were allocated to such a project. Therefore, effective governance should ensure that projects deliver the intended value that is expected from them. When an appropriate framework is put in place, it will ensure that money is saved, as it is only used as budgeted. In addition, good project governance includes an effective mode of communication and an effective assignment of duties and responsibilities. Therefore, an organization management team should be responsible when implementing and supporting a governance structure before a project begins. References Garland, R., 2009. Project Governance: A Practical Guide to Effective Project Decision Making. London: Kogan Page Pu blishers. Kerzner, H. and Sponholtz, J. 2011. Project Management Metrics, KPIs, and Dashboards: A Guide to Measuring and Monitoring Project Performance. NJ: John Wiley and Sons Publisher. Muller, R., 2009. Project Governance; Fundamentals of project management. Surrey: Gower Publishing, Ltd. Nickerson, J. Zenger, T. 2004. Organization Science; A Knowledge-Based Theory of the Firm; the Problem-Solving Perspective. Web. PM4DEV. 2008. Fundamentals of Project Management. NY: Lulu.com Publisher. Renz, P., 2007. Project governance: implementing corporate governance and business ethics in nonprofit organizations. Berlin: Springer Publishers. Robinson, H. et al. 2010. Governance and Knowledge Management for Public-Private Partnerships. NJ: John Wiley and Sons Publisher. Treasury board of Canada secretariat. 2008. Project Organization; Project governance. Web. Turner, R., 2007. Gower handbook of project management. 4th edition. Surrey: Gower Publishing Ltd. Vallabhaneni, D., 2009. Whatâ€⠄¢s Your MBA IQ? A Manager’s Career Development Tool. NJ: John Wiley and Sons Publisher. World Bank. 2009. Attracting investors to African public-private partnerships: a project preparation guide. 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