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Project Governance: A Roadmap to Mitigating Risk

By Jodie Caron and Stefan Laplante | September 8, 2021

When it comes to managing projects, there are three challenges that owners commonly face when a project management office or governance process isn’t established – ambiguity surrounding roles and responsibilities, confusion around decision making and approval delays. These three challenges can be lethal to a project, but all share a common remedy – focusing on project governance.

Project governance is similar to developing an organizational structure. As an organization grows, owners will take the necessary steps to develop a framework that determines how decisions are made and who makes them. They also identify the roles and responsibilities needed to support business growth, thereby clarifying how each member of the organization will contribute to its success.

Capital projects should be treated similarly. Owners, contractors and consultants come together to achieve a common goal, but without common governance, the success of your project may be at risk.

What is project governance?

The Project Management Institute (PMI) defines project governance as “the framework, functions and processes that guide activities in project, program and portfolio management. In organizational project management (OPM), governance provides guidance, decision making and oversight for the OPM strategic execution framework.”

Many popular definitions of project governance lean on the administration, authority or controls that ensure the projects undertaken are achieved by the teams involved in their delivery. PMI’s definition, however, focuses on terms like framework, processes, guidance and oversight – shifting away from authoritative language and emphasizing the structure that project governance provides. This approach is important because it is empowering and encourages teams to ground their efforts throughout the naturally fluid project lifecycle.

Why is it important?

Without a proper project framework, team members – including consultants and contractors – will interpret their roles and scope of work based on available information. If no formal framework is developed or communicated, project teams will rely on past experience or preconceived notions of governance to manage their individual roles and fill gaps in the process.

Establishing clear direction, decision making processes and oversight is key to project implementation. It eliminates ambiguity and sets a clear path to project success.

There is often a misconception that the size of the organization, or even the project, dictates whether or not project governance is needed – or worthwhile. This is untrue. While it may be true that the larger your organization is, the more likely that a governance plan exists, project governance is not tied to organizational size and complexity. Rather, it is just as important, and worthwhile, to initiate in smaller organizations. If you establish a framework where all parties clearly understand their roles, responsibilities and expectations from the outset, teams of all sizes will be able to function efficiently and effectively. This way, when issues do arise, the project team will have a set of agreed upon protocols that enable them to make important decisions quickly – in turn, making it easier to stay on schedule and on budget.

Implementation tips

Establishing rules is a fundamental element to almost any team interaction. From the boardroom to the construction site, project governance sets the foundation for a strong and collaborative environment.

Here are tips to help your organization implement a governance plan as part of your next capital project:

  1. Start planning early: Incorporate a governance framework from the onset of your project to alleviate challenges and risks associated with refurbishment or new construction work.
  2. Identify a governance lead: Clearly identify a single point of contact to implement and manage governance throughout the project life cycle. Whether an internal resource or external consultant, the governance lead should have the knowledge and capacity to create a solid success strategy.
  3. Evaluate and acknowledge your internal capacity: Many organizations are stretched thin and cannot dedicate the resources needed to manage a new project. Depending on existing workloads, you may want to consider supplementing your internal capacity with external resources focused on establishing a governance structure.
  4. Understand the risks: Your project governance lead should work with the project team to identify resource and project-related risks. Doing so at the start of the project allows the team to come up with a plan to mitigate known risks, as well as a strategy for overcoming unknown risks quickly.
  5. Prepare a governance plan: In addition to identifying risks, your governance lead will help you establish a plan or framework to manage direction, decision making and oversight throughout the project’s life cycle. The customized governance plan will include a clear, project-specific breakdown of each party’s role and responsibility, as well as an approvals process to regulate decision making.
  6. Evolve with the project: It’s only natural that processes change over time. Your project governance plan is a live document that evolves with the project. The governance lead will be responsible for monitoring the performance of the governance framework and adjusting it as needed to ensure it fits the needs of the project each step of the way.

Organizations may be tempted to forego setting up governance for a project because of resource constraints or misconceptions about the importance of this critical step in project planning. As a result, we often hear about delays, challenges and risks that can impede capital endeavours. So, before you begin your next project consider taking the time to evaluate the capacity, availability and expertise of your internal resources. With a governance plan, you can alleviate some of the stress of capital projects and ensure that your team has a clear understanding of the overall goal, roles, responsibilities and chain of command. Clarity in these areas are sure to guide you and your team along a smoother path toward successful project delivery.