open project governance and organisational project governance
The acronym OPG may mean both Organisational Project Governance and Open Project Governance. In this context Open means that the models and templates are free and can be used by anyone. The establishment of a governance structure in an organisation will usually result in a more focused portfolio of projects and programmes. In order to achieve this, one may develop a governance structure from scratch or buy an expensive model from a vendor. The other alternative is to start with a free model and to tailor it to the specific organisation.
The governance structure is outlined in this article. It covers portfolio management and the management of the interaction between a portfolio and individual initiatives.
Open, free, gratis: three words that are not usually associated with project management. Of course, projects and project management demand resources so they are never literally free. In this text the term open is not connected to the actual project, but rather to the methodology, models and templates that are used by a project manager or the organisation.
Why do organisations still try to invent the wheel, as they do when it comes to developing their project models? A few buy models developed by some consultancy firm, and will have to continue to pay for the service.
In software there has been a trend over the past 10 years towards open source. Almost everything in one’s PC can be based on open source applications, from the operating system to all office programs. Open source builds on a couple of principles:
- The Software is free to use, as is
- Users can modify it and use it for their own purposes
- Users may (but do not have to) share their modifications and improvements with the rest of the community.
- There are forums to discuss possibilities and improvements, to provide instruction, and to encourage collaboration between practitioners.
Open Project Governance
The trend is towards more and more open applications, and this trend has already been transferred to other areas, such as biomedicine. Why not have a Project Model that is free and builds on the open concept? And why not expand project management into organisational project management, so that it covers all aspects of project portfolio management, programme management and project management?
The web portal www.opgport.com combines the open concept with organisational project management, OPG. Models for portfolio management, programme management and project management, together with templates and “how to” tips are available on an open source basis for individual users. It is possible to download all material and tailor it to suit one’s individual needs.
One can also share one’s own models and templates on the portal, and have discussions with other project management professionals. Collaboration is encouraged. New knowledge and best practices will come from the actual use of the models and templates. Lessons learned are essential to achieve continuous improvement. By sharing lessons learned with the community, the total knowledge base will increase and new or improved best practices can be developed. If, for example, a practitioner uses a model or template and decides to change (tailor) it to suit their own project or organisation, then this may result in a new, revised model or template that is better suited to other projects. It is important to document why the tailoring was needed, in what kind of circumstances it was used, what the benefits were, as well as any retrospective thoughts about how the tailored model worked.
This sharing of experiences must be made possible in the PM community. Together this collaboration will result in improved methods and knowledge.
Even if the published standards from the Project Management Institute (PMI®) are not open and available for free copying or citation, their best practices, structures and terminologies are used in many models in the market place, and where individual organisations have developed their own in-house models and templates. The models and templates in the portal www.opgport.com have been developed from experience and work actually performed for different organisations, and are based on the following standards from PMI:
- A Guide to the Project Management Body of Knowledge (PMBOK® Guide), (PMI 2008a)
- The Standard for Project Portfolio Management (PMI 2008b)
- The Standard for Program Management (PMI 2008c)
- Organizational Project Management Maturity Model, (OPM3®) (PMI 2008d)
In the future, other models and templates will be welcome, for example from Prince2, PROPS, as well as those tailored to be used in different areas.
OPG: Organisational Project Governance
The term “governance” is elusive. Looking in ordinary dictionaries will not give up adequate explanations of what the term means in the current business environment. In Wikipedia it is defined thus:
“In the case of a business or of a non-profit organisation, governance relates to consistent management, cohesive policies, processes and decision-rights for a given area of responsibility. For example, managing at a corporate level might involve evolving policies on privacy, on internal investment, and on the use of data” (Wikipedia)
Organisational Project Governance (OPG) is a term often used interchangeably with Enterprise Project Management (EPM). In this paper the definition of the term is somewhat broader than what is usually meant by EPM. Here OPG is primarily focused on:
- How to govern initiatives in any kind of organisation, not just enterprises. The term govern is used in a way that means to manage, to steer, and to control not just the individual initiatives, but the total portfolio and the policies, decision-making and processes that relate to portfolios, programmes and projects. In this context, the continuous improvements of all processes involved in governing the initiatives are included.
- Ensuring that the governing is performed in such a way that the organization will focus on the initiatives most valuable to the organization, that the realisation of the initiatives is achieved in an efficient way, and that the organisation will actually get the benefits as defined in the business case.
In other words, it is important to have policies, guidelines and processes in place to ensure that the right initiatives are selected and executed. The second concern is to make certain that the initiatives actually yield the benefits planned.
The organization will need to establish a framework for handling the initiatives. The framework includes a Project Policy, a Guiding Principles document, and models for portfolio management, programme management (if applicable) and project management processes. However, for the policy, guidelines, and processes to work in an efficient way the organisation will have to establish organisational enablers (see PMI 2008d, p. 3-4).
The Project Policy should be issued by the CEO or in some cases the CPO (Chief Project Officer). It is a single page document outlining the importance of project management to the organisation, and declaring that the organisation expects everyone to follow the guidelines for handling projects and other initiatives necessary to achieve organisational strategies, goals and objectives.
The Project Policy is a fairly stable document and should not be changed too often. It will, however, point to the Guiding Principles document, where the following are defined:
- The overall governance structure
- What is an initiative and in what circumstances will an initiative be managed as a project or a programme.
- The roles in the organisation
- The models to be used, and principles employed for tailoring them to suit the specific need
- The principles that decide what is to be measured and what metrics are to be used.
This document is expected to change over time.
Governance through the Portfolio Process
While the Policy and Guiding Principles are important and define the overall framework for organisational project governance, the Portfolio Process is the heart of it. This is where all initiatives are screened and formal decisions are taken. Exhibit 1 shows a graphical view of the portfolio model available in www.opgport.com. This model aligns with the PMI Standard for Portfolio Management (PMI 2008b).
Exhibit 1: The Portfolio Model (opgport.com, 2010a, ¶2)
The overall governance structure in the Guiding Principles should explain how the models for portfolio, programme and project management will interact. An initiative may arise from many places and for several reasons. Initiatives will be needed to follow strategies and to achieve goals, but initiatives may also come from customers, from ongoing operations and in order to meet other needs. All initiatives must support the strategies, goals, and the long or short term objectives. If not, they should not be employed.
In the OPG-model all initiatives will be formally handled by the Portfolio Processes at the point when they pass one of the following gates (or decision points):
- Gate 0: a new initiative. If the initiative is selected and authorised it will start the initiation phase.
- Gate 1, which is after the initiation phase has been performed.
- Gate 2, which is after the planning phase has been concluded.
At each of these gates the Portfolio Process will select the initiative (go/no go), prioritise it, and balance the total portfolio. There will also be an authorisation to actually start the initiative and to use the organisation resources. An initiative will not automatically be started just because it has been selected and has received a high priority. The actual authorisation may be delayed due to the total balancing of the portfolio or if the result from the initiative will not be of value until a later time. In the latter case it will beneficial to execute other initiatives, even if they have a lower priority.
The interaction between the projects/programmes and the portfolio processes are outlined in Exhibit 2. When an initiative has passed Gate 1 or Gate 2, the decision will be passed to the Portfolio Process. As this may take some time (if the portfolio board meets only once per month, for example) the initiative may continue with its next phase on an interim basis. If, however, the portfolio board decides to terminate the initiative it will be stopped and moved on to the closing phase.
Exhibit 2: Interaction between portfolio management and programme/project management (opgport.com, 2010a, ¶2)
At all gates a new or updated Business Case will have to be completed. The Business Case must reflect the cost of developing the next phase (which is, essentially, what the gate decision is about), the total cost of the initiative, the total life cycle cost, as well as all benefits, both tangible and intangible. The Business Case is discussed later in the article.
During all phases the project/programme will be reviewed monthly from its status reports, and whenever there are major change requests that have an impact on the Business Case. Each month all initiatives (projects and programmes) will be balanced against each other, using the criteria the organisation has decided upon. During this process, initiatives may be reprioritised.
All decisions from the portfolio board (selection, prioritisation, balancing, authorisation etc) must be communicated to all stakeholders in the organisation in a timely manner. If this is not done in a proper fashion, the decisions will not be brought about efficiently, and the governance process will lose its potential. This does not mean that highly confidential information will have to be disseminated to everyone. In some cases the confidential initiatives may be referred to as, say, “Project ABZ”. All sponsors and project/programme managers must know where their project/programme is located in the prioritised list. All concerned parties must understand why an initiative has been terminated.
Governance through the Programme Process
The Portfolio Processes and the Programme (and Project) Processes interact in the governance of the initiative. In the previous section the interactions at the gates were outlined. The actual governance of a programme take place on three different levels:
- The overall steering level. This is the programme sponsor’s level. The sponsor will take the gate decisions. The sponsor will also follow the programme closely and receive monthly status reports, which will be reviewed at the formal status meetings. The sponsor must be involved when programme change requests that impact the Business Case have been identified and evaluated.
- The programme steering level. This is the programme manager’s level, where the overall programme is reviewed, coordinated and controlled. On this level the programme manager will exercise her/his role as sponsor (or sometimes key stakeholder) for the constituent programmes, projects and other work. The programme manager will review status reports from the projects and take the gate decisions. It is recommended that the programme manager be the sponsor for the individual projects in the programme. Sometimes this will not be politically possible. In these cases the programme manager should retain a veto-role.
- The individual project or sub-programme level. This is where most of the actual work is performed and where the individual project manager must exercise the governance within her/his project.
Exhibit 3 shows a programme management model, with just four phases. In this model the documents needed to govern the programme are shown.
Exhibit 3. An example of a programme management model, showing documents needed for governance (opgport.com, 2010b, ¶2)
The salient documents for governing the programme are:
- At Gate 0: Business Case version 0 with a description of the programme initiative.
- At Gate 1: Programme Charter and an updated version of the Business Case (version 1)
- At Gate 2: Programme Management Plan including all other management plans. An updated Business Case (version 2) must be supplied together with the Programme Management Plan.
- Programme Change Requests (PCRs) may be submitted during the whole programme. PCRs must be accompanied by an updated Business Case if the Business Case is impacted by the change.
- Final report at the end of the programme together with an updated Business Case (version 5)
- Status reports.
The Project Model looks similar to the Programme Model, but is, of course, more aligned to the detailed work to be accomplished. The Project Model has a similar structure in terms of its governing documents. (Note on Gate 3: there may be several gates, called Gate 3-x. The first Gate 3 is usually at the end of the Programme Set-up).
As can be seen from the above model, the Business Case is extremely important. In the next section, some parts of the business case will be highlighted.
The Business Case
The Business Case must be aligned to the governance structure. In OPG the term Business Case is used, even in scenarios involving organisations that are technically not businesses, for example governments and NGOs. All organisations have limited resources and must optimise their usage. The Business Case shows what kind of resources will be needed and in what quantities. It should also take a life cycle perspective of the initiative. For it to be useful, a Business Case should contain several parts. This is outlined in Exhibit 4.
Exhibit 4: Business Case structure (opgport.com 2010c, ¶4)
A Business Case should be summarised on a standardised one-page form, known as the Management Summary. This page should have the same structure for all initiatives. The content may differ for different gates and will, naturally, include data with different levels of precision. At Gates 0 and 1 all data will be on a fairly high level, while at Gate 2 and later the data will be much more precise.
The Benefit Analysis part of the Business Case contains three parts:
- Strategic Value: how will the benefits contribute to the strategies? Is the initiative necessary and/or sufficient? To what extent will it fulfil the strategies?
- Financial Value, focusing on life cycle costs and benefits.
- Risk Value. The risks are analysed both for the initiative (will it be possible to accomplish) and the business risks (will it be possible to realise the benefits).
The initiative will be developed and the potential benefits will be realised in a particular context. This context is described in the Narrative part of the Business Case. Indeed, the facts and figures in the analysis are not worth much, unless the assumptions, constraints, environment and so on are clearly outlined.
OPG can stand both for Organisational Project Governance and Open Project Governance. In this article both concepts have been described. The actual governance parts including Portfolio Model, Programme Model, Business Case and other salient documents are all taken from and included in the web portal for Open Project Governance.
This portal currently includes about a hundred different models and templates. All are free to download and available for personal use. The portal welcomes collaboration and discussion on subjects within the OPG area, including specific project questions, career development and other associated topics.
Governance is important to organisations, and the web portal provides a structure of how this can be accomplished. As with all models and templates it will have to be tailored to the individual needs of a particular organisation, programme or project. The structure in OPG Port makes it possible to exchange, for example, the Project Model of Prince2 or any other model. Most important is that a governance structure is defined. OPG Port (www.opgport.com) provides an example of how this may be done.
The Business Case should be an important part of the governance structure. In the last section an outline of a Business Case is shown. Even if the organisation does not want to implement a governance structure, it will still be beneficial to implement the Business Case in a consistent way.
Project Management Institute. (2008a) A guide to the project management body of knowledge (PMBOK®) (2008 4th ed.). Newtown Square, PA: Project Management Institute.
Project Management Institute. (2008b) A standard for project portfolio management (2008 2nd ed.). Newtown Square, PA: Project Management Institute.
Project Management Institute. (2008c) A standard for program management (2008 2nd ed.). Newtown Square, PA: Project Management Institute.
Project Management Institute. (2008d) Organizational project management maturity model (OPM3®) (2008 2nd ed.). Newtown Square, PA: Project Management Institute.
Wikipedia (no date), Governance (2010), retrieved on February 20, 2010 from http://en.wikipedia.org/wiki/Governance
© 2010, Kjell Rodenstedt
Originally published as a part of 2010 PMI Global Congress Proceedings – Milan Italy