Interlocking Program and Project Governance with PMI's Process Groups
How to Form the Proper Baseline and Tailor Project/Program Governance
SALINA SANDRA ALIE
Have you ever participated in a stakeholder meeting where project governance or lack there of seems to be the “secret sauce” to any project's success or demise? Have you pondered what the correlation is between project governance to the basic principles of the Project Management Institute (PMI).
Many have observed across all industries that everyone is jumping on the bandwagon of ensuring that project governance is established and adhered to. However, it is difficult to clearly articulate what project governance is, how it is established, controlled/monitored, measured, customized, and closed off. The success of establishing project governance is ensuring that it overlays onto the core process groups that we all have learned early in our careers as project managers.
Keywords: project governance, process groups
Project (or program, used interchangeably) governance is a term that is used quite loosely in the project management community, especially with new practitioners in this field. However, as a project manager becomes immersed in their vocation, they come to realize that program/project governance is mandatory and should be established at the onset of the project. However, this is often overlooked and thought of as an unnecessary evil.
Project governance entails all the key elements that make a project successful. However, this is not “one-size-fits-all.” Project governance needs to be sizable, based on the stakeholders’ specific needs and overlaid onto the traditional PMI Process Groups. It is essential for the success of the project to depict how program/project governance underpins the traditional PMI process groups and to tailor governance to the dynamics of the organization.
WHAT IS PROJECT AND PROGRAM GOVERNANCE? WHAT ARE THE KEY BENEFITS?
Project governance is a term that is not easily comprehensible in the project management community. It is frequently misinterpreted and improperly executed, which in turn triggers a misuse of resources, drainage of funding and translates to discontented stakeholders.
Let's take a step back; the core definition of program and project management (PPM) governance, according to PMI is:
Project governance is an oversight function that is aligned with the organization's governance model and that encompasses the project life cycle. (PMI, 2013, p. 34)
To decompose this definition, PPM governance can be viewed as attaining three essential ingredients. PPM governance is the foundation that dictates to the project managers:
- Team structure, processes, decision-making models, and defines the accountability for managing the project and program. (Initiating and Planning Process Groups)
- The mechanisms to support, control, and monitor the execution of the project. (Executing and Monitoring and Controlling Process Groups)
- How to achieve the organization's objectives in accordance with the project charter. This is critical because a lack of alignment with the project charter will lead to an unsuccessfully delivery of the project and stakeholder dissatisfaction. (Closing Process Group)
The key benefits to having PPM governance within the organizations and then filtered down into the project management practices are the following:
- Provides the adhesive for the relationship between project governance and business/organization strategy
- Creates a single point of accountability and organization's sponsorship
- Establishes clear objectives and provides guidelines on how the project will be executed
- Clear roles, responsibilities, decision tree, and escalation path
- Common thread between the five PMI Process Groups (as depicted above)
- Fosters the implementation of decision trees, authorization bodies, and risk escalation models
- Defines procedure for reporting status of the program/project and provides continual improvement plan
- Institutes project close-down procedures to ensure that no further deliverables need to be executed and relinquishes the responsibilities of the project team
There are multiple benefits to infusing PPM governance into any organization/program/ project. The eight benefits dictated above are not limited and can have a multitude of benefits for the stakeholder within the program/project. In summary, PPM governance provides strategic direction, management controls, accountability, and an audit trail for the project and program, while aligning with business priorities.
In the introduction, it was alluded to that the key to a successful governance plan to ensure it is woven into the five PMI Process Groups and that PPM governance is encompassed into the organization's governance model. In this section, we will emphasize the input to the governance plan, how it is defined, executed, monitored and controlled, and how it facilitates project closure. Exhibit 1 illustrates the PMI Process Groups as the key to unlocking the governance of the project.
Exhibit 1: Organization governance model.
INITIATING PROCESS GROUP
A project is commenced due to a change in the organization, either a new business implementation or a need to adhere external rules/laws. The fundamental aspect of the initiating process group is to formulate the principal business objectives of the project, define the sponsorships, and form a baseline of the PPM governance plan. This is a critical precursory step in executing any project. It enables the project to catapult into achieving its objectives. Within the initiating process group it is integral to ensure that the business objectives are defined in the project charter. Both of these are crucial inputs to the governance plan.
Within the Initiating Process Group, the project governance plan needs to be defined. Let's magnify what needs to be outlined in the project governance plan:
- Establish the strategic direction of the project and establish a governing board
- Define who signs the project charter, funds the projects, and approves variances
- Stakeholder commitments to the project
- Clarifies the roles and responsibilities of the PPM team and stakeholders
- Delineates the approving bodies, escalation points, and documents contract agreements
- Defines the governing roles and responsibilities in which the project sponsors are the top of the hierarchy
- Ascertains who is accountable for project sign-off and who has the authority to confirm all business objectives defined in the charter are completed
PLANNING PROCESS GROUP
It is well known that the output of one process group is an input into the subsequent process group. In order to start planning the execution of your governance plan, you have to utilize the input from the Initiating Process Group to develop the detailed governance plan. The inputs from the Initiating Process Group to the governance plan include but are not limited to:
- Business case
- Budgeting models
- Approval from the project sponsor
Similarly, as the project manager would utilize these inputs to create the project management plan, these inputs are also used for the detailed governance plan. The governance plan is a complementary document to the project management plan. In the Planning Process Group, the scope of the governance plan is defined, which includes the following topics:
- Identifies internal and external stakeholders: Not all individuals involved in the organization are stakeholders. When defining the stakeholders, one must consider the following functions: executives, PMO, steering committee, financial teams, sponsor, legal, customer, resource centers, government boards, and subject matter experts
- Classifies authority levels for the stakeholders and decision-making structures
- Defines approval documentation for milestones sign-off and project deviations
- Outlines contract deliverables/milestones
- Project management responsibilities/accountabilities (i.e., development of the project plan, processes, and procedures)
- Risk/issues process, which ensures how unidentified risk/issues are characterized and specifies accountability to ensure that the issue is driven to resolution. This process definition is a safeguard to identifying issues, analyzing, and assigning a responsible party.
- Creates escalation process to raise the visibility of any issues. Frequently, issues need to be escalated, since often they cannot be resolved by the project team. The escalation process needs to be regulated by the governance plan. This ensures that the issues are properly classified, the impact is analyzed, and then escalated to the right authority level. There are three major objectives to the escalation plan: ensure that issues are streamlined, classified, and addressed in a timely manner.
Other aspects that need to be considered in the planning process group when creating the detail governance plan is the financial investment that will be required to create and manage the plan, the impact on resources, and the success criteria of the governance plan
When you have created your governance plan, you have also in turn provided the baseline for you stakeholder management plan.
EXECUTING AND MONITORING AND CONTROLLING PROCESS GROUPS
After the governance plan has been distinctively ascertained, the project manager needs to ensure it is executed, and there is adequate cadence to monitor and control the success of the governance plan.
During the Executing Process Group, the first imperative step is to ensure the details of the plan are coherent to the program and project team. This should be communicated at the program/project kick-off meeting. The focal areas that the program/project team should comprehend are the following:
- Roles and responsibilities
- Issue and risk management guidelines
- Escalation path
These components of the governance plan will assist the project team when they have come to a standstill in the project and need guidance on the approach on resolution. Let's expand on other areas of the governance plan that the kick-off meeting will cover:
- Overview of the governance plan
- Goal/Scope of the governance plan
- Critical milestones of the governance plan
- Checks and balances that will be done on the success of the governance plan
- How the communication flow and reporting will be executed on the project
Amidst the monitoring and controlling phase, the project manager needs to ensure that there is a continuous focus on the baselined governance plan. Not only should the focus be on what the initial scope of the governance plan was but also the investment made to manage the plan needs to be tracked and reported on. The governance plan will be obsolete if there is not a return on investment on the governance plan.
However, the plan that was established in the Planning Process Group is not concrete. It is expected that it needs to be adjusted throughout the project. Frequently, changes to roles, responsibilities, issue management, and escalation path can be “tightened” or “loosened” once it supports the business objectives.
CLOSING PROCESS GROUP
In the Closing Process Group, the pivotal aspect is to ensure that the governing bodies defined in the governance plan have reviewed and approved formally that all the business objectives have been met and signed off. This is a trigger to renounce the responsibilities of the project team and stakeholders. The governance plan will also define the consequences if a business objective is not met, the next steps toward resolution, and how to address a business objective if it is no longer applicable.
KEY FACTORS THAT IMPACT PROJECT GOVERNANCE PLAN
A governance plan is not “one-size-fits-all” and needs to be tailored to be consistent with the organization's requirements, business objectives, and the project and program team's needs. In this section, there will be further elaboration on the primary factors that must be considered to size the governance plan to support the business objects. Exhibit 2 provides an overview of the factors influencing governance. We will drill down on the factors that influence this two-step approach.
Exhibit 2: Factors influencing governance.
In order to effectively define the critical factors that can impact the project governance plan, the project manager can utilize the two-step approach defined. The initial step focuses on the customer landscape, which covers the following:
- The complexity of the business objectives that are defined in the charter
- Who the key stakeholders are, and what cadence is required
- Understand the end-customer relationship
The second step analyzes the complexity of the production/solution that is being delivered by focusing on:
- Product infancy and financial challenges
- How success is defined
STEP # 1: OVERALL PROJECT LANDSCAPE
Let's dissect each of these areas to fathom the preliminary factors that will provide some initial guidance on how complex the governance structure needs to be.
First, the definition of a stakeholder in the truest form is anyone who can be affected either positively or negatively by the objectives/outcomes of the project. The first step is to gauge the stakeholder environment. The project manager needs to review the charter and determine what levels of the organization are impacted by the outcomes of the project or program.
There are four basic groups that the program/project manager must be cognizant of when creating the project governance plan.
Legal and Government Board - Need to understand if there are legal stipulations or government boards that are fostering this change. For example, if the project is not implemented, will there be fines that the company will have to pay because they are not compliant to certain regulations, or will there be legal action taken against the company? If this is accurate, you need very tight governance controls over your projects because typically there is a hard delivery time line that must be met.
Within the organization, there are three layers of stakeholder management that must be considered:
Top-Level Management - Also known as senior management, or C-Suite. These individuals reside at the top one or two layers of the organization, such as chief executive officer, chief financial officer, chief technology officer, and so forth.
Middle Managers - Middle management is accountable for executing the goals set up by top management. Depending on the size of the company, the span of control of middle managers will vary.
First-Level Managers - First-level managers are responsible for daily management of the employees who will be creating the product or service of the project and program.
Once, the project manager has determined what levels of the organization the objectives will impact, this formulates the basis for a stakeholder matrix. The project manager will need to do an assessment and determine the following for each stakeholder:
- Define stakeholder role
- Interest (social, economic, political, technology, legal)
- Influence (high, medium, or low)
- Authority level (high, medium, or low)
- Current support level (high, medium, or low)
- Flexibility (high, medium, or low)
- Mode and frequency of communication
This gives the project and program manager a lenses-set of how critical the project is to the organization and the type of impact the outcome will have on the company.
SCOPE AND SCHEDULE ASSESSMENT
After understanding the stakeholders, you need to amplify and understand the holistic scope and desired scheduled. At the highest level, this is typically outlined in the project charter or the statement of work. The key responsibility of the project manager is to ensure that the scope that will be executed will be completed on time, within scope, with quality requirements and within budget. But how is this done? The first step in the Planning Process Group is to (re)validate that what was derived in the charter is accurate. The project manager will need to transact three steps here:
- Collect the requirements
- Define the scope
- Create a draft work breakdown structure (WBS)
The key output is the WBS; this will equip the project manager in the planning phase to determine the resource requirements and in turn create cost estimates. This bottom-up estimation administers two fundamental outputs, it determines how complex the project will be based on the WBS, and determines any financial limitations based on the budget that was awarded.
The more complex the WBS with having dependencies, an intricate critical path with no slack, and a limited budget, will raise awareness to the project and program manager how strict the controls need to be, and reinforces the need to have frequent reporting, and monitoring and controlling procedures set in place. This assists with identifying any deviations to the plan, so necessary action can be taken. This will also foster the project manager to create a decision tree to resolve roadblocks and avoid lingering decisions.
END CUSTOMER ENVIRONMENT
Last, after getting a grasp of the scope and the stakeholders, the project manger should understand the dynamics of the customer. The end-customer environment is the person/group/organization funding the project. This can be internal or external to the project manager's organization.
The project manager needs to understand the following:
Customer pressure - The project manager needs to understand the consequences they encounter if time lines slip, cost increases, or quality is jeopardized.
Customer support structure - The project manager needs to understand if the customer is a true advocate of the project or if there are other reasons why they are forced to execute this project.
Customer engagement - This area overlaps in the stakeholder analysis that is done in the first step. However, it is worthwhile to rehash. The project manager needs to be beware of what the driving forces/people for the project are and who is responsible for these driving forces, as their engagement will be critical throughout the program/project.
Third parties - The project manager should understand any dependencies on other third parties. This should also be defined in the stakeholder analysis, but it may not be visible at the onset of the project. Once, the program/project manager is engaged with the customer, he or she will need to understand if the critical path or any activities in the WBS are dependent on third parties or if any output of the project is required for another project.
Once, the project manager has investigated each of these areas he/she will have a good understanding of the following:
- How visible the project is in the organization
- Define any third parties, government, or legal stipulations that may impact the project
- Who are the key players and what are their interests in the project?
- Bottom-up time line, critical path, and budget assessment against the project charter
- Customer sentiment on the overall project
STEP #2: PRODUCT COMPLEXITY
The second step in customizing your governance plan focuses on the complexity of the solution that will be delivered. In the second step the program/project manager will need to take into consideration the following: type of project, financials, how success is defined, product implementation, internal team requirements, and dependencies.
In the first step, it was suggested to do a bottom-up schedule to determine if the project's budget is in alignment with the budget set forth in the charter. Now, let's take it a step further.
When deep diving into the project type/complexity and the financials, the project manager should research if there were similar projects/programs that have been executed in the past. This seems like daunting work up front, but it will have an immense return on the project managers’ investment of time. The following are the key items that can be uncovered, that will assist in determining how rigid the governance plan needs to be:
- Time line allocated to the project, the critical path, and how the previous project performed
- The project manager should understand the root cause/remedial plan on the following triggers that led to risk/issues on the project:
- Project delays
- Cost variances
- Quality and scope issues
- Customer satisfaction
- Post-launch performance of the project
- In addition, lessons learned, or project closeout documents are another vital document that can provide guidance. These documents will contain information on the project performance against the key performance indicators.
Please be mindful that some organizations may not have a mature PMO, in which all these documents are located in a central repository. However, in the planning phase of the project, the program/project manager needs to do some investigation and invest time to understand the history of the product/service that he or she will be implementing.
DEFINITION OF SUCCESS
The project manager will need to define a handful of key performance indicators that equip the stakeholder with data points so that they can clearly understand the health/progress of the project. These key performance indicators (KPIs) need to be presented and tracked frequently to ensure if there are any issues/risks, they are notified with sufficient time so remedial action can be taken.
Some traditional quantitative KPIs that provide an end-to-end view of how the project is currently performing/trending are the following:
- Schedule variance
- Cost performance index
- Schedule performance index
- Number of unstaffed hours
- Percentage of milestones missed
- Planning cost as a percentage of labor
- Resource utilization
- Earned value
- Number of blocking production launch issues
In selecting the KPI, the project manager will need to ensure that the KPIs are mapped into the stakeholder interests. The KPIs should also be SMART—specific, measurable, attainable, realistic, and time bound. There should be no room for interpretation on the value and object of the KPIs, as this can lead to misalignment with the stakeholders on how the project is progressing.
Once the KPIs have been determined, there are two additional items the project manager must consider; that will also be an input into the governance plan.
- If there are deviations in the KPI, who is responsible, accountable, consulted and informed?
- At what frequency should the KPIs be distributed and reviewed with the stakeholders?
The second item is a balancing act, depending on the stakeholder involvement the project manager will need to decide how frequent the KPIs are communicated, whether weekly, biweekly, or monthly is sufficient for the stakeholder needs. In addition, the project manager needs to define the form of communication adequate for the stakeholder (i.e., email, status meeting, steering committee, etc.).
This two-step approach covers all the key factors that the project manager must consider prior to establishing the governance plan. These questions can be used as a guideline to initiate the discussion how lax or tight the governance plan needs to be in order to comply with the business objectives.
Before concluding, let's highlight some of the key themes that have been emphasized throughout this paper with a simple case study.
A start-up company was engaged in creating an industry-shattering product in renewable fuels. However, in order to continue with the momentum, the leads of the program realized that by analyzing the program landscape there were multiple layers of the organizations involved, including legal boards and contractors. To add to the complexity, this was a new product and in order to stay ahead of their competitors, delivery of the product was time sensitive.
Faced with all these controls over the program, the start-up company engaged a partner to set up and monitor and control the overall governance of the program. The first steps the partner undertook was to review and formalize the project charter. As indicated earlier, this is the core of the governance plan. The partner ensured that all the key goals and objectives of the program were captured in the charter and it was clearly comprehensible. Some of the highlights were the need to have a quick time-to-market, which was pivotal to generate revenue, as well as being the first to unveil this type of product to the industry.
Fast-following the formulation of the project charter, the partner did a stakeholder assessment. This uncovered a multitude of critical players: product research and development, regulatory parties, legal boards, contract manufacturers, board members, plant owners, investors, and executives. Given the wide array of stakeholders, the partner then executed a stakeholder analysis, which delineated who the core team was and classified:
- Each stakeholder's interest
- How they were aligned to the business objectives
- Mode/frequency of communication
- Authority level and decision making power
This equipped the stakeholders with the information that was required for them to make timely, informed, and calculated decisions.
Lastly, in the planning phase, the partner assisted in creating a breakdown of the work (WBS), which was aligned with the program charter. This denominated the critical path and decision points that needed to be made. The WBS paired with the stakeholder analysis gave the start-up company visibility into the critical path and vital decision points in the program. The baseline WBS was in turn used to execute, and monitor and control the progress of the program.
In the next phase of the program, the partner assisted with creating dashboards based on the stakeholder analysis and the communication plan. This enabled the variety of stakeholders to attain information in an opportune time and ensured the messaging and status of the objectives of the program was consistent and transparent with all the stakeholders. It also highlighted deviations from the plan and who has to make the decisions.
Finally, during the closing phase of the program, the partner assisted with the analysis of what was targeted to be completed versus what was set forth to be completed in the program charter. Unfortunately, the program was not able to scale and was not able to decrease manufacturing cost compared to other products that were already in the market. However, due to the governance plan, it supplied the start-up with sufficient information on the execution of the project to enhance the product and engaged in a joint venture with a major manufacturer. Had it not been for the governance plan, the start-up would not have been able to have any traceability, documentation, or control in the program to communicate the value proposition of the product, and they would not be able to express the benefit of the product.
Implementing project governance is not a trivial task. There are multiple conflicting definitions on what governance means to an organization and how it needs to be materialized during the life span of the project. Despite the mode of implementation, the underlying theme is the need for governance within any project.
Governance supports the strategic direction of the project, implements controls, and endorses accountability; it provides structured roles and responsibilities, and creates an audit trail of all the key decisions points within the program/project.
These are all achieved by underpinning the governance plan with the five Process Groups. Lastly, the project manager needs to author a governance plan that fits the organization to achieve the business goals, and it needs to be validated and adjusted throughout the life cycle of the program/project so that it is customizable and adaptable to comply with the project charter.
ABOUT THE AUTHOR
Salina Alie is a manager in Cisco Advanced Services. She was recently appointed Leader of the PMO for America and Canada Cable and Media Accounts. Her varied career includes positions, such as leading bid management as well as project and program management in deploying mobility networks throughout Canada. She held these various positions at Nokia Siemens Networks (NSN), Ericsson, and AT&T Wireless.
Ms. Alie has a bachelor's degree in computer science from Montclair State University in New Jersey and a master's degree in computer science with a concentration in management, from Steven's Institute of Technology in New Jersey.
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© 2016, Salina Sandra Alie
Originally published as part of the 2016 PMI® Global Congress Proceedings – Barcelona, Spain