What is project governance?

A project can be thought of as an endeavor in which participants join forces in the pursuit of a common goal — the project deliverable.

However, a project — just like other endeavors that include a large number of people — needs a steersman.

The role of such a person is to guide the team in the right direction and along the right path.

In other words, every project needs governance.

This article will help you understand the meaning of project governance and related terminology by explaining:

• The definition of project governance,
• The difference between project governance and project management,
• The 3 pillars of project governance,
• The project governance components and roles,
• The benefits of project governance, and more.

So, let’s begin.

How do we define project governance?

Project governance is part of an organization’s overall corporate governance. 

In other words, project governance refers to those activities within an organization’s governance framework that are related to a particular project.

According to the PMBOK 5th edition, “project governance is an oversight function that is aligned with the organization’s governance model and that encompasses the project life cycle.”

From this definition, we can draw several conclusions.

First — project governance is about overseeing and regulating. 

This means that project governance provides a framework of guidelines for project management to follow. 

Among other things, this refers to the regulation of project roles, responsibilities, and authorities. 

Also, this framework provides guidelines for decision-making when dealing with project risks or changes during the course of the project.

Second — project governance must be aligned with the organization’s governance — its policies, standards, and guidelines. 

A project needs to have the same strategic direction as the organization it belongs to.

And third — project governance refers to the entire project life cycle.

This means that project governance activities must be present in all phases of project development.

Project governance vs. project management

The phrases project governance and project management may be similar in meaning, but they are not the same. Also, these 2 functions imply different sets of activities. 

Still, these phrases are often confused, so let’s dispel the confusion once and for all.

Project governance procedures are concerned with the project as a whole and not with everyday project activities.

They make sure that the project is in compliance with the company’s objectives.

Additionally, project governance practices check whether project managing activities follow the rules and regulations set out in the project governance framework. 

These rules and regulations serve as guidelines and tell project managers how to plan, execute, and manage a project.

On the other hand, project management is concerned with the day-to-day activities that make up a project.

For instance, project management deals with the prioritization of tasks. Also, it should ensure that project deadlines are met and that costs don’t exceed the budget.

To conclude — project governance takes care of the strategic aspects of a project in general, while project management deals with the day-to-day activities of that project.

The 3 pillars of project governance

The project governance framework is supported by these 3 “pillars”:

• Structure,
• People, and
• Information.

Pillar #1: Structure

In the context of project governance, structure refers to all the entities involved in project governance. 

These are individuals and groups who make decisions and support the project team toward project completion.

The structure of project governance is not the same in small and large organizations.

In larger organizations, project governance consists of several governance teams, such as:

• The steering committee, 
• The project management office, 
• The capital expenditure board, etc.

On the other hand, in smaller organizations, the governance structure is not so complex. It often consists just of a project team and an auditing group.

Pillar #2: People

In this context, this term refers to all the individual people participating in project governance.

In order for project governance to be effective, it is important to put the right people in the right places. 

These people are assembled into various boards, committees, and governing bodies. 

Apart from functioning as a group (a steering committee, for instance), they can also work individually (as product owners, for instance).

These people need to establish clear, reachable, and sustainable goals that project managers should strive for.

Pillar #3: Information

This pillar refers to the information about a project and how it is shared.

The people within the governing structure should maintain clear and transparent communication. Also, the information flow should be open and regular.

Therefore, there should be timely meetings and reporting, as well as other types of information sharing. 

This way, project decision-makers should always be updated and informed about the direction in which they should go.

4 Project governance roles

Good project governance requires clearly defined roles and responsibilities. 

Since all projects are different, the roles their participants occupy may vary depending on the project. 

Thus, the roles that make up the project governance structure can be different depending on the type of organization and the complexity of the project.

Still, there are 4 main roles that are of the utmost importance for establishing and maintaining strong project governance:

• Project sponsor,
• Steering committee,
• Project management office (PMO), and
• Project manager.

Role #1: Project sponsor

The project sponsor is the person (or a group of individuals) who is responsible for the overall success of a project. 

This person should make sure that the project is aligned with the business strategy of the organization. 

These are some of the responsibilities that the role of a project sponsor encompasses:

• Owning the business case,
• Approving the project charter,
• Prioritizing projects within the organization,
• Solving issues beyond the project manager’s authority, etc.

The project sponsor makes sure that a project meets all the requirements of the project governance by way of monitoring, either personally or by appointing their proxy. 

Role #2: Steering committee

The steering committee is a board within the project governance structure that is responsible for maintaining project oversight. 

They monitor and control the project to make sure that its activities are in alignment with the project charter. 

The tasks that this role includes are the following:

• Determining how project objectives are measured,
• Approving the project management plan,
• Communicating expectations,
• Making investment decisions, etc.

Role #3: Project management office (PMO)

The project management office (PMO) is a team or department that makes sure the project governance framework is implemented properly. 

The PMO sets standards for project management in an organization to ensure that all processes, operations, and deliverables are managed appropriately.

Normally, it provides support to project managers, but sometimes, the PMO can directly manage one or more projects.

However, not every company has a PMO. Whether or not a company has a PMO depends on the size and type of its projects, as well as the size of the organization itself. 

Large organizations typically undertake more projects. Consequently, they have a greater need for project support provided by PMOs. 

In smaller companies, it is the project manager who performs this function.

Role #4: Project manager

The project manager’s role is to manage day-to-day project tasks following the project governance plan.

This role includes taking care of various project activities in accordance with the objectives set by project sponsors, the steering committee, and the PMO.

If there is a need for clarification regarding decision-making, the project manager refers to the project sponsor for an explanation.

6 Project governance components

In order to be efficient and garner positive results, the project governance framework should contain a number of components. 

It should address the management of all aspects of a project. Thus, project governance components include:

• Defining adequate governance models,
• Determining accountability and responsibilities,
• Defining stakeholders,
• Developing a stakeholder communication plan,
• Managing risks and issues, and
• Defining project assurance metrics.

Here is a brief description of each of these components.

Component #1: Defining adequate governance models

Every organization needs to establish an appropriate governance model to ensure that a project is moving in the desired direction.

Therefore, based on experience, an organization should define the key points that make up their governance model.

It should take into consideration some of the following elements of a project:

• The project’s scope,
• Timeline,
• Complexity,
• Risks,
• Stakeholders, etc.

Component #2: Determining accountability and responsibilities

For a project to be managed successfully, it is necessary to define accountability and assign various responsibilities to different people.

Determining who is accountable and responsible for what is the key to achieving transparency of project-related activities.

Component #3: Defining stakeholders

It is important to take into consideration not only those people who perform project activities but also all other project stakeholders.

When we hear the term stakeholder, we usually have in mind project sponsors and the project team. However, this term often encompasses a much larger number of people. 

In project management, a project stakeholder is any person that is affected by the project activities and its deliverables.

Component #4: Developing a stakeholder communication plan

After stakeholders are defined, it is necessary to create a plan for stakeholder communication.

The stakeholder communication plan determines how to communicate with each stakeholder. It also states how frequent and detailed this communication should be.

Stakeholder communication has to be transparent and timely.

It should consist of concise meetings and reports so that every stakeholder understands their content.

Component #5: Managing risks and issues

Internal and external factors that influence a project are liable to change. As a consequence, these changes often bring various risks and issues concerning project development. 

Therefore, a project manager should be prepared to face such challenges and deal with them appropriately. 

Before a project starts, there needs to be an agreement about how to handle risks and issues. 

Thus, it is important to decide how potential risks and issues should be:

• Identified,
• Classified, and
• Prioritized.

Component #6: Defining project assurance metrics

To make sure that risks and issues are handled the right way, project governance should define project assurance metrics. 

These measurements, among other things, should determine the following:

• Adherence to the business case,
• Quality of change control and risk analysis,
• Effectiveness of monitoring deviations in project scope, time, cost, and schedule,
• Accuracy of tracking the project plan, etc.

Benefits of project governance

Establishing project governance is not an easy job. It requires a lot of experience and good communication around a project.

Still, it is worth the effort, taking into consideration the manifold benefits it can have for projects.

We will mention only the most notable benefits of project governance:

• Better selection of projects,
• Clearly defined roles and responsibilities,
• Good change control, and
• Stage gate processes.

Benefit #1: Better selection of projects

Since every company has limited resources, it should carefully choose the project that is worth investing in. 

In other words, a company should opt for those projects that are best suited to its strategic goals and that bring benefits to its overall business. 

And this choice of projects is exactly what project governance should execute. 

Project governance professionals examine project ideas and select those that are in accordance with the organization’s priorities. This way, resources are put to good use.

Benefit #2: Clearly defined roles and responsibilities

Project governance prevents misunderstanding regarding roles and responsibilities. 

If everyone on the project knows what their job is, there will be no waste of time or misinterpretation of roles.

We asked Randi Mays, a Project Development Manager at Oii.ai, to share her experience regarding a project she worked on. She described how she completed the process of role division for that project:

Transparency of roles and responsibilities leads to better organization of project tasks. That way, everyone knows what is expected of them and who to turn to for help.

A good solution for the visual representation of the division of roles and responsibilities is a project management tool.

For instance, Plaky offers an option to assign a person to each item, so that everybody knows which team member is responsible for which task.

Benefit #3: Good change control

Projects are liable to change. Therefore, it is important to react to change on time and not let it develop into an issue. 

Project governance helps project managers make appropriate decisions regarding changes in a project by establishing a decision-making framework.

However, this does not refer to small changes like, for instance, when a task is delayed by a few days. 

In such cases, project managers can make decisions without consulting governance structures.

But, if the delay is by a few months, project governance should intervene.

If this is the case, an appropriate project governance board reaches a decision for the project manager to follow.

Project governance experts make use of their experience and knowledge and help project managers avoid serious problems, like scope creep.

Randy Mays emphasizes the importance of a good communication plan when it comes to risk management:

Benefit #4: Stage gate processes

Stage gate processes guide a project through all phases of its development and help decide if it should move to the next phase.

Project governance should review the project at key points in project development. 

This way, it ensures that the project is going in the right direction and producing the desired output. 

As a result, project governance decides if the project development should continue or if the project should be closed.

If the project is approved by the project governance, it is given an agreement for passing through the “gate” to the next stage. This way, serious losses at the organizational level are prevented.

In order to determine if the project is developing as planned, project governance needs access to all project information.

In such situations, project management software is a great help.

Using project management software for organizing tasks enables storing all project information in a single place. That way, project governance can access any project and get an overview of its development.

Plaky is free to use, and it enables you to create a board for every project. Within that board, you can create any number of tasks. 

For each task, it is possible to attach information like the due date, the person responsible for its completion, its priority, cost, etc.

Conclusion: Project governance establishes guidelines for successful project management

We start every project with the same goals in mind — to deliver it within budget and on time and to make clients satisfied. 

For a project to reach these goals, there has to be project governance — a framework that oversees project activities from start to finish.

It ensures that the project outcome is aligned with the company’s strategic goals. 

Its 3 pillars — structure, people, and information — make up a framework that offers project managers support in decision-making. 

Project governance clarifies the roles and responsibilities of the project team. This way, it helps establish transparent information sharing and communication.

No matter how well thought out your project is, it is unlikely to give the desired results if it lacks proper governance.

Therefore, project governance is crucial for leading a project toward its desired results — the final deliverable.

References

• APM Body Of Knowledge (5th edition). (2006). Association for Project Management.
• Hines, V. (2020b, June 10). 5 Benefits of Good Project Governance. Wellingtone. https://wellingtone.co.uk/5-benefits-of-good-project-governance/
• Project Management Institute. (2013). A Guide to the Project Management Body of Knowledge (PMBOK® Guide) Fifth Edition (Fifth Edition, Fifth edition).