APM 2010 – 2011 Study Directing of Project Portfolios: Good Governance of Change initiatives Carried out by: Governance Specific Interest Group This is a short presentation for use in external presentations, time limit 15-20 minutes or less.

Background, Purpose and Scope Foundation: Governance of Project Management SIG guidelines (Directing Change) Why: Study to improve insight in reality of governance in relation to project management What: Define a practical conceptual structure to help discuss governance issues How: Interviews with Directors in 5 professionally managed corporations in UK and Norway The intention with the study was to get insight into reality – how corporations actually govern their project portfolio. This means it was imperative to identify and get access to respondents in relevant positions in the corporations, and to avoid asking questions in a way that leads into discussions about theory rather than practice. The intention was not to prove anything. GovSIG 2

Key findings (1): Strong points Project management systems, including controls and reporting, terminology, roles and responsibilities are defined and in place Ability to stop non-viable projects claimed to be high Well aware of challenges in discriminating between business as usual and projects. The challenges of project operations obstructing ongoing operations is claimed to be well taken care of. Risks seem to be potentially very large, but few in numbers and well controlled. The use of decision gates and verification of decision making documents seem well established. The interviewees represented 5 very large corporations, mainly private sector, in different industries with a wide variety of project types. They represent professionally managed corporations with a size, structure and resourcefulness that is not representative for industry in general. This was never the intention. This gives a good look into what the ”best” organisations are doing in terms of governance of project management.

Key findings (2): Blind spots Heavy divisionalisation, to a degree where we question the top level Board overview Although aware of risk and uncertainty, discussions fail to cover the whole portfolio and risk across portfolios, focus single dominant risks Motivation of those making decisions and optimizing the portfolio of change initiatives seems a non-recognised issue No mentioning of culture issues or levels of success and satisfaction No learning process connected to projects or portfolios is described Even the best and most resourceful corporations have weak spots, or at least did not convince the study tour team that everything is well taken care of. There are certainly potential for improvement. Coming from very resourceful organisations, it is reasonable to assume that boards and directors in most other organisations also might have some of these ”blind spots”. This makes the findings general, although not from a representative sample of corporations or interviewees.

Key findings (3): The portfolio of change initiatives Awareness of Boards’ and Directors’ responsibility in terms of total risk exposure in portfolios, programmes and projects Business Plans and Business Cases actively used. The degree of alignment between strategy and projects is claimed to be very high. Active engagement with suppliers, customers and other stakeholders to maintain business relations, but not to support the optimization of project portfolio The focus point of the interviews were the corporations’ portfolio of change initiatives. We found that these corporations in general had well developed governance of their portfolio. They are aware, skilful/resourceful and have necessary systems in place. This results in a portfolio of change initiatives that seems to be well aligned with strategy. At least the interviewees claim this to be the case. Further studies would be needed to actually determine to what degree this is a precise description.

Governance of Project Management Three Main Pillars Strategy/Policy Purpose Restrictions CONTEXT Motivation (of Directors) Delegation (Divisionalisation) BAU (Business as usual) Portfolio A Portfolio B Portfolio C Programme Project System Culture Individual Plan (of Actions) Behaviour (of People) WORK Stakeholders Influences Society Nature To ease discussions about governance of project management, the elements addressed in the interviews and the observations are put together in a structure with three main pillars that needs to be properly addressed in discussions about governance. This is the basic model – a structure with three fundamental legs. Governance includes relations to the external stakeholders. Things are just as complicated as they seem. Projects are planned and executed within its context, including the social and natural setting. Governance includes relations to external stakeholders and parties. This is why the structure includes these elements in addition to the governance aspects internal to the organisation. The actual work of the organisation (BAU and projects) is partly embedded in this situation, partly a part of the defined internal organisation.   The board has got an overall responsibility to form strategies and policies and keep a balanced over-all risk exposure. The board should see its organisation and its governance of project management in this wide perspective and in a long term. The three pillars that dominate is (1) the rational systemic side, (2) motivating the individuals working within the organisation as directors, managers or staff, and (3) the collective group - or culture side. By using these elements and their relations, a tool for structuring and enhancing discussions of governance of project management appears. GovSIG 6