Project Governance. Version: June 3, 2010 By: Dr Ralf Müller PM Concepts AB
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1 Project Governance Dr Ralf Müller Managing Director, PM Concepts AB, Sweden Adjunct / Associate Professor, SKEMA Business School, France, Norwegian School of Management BI, Umeå University, Sweden Version: By: Dr Ralf Müller PM Concepts AB ralf.mueller@pm-concepts.com
2 Authority Portfolio Programs Agenda Program Corporate /authority level governance Governance of programs, portfolios and project management Project Project Project Project Governance of projects 2
3 Projects, Projects, programs, portfolios Projects are temporary organizations and produce a clearly identifiable (often physical or measurable) outcomes or results Main themes are time, cost, quality and other measures of success at the end of the project Projects are usually outside the day-to-day operations of an organization (to improve processes, products, create new services etc.) 3
4 Projects, programs, portfolios Programs link the outcomes of several projects into higher level benefits Programs are closer to the organization s strategy than projects Themes in programs are benefits, stakeholder management, and program governance, often over an extended period of time Programs may include elements (or are part) of an organization s day-to-day business 4
5 Projects, programs, portfolios Portfolios group (possibly unrelated) projects to facilitate effective management Themes are prioritisation of projects, effectiveness in resource usage, contribution to metrics of strategic goal achievement, often for the life-time of an organization Portfolios impact or define an organization s day-to-day business 5
6 Projects, programs, portfolios Maximizing benefits Programs -Groups of projects with a shared goal - time focus Portfolios -Groups of projects with shared resources - cost focus Maximizing economic resource usage Projects -Individual undertakings - time, cost, quality focus Delivering planned results
7 The Öresund bridge - A portfolio? - A program? - A project? Source: Wikipedia 7
8 The Öresund bridge - Part of economic projects portfolio - The program - Increase of economic growth in Öresund region - A project in a program - Other projects, e.g. Tax harmonization, health care coordination, phone rates over country borders Source: Wikipedia 8
9 The Öresund bridge - Each project s objective contributes to the program objective - Program objective = sum of all project objectives - Each project / program contributes with its objectives to the portfolio objective - Portfolio objective = sum of all program/project objectives Source: Wikipedia 9
10 Sweden - Goal is to. create an effective administration, which in a whole is characterized by high productivity, good quality and good service, helpful for policy makers, citizens and businesses. - To achieve this the government should ensure the continued development and improvement of state administration through technological development and administrative effectiveness. Source: Economistyrningsverket (2008) Ramverk för programstyrning av IT-baserad verksamhetsutveckling 10
11 Sweden Citizens, parliament and government External requirements Directives and instructions Policies and strategies Other needs and requirements Authority level Structural objectives (What to change) Program vision and overarching goals Mutually supportive Performance objectives (What to achieve) Program level: - Vision - Structural objectives - Performance objectives Project A Objectives, suppliers, deliverables Project A Objectives, suppliers, deliverables Project A Objectives, suppliers, deliverables Project level 11
12 Projects, programs, portfolios Portfolio level Why Focus on achievement of strategic objectives. Economic use of resources How Portfolio selection and optimzation strategies Control at benefit level Program level: - Vision - Structural objectives - Performance objectives Creation of benefits, both tangible and intangible over an extended period of time. Centralized coordination of project objectives into a larger benefit Use of program managment standards Control at Milestone level Project level Risk minimization Use of methodologies (e.g. PRINCE2) for planning, implementation and control-.control at task level 12
13 Governance...making it happen! 13
14 From strategy to project governance 14
15 Governance Governance of portfolios, programs, projects, and project management, coexists within the corporate governance framework. It comprises the value system, responsibilities, processes and policies that allow projects to achieve organizational objectives and foster implementation that is in the best interests of all the stakeholders, internal and external, and the corporation itself. 15
16 Project governance Defines the objectives of an organization / project. Provides the means to achieve those objectives. Controls progress. 16
17 Purpose of project governance Alignment of the objectives at the different management levels of the organization to allow for most effective and efficient project planning and execution within the boundaries of corporate governance. 17
18 Institutions Project governance Sponsor & Steering Group Program management Portfolio management Mix of both Project management governance Board of Directors Middle management PMO 18
19 Steering Comittees Responsibility Ultimate responsibility for project success Delegation of day-to-day work to the project manager Linking strategy from corporate level with projects on operational level 19
20 Not shared Resources shared Governance types Portfolio of projects Project organization Multi-project organization Program of projects unrelated Objectives related 20
21 Program mangement as governance Program types Temporary or semi-permanent programs Goal setting Contribution to benefits and portfolio objectives Choosing of appropriate project managers Setting the framework of methods, tools and processes to use 21
22 Program life cycle Program Governance 1. Preprogram set up G1 2. Program set up 3. Establishing a 4. Delivering G2 Pgm Mgt. and the G4 5. Closing the G3 G5 Technical incremental program Infrastructure benefits Phases of program life cycle Stage Gate Reviews 1-5 Progress reporting or decision interaction 22
23 Program board exists throughout the program life-time responsible for the governance of a program is also known as Program Steering Committee or Governance Board controls the investment and monitors the achievement of planned benefits reviews the program, at Stage Gate Reviews to either stop, change, or continue as planned with the program 23
24 Not shared Resources shared Governance types Portfolio of projects Project organization Multi-project organization Program of projects unrelated Objectives related 24
25 Portfolio management processes Strategic Planning Process Output: Current Strategic Plan Aligning Process Group Monitoring and Controlling Process Group Component Processes Current Strategic Plan: Goals definitions & categories Key performance criteria Capacity definition 3.1 Identification 3.2 Categorization 3.5 Prioritization 3.6 Portfolio Balancing No 3.8 Portfolio Periodic Reporting and Review Component Execution and Reporting 3.3 Evaluation 3.9 Strategic Change 3.7 Authorization Yes 3.4 Selection 25
26 Not shared Resources shared Governance type Portfolio of projects Project organization Multi-project organization Program of projects unrelated Objectives related 26
27 Project Perspective Organization Probability of success Balancing project selection techniques Balancing risk Force field analysis Pearls Bread & Butter D C Driving forces Restraining forces B E In fashion Long-term RoI Easy to copy Initially expensive Reward (NPV in million ) Long-term strategy Market development Oysters A F White Elephants Organizational commitment Skills availability Value maximization Scoring models Project 1 Project 2 Project 3 NPV ( M) Payback (y) RoI 1st year (%) Capital Investment ( M) Investment Life (y) Cost of Capital (%) Priority Project 1 Project 2 Project 3 Newness Attractiveness Profitability Ahead of competition Skills available Sum Resource need Resources needed: 85 Priority 1 2 Resources available: 70 Quantitative Approach Qualitative 27
28 Not shared Resources shared Performance by governance type Portfolio of projects Project organization Multi-project organization Program of projects unrelated Objectives related 28
29 Organizational performance 0,8 0,7 0,6 0,5 0,4 0,3 Multi-project Organization Mainly Program driven organization Hybrid organization Mainly portfolio driven organization 29
30 Governance of project management Board of Directors / authority level What business are we in which types of projects? What level of maturity in project / program are we aiming for? Internal or external project management capacity? Shall we have a Project Management Office (PMO)? 30
31 Governance of project management Middle Managers How many project / program managers are needed? What skills profile (also for the future)? How many areas of specialization (construction vs IT projects)? Centralized pool or distributed over the organization? 31
32 Quality of project management A force field analysis + Economic pressure (What is done) Quality of Project management - Education (What can be done) Management demand (What should be done) 32
33 Projects Programmes Programs Portfolios Framework Portfolios Programmes Programs Projects Step What can be done. Education Methodology use and basic training Certification Advanced training and Internal Certification What should be done. Management demand Steering Committees Project Management Office (PMO / PSO / PO) Benchmarking What is done. Audits / reviews Mentor programs Maturity Model Müller & Stawicki
34 Project Management Office Project Management Office Organization responsible for project management in a firm Usually made up of top project managers Develops methodologies / tools / policies / quality standards Mentors / audits / and consults Project Office / Project Support Office Supports one project or one organization Takes away administrative tasks from productive people Ensures quality in administration 34
35 Institutional setup Client/citizens Customer interface STEERING GROUP Authorities/MGMT PMO Project Mgmt Office Center - real / virtual Focus: coordination, competence Manages a portfolio of projects / programs Usually made up of top project managers Develops tools / methods / policies /quality standards i.e. Adm. support Project Portfolio Mgmt preparation of project / program info Best practice Support Program info Project info Project continue/ stop /hold, resources Program continue/ stop / hold, resources PROGRAM Focus: benefits Managed through multipe projects PROJECT Focus: scope, time, cost, end results PPM project / program info transfer Project/ program continue/ stop/hold, resources Go decision for projects & programs Strategy goals PPM Project Portfolio Mgmt Focus: Cost, shareholder value, resources, strategy Manages a portfolio of projects / programs Usually executives PPM ranking higher than SG for decisions Decision for prioritizing resources between projects / programs to manage strategic business objectives 35
36 Authority Portfolio Programs Wrap-up Program Corporate /authority level governance Governance of programs, portfolios and project management Project Project Project Project Governance of projects 36
37 Questions? 37
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