Breakthrough or burden?

November 2009

The right project can take a charity to new levels of beneficiary provision, but if badly run it becomes an albatross. Amanda Brown sets out her model for successful project governance

Losing thousands from a badly run project might be an issue for the large multinational companies, but for a charity it could mean the difference between continuing to serve its beneficiaries and closure. Recent high profile failings such as the banking crisis have illustrated the dangers created by weaknesses in accountability, disclosure and reporting at all management levels. Many organisations now find that their projects also suffer from these shortfalls.

Project governance creates a process to align projects with the organisation strategy and deliver benefits and value for money with appropriate due diligence and risk management. This involves selecting suitable projects, planning and delivering them successfully and generating the expected benefits in line with the strategic objectives.

Matchett Group believe that the leadership for good project governance should be driven from the top. This involves clearly identifying projects, aligning them with the key objectives of the organisation and putting in place open lines of communication to manage and report progress.

Project failure

News reports suggest that project failure is a common occurrence. The NHS IT project, Wembley Stadium, ID cards, Trident, have all fallen under the spotlight, demonstrating the problems of not controlling and monitoring projects and stakeholders better. The causes of failure can be many, but some common reasons are:

they are badly defined;
management problems hamper the project throughout;
the scope changes but the cost and other estimates do not;
resources are not allocated appropriately; lessons learned from previous projects are not documented or used; and
poor planning and control.

Without clear management and performance indicators, projects can quickly derail and cost far more than budgeted. Even worse, they can put organisations into disrepute - for charities this could lead to a reduction in support from key funding.

Project selection

Even without catastrophic failure, projects can undermine an organisation by taking it along a route which does not align with its stated goals. Charities, and other public sector bodies, have very tight guidelines which they need to follow to maintain their status and to engage their stakeholders. Projects which do not support these guidelines can jeopardise the status of the organisation and put their mission in question. This is why organisations need to focus more on how they set up projects and why they are doing them in the first place. Intelligent project selection is critical – without linking projects with the strategic core values and objectives, they can put the organisation at risk, financially or by reputation. Selection of key projects to take on must be the responsibility of a project board who should review all potential projects against the needs of the organisation.

Step one: the business case

This is the justification document for the project and helps the board understand the outcomes and benefits and the connection with the organisational goals. The rationale behind the project, a cost benefit analysis, risk analysis and a clear explanation of the context or environment in which the project is being carried out should all be covered here. The project sponsor or senior responsible officer would usually present this, taking personal responsibility to deliver the benefits that they have outlined in the case. See figure 1 below.

Step two: strategically analysing projects

The benefits and costs, along with the risks of all proposed projects should be assessed against each other and the organisation’s strategic direction, to select the key projects which are going to move the organisation forward. Additional selection can then be done using a variety of techniques. Some common ones are:

SWOT analysis In the context of the organisation and the marketplace, the strengths, weaknesses, opportunities and threats related to the project can give an indicator of whether the project is viable. Often this is done as a simple list of factors, but a better and more useful way of doing this is by combining the SWOT with a force field analysis, so that each element is weighted against its relative impact. This can give a much more accurate picture of which projects have greater potential benefits or risks.
PESTLEE Listing the positive and negative factors in the external market posed by political issues, economic factors, sociological elements, technology, legal requirements, environmental and ethical considerations may illustrate differences between projects and lead to some being more attractive than others.
Forced pairsThis technique compares each project and their stated benefits against each other to produce logical weightings against the strategic priorities of the organisation. This is particularly useful when projects initially appear to offer the same benefits.

Step three: sign off

The final stage in selection is signing off the business case. This involves the board approving the project and the benefits which it is stated to deliver by the sponsor, making the business case a significant agreement between the project sponsor (or SRO) and the board. This then creates a stronger driver to project sponsors to support and commit to the project throughout its life cycle.

Project delivery

As a result of a lack of a governing structure for projects, many organisations have no processes to start and manage projects or to ensure they are implemented well. This can lead to:

projects starting before they have been clearly scoped out or approved;
unrealistic deadlines;
project sponsors not understanding what the role entails and unavailable to discuss resources, risks, issues, progress, or to authorise changes with project managers;
projects without any senior level support;
no structured escalation of risk; and
mismanaged communications, as people cover their backs.

These dangerously expose organisations to high levels of risk, waste and ultimately, project failure. Project management becomes constant crisis management and, when time and resource constraints are fixed, quality gets cut. The worst case scenario is that poor governance can cost jobs, entire companies and even peoples’ lives.

If organisations are to meet this challenge the first step is for senior managers to establish processes for projects that support projects and underpin structured governance principles. This means that projects should be managed through a set of stages communicated and understood by everyone in the organisation. As part of this the project is controlled using these stages, along with a sign off process. Unless each stage is completed and signed off, the next stage should not be started. This prevents projects leaping from inception to delivery, without any idea of the true costs and timetables. In addition, it helps to create points where projects can be stopped if they are no longer linked with the goals of the organisation, or if they are clearly not working. This can prevent a culture of ‘we’ve started so we must finish whatever the cost’.

A typical lifecycle using some generic phase names is outlined below, though many variations exist. At the end of each phase is a gate, often the point where a significant document is required to be signed off before the gate is passed through. Each phase is not the same length – implementation is usually the most time consuming and expensive phase. See figure 2 below.

Good project governance ensures that the process is followed and that senior managers are involved from the start to the finish of the project. This can be particularly important at the end of the implementation stage as often, once the project is delivered, if the benefits are not a part of this delivery they can fail to materialise. This happens, for example, with IT projects when the system is set up, but because it is not integrated into the business the staff are not able to use it in the way that delivers the benefits.

Benefits management

Benefits are the sole business reason for doing projects and therefore they must be clearly defined (with measures) in the business case. Too often project success is viewed simply in terms of bringing in the deliverables to time and to cost and little thought is paid to making sure that these produce real strategic benefits to the organisation.

Many projects have failed to produce any benefits to the organisations commissioning them. This is the responsibility of the project sponsor. Projects can be defined in terms of their ability to deliver benefits:

Direct: a project with direct benefits on or after implementation.
Enabling: a project with no immediate direct benefit, but which benefits other projects indirectly.
Passenger: a piggyback project, which adds to the benefits created by other projects.
Synergistic: a project which delivers benefits only when combined with others, but delivers little or no benefit on its own.

The sponsor will need to manage the project deliverables and stakeholders to create the opportunities which support the benefits being realised. This may mean being involved after the project delivery is finished and monitoring the benefits, through benefit realisation meetings, at strategic points after the delivery.

Benefits management, therefore, should start before the project is approved and continue until the planned benefits are delivered to the organisation and/or its stakeholders. Project management then becomes a part of a formal end-to-end process of benefits and value creation along with a strategic benefits statement and a structured benefits realisation plan. Key steps to improving this include:

Improve the way in which benefits are stated in the business case, be SMART and state benefits aligned with measures and strategic links.
Clearly differentiate between deliverables, objectives, benefits and financial outputs.
Create a clear plan for how benefits are to be gained after the implementation of the deliverables of the project.
Ensure that the project sponsor is committed to delivering the benefits and will oversee this once the project becomes live, through benefits realisation reviews and ongoing communication with stakeholders from inception throughout the lifecycle.

Recommended actions to support project governance in your organisation:

Clearly define projects in the organisation (versus business as usual) and also what constitutes a capital project (high spend, high resource involvement) so that the project stages can be applied when relevant and suitably senior managers involved at the start.
Create a project board (or the directors’ board) to take responsibility for the governance of all projects.
Clearly define roles, responsibilities and performance criteria for projects. Ensure all project staff are suitably trained and authorised to make decisions at their particular level of delivery.
Only start to deliver projects which have an approved business case, linked with the strategic objectives of the organisation, and a signed off project plan. There should be key authorisation points and robust reporting procedures to ensure that progress is communicated accurately and in a timely fashion.
Set up processes and controls and apply these throughout the project, along with independent auditing where necessary.
Encourage and actively promote transparent communications to ensure that information is shared and risks and issues are escalated, not hidden.

These actions link to the Association of Project Management principles of project governance1, which set governance standards. However, it is important to maintain the balance between establishing strong governance procedures whilst allowing sufficient flexibility for projects to progress. A case study illustrating this in action is shown in figure 3 below. With the push to deliver value for money alongside increased services and support, charities and the public sector have to proactively control activities that cost time, money and resources. There is, therefore, more insistence on good governance and by association better project governance to minimise exposure to risk and support stringent auditing procedures.

[1] Directing Change – A Guide to Governance of Project Management, Association of Project Management, www.apm.org.uk

Author: Amanda Brown

Amanda Brown is a senior project & programme management consultant at Matchett Group specialising in leading change and developing project management skills throughout organisations. She works with not-for- profit, government and private sector organisations. She holds an MBA, the CIM diploma in marketing and the APM’s project management qualification, the APMP.

www.matchettgroup.com

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