Project Governance: Pillars, Roles, Principles, and Components

Project governance is a strategic framework each organization adopts to define how projects will be managed.

The concept of project governance is rarely discussed in project management even though it defines key guidelines for each project’s success.

To implement project governance in the right way, we’re arming you with knowledge of its pillars, key roles, and components. Become an expert in guiding all your projects to successful completion!

• Project governance defines the rules by which project management is conducted in an organization.
• The main focus is to align project efforts with the organization’s strategic goals.
• With project governance, accountability is increased and risk management is improved, thereby increasing the quality of project deliverables.
• This framework also establishes the company culture and its ethics.

What is project governance?

Project governance is a strategic framework that defines how an organization manages projects. 

It describes how projects should be managed and overseen so that they are compliant with the organization’s strategic goals, culture, and ethics. 

In addition to this, project governance:

• Approves projects,
• Ensures accountability,
• Makes executive decisions, 
• Weighs project risks against the organization’s risk appetite and risk threshold, 
• Settles project issues that are beyond the project manager’s purview, and
• Offers senior-level guidance.

Not all organizations use the same governance structure. What’s more, while the role of governance is the same in all systems, it can be performed by one person or multiple entities depending on the complexity of the organization.

In larger organizations, the project manager is barely included in governance, with the project board and executive management calling all the shots.Alternatively, in smaller organizations, the project manager plays a much larger role in governance. And then, there’s everything in between.

Project governance vs. project management

The main difference between project governance and project management is the scale.

Project governance establishes a set of rules and regulations that project managers should follow when planning and managing their projects.

On the other hand, project managers manage day-to-day project activities. They also ensure that project outputs don’t deviate from the big picture that enterprise project management provides.

Here is a simple overview of the differences between project governance and project management:

Parameter	Project governance	Project management
Scale	Strategic	Operational
Focus	Entire organization	Individual projects and project activities
Responsible entity	Top management	Project manager

What are the 3 pillars of project governance?

The project governance framework is supported by these 3 pillars:

• Structure,
• People, and
• Information.

Structure

Structure refers to all the entities involved in project governance.

These individuals and groups 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 project sponsor,
• The steering committee, 
• The project management office (PMO), and
• The project manager.

On the other hand, smaller organizations have a simpler structure. Most of them lack a steering committee and a PMO as the project sponsor takes on all their responsibilities.

Project managers usually report directly to upper management and are responsible for project governance.

People

The people pillar represents all the individuals participating in project governance.

For project governance to be effective, management assembles the right people into boards, committees, and governing bodies.

They can function as a group (a steering committee) or work individually (as Product Owners).

These people establish clear, reachable, and sustainable goals for project managers.

Information

This pillar refers to project information and how it’s shared.

Sharing information includes creating regular project reports and communicating issues and risks that the team encountered.

All project stakeholders need to be updated at all times, so communication and information-sharing should be constant and transparent.

4 key roles in project governance

The 4 main roles vital for establishing and maintaining strong project governance are the same 4 roles that make up the structural pillar:

• The project sponsor,
• The steering committee,
• The project management office (PMO), and
• The project manager.

Project sponsor

The project sponsor is an individual or a group of individuals that acts as a link between corporate and project governance. 

Project sponsors ensure that the project aligns with the organization’s business strategy and are responsible for its overall success.

Some of the responsibilities of a project sponsor include:

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

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

Steering committee

The steering committee, also known as a governance board, is a board within the project governance structure responsible for maintaining project oversight.

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

This role includes the following tasks:

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

Project management office (PMO)

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

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

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

That said, a company doesn’t necessarily need a PMO. The size and type of the project and the organization dictate whether a company will have a PMO or not.

Large organizations typically undertake more projects. According to the latest project management statistics, this is the #1 challenge for project success. Consequently, they have a greater need for project support provided by PMOs.

In smaller companies, the project manager performs this function.

Project manager

Project managers are responsible for managing day-to-day project tasks and their deliverables following the project governance plan.

The project manager’s role includes taking care of various project activities according to the objectives set by project sponsors, the steering committee, and the PMO.

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

8 key project governance components

The following 8 components are mandatory for project success:

1. Governance models,
2. Accountability and responsibilities,
3. Stakeholder engagement,
4. Stakeholder communication,
5. Meeting and reporting,
6. Risk and issue management,
7. Assurance, and
8. Project management control process.

Let’s take a closer look at each of these components to see what they’re all about.

Governance models

The governance model is also known as the project governance framework. It’s the foundation for project governance and, by extension, project management. 

The right governance model should take into account key elements like the project’s:

• Scope,
• Timeline,
• Complexity,
• Risk,
• Stakeholders, and
• Importance to the organization.

The nature of a governance model is bureaucratic. If implemented incorrectly, it can inhibit Agile project management and stakeholder engagement by defining rigorous rules that are both overbearing and obstructive.

Accountability and responsibilities

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

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

Alternatively, a lack of defined accountabilities and responsibilities can impact communication, change management, and risk assessment.

Stakeholder engagement

Stakeholders aren’t only project sponsors and project teams. This term includes a larger group of people.

In project management, a project stakeholder is anyone affected by the project activities and its deliverables. This includes project team members and all project governance roles, but it also extends to people outside the organization, like government boards or vendors.

Effective project governance requires you to:

• Identify all key stakeholders, and
• Understand and manage their expectations regarding the project.

If you don’t fulfill these requirements, you could face minor inconveniences or complete project derailment.

Stakeholder communication

Once the company defines who the stakeholders are and their project expectations, it can create a plan for stakeholder communication.

The stakeholder communication plan outlines how to communicate with each stakeholder and how frequent and detailed this communication should be.

The goal of a stakeholder communication plan is to supply all stakeholders with relevant project information in a concise, transparent, and timely way.

Project Development Manager at Oii.ai, Randi Mays, described how she created and used a communication plan to mitigate risks successfully:

Meeting and reporting

A big part of the communication plan is defining the frequency of meetings and reports.

All stakeholders need to understand:

• The mode and content of communication,
• Its frequency,
• Who the owners and receivers are,
• Communication milestones, and
• Decision gates.

Communication should be concise, transparent, and timely while meetings and reports should be balanced to ensure constant stakeholder engagement.

Managing risks and issues

Internal and external factors that influence a project can easily trigger various project risks.

Therefore, a solid project governance framework must include a good risk management plan that defines how potential risks should be:

• Identified,
• Classified, and
• Prioritized.

It’s important to know how to handle any risk and issue thrown at the project. Project managers can’t stop issues from occurring, but they can devise a strategy to manage them, no matter how complex or dangerous they may be.

Assurance

A project governance framework should define project assurance metrics to ensure risks and issues are managed correctly.

Metrics measure project progress and performance and can differ throughout various industries and individual companies.

In the context of project governance, the best metrics to consider are:

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

Project management control process

Finally, the last component of project governance is the continuous control process of project management.

Managers should apply and check project metrics regularly throughout the project development. Constant monitoring and control help project managers spot issues in their early stages, allowing for timely variance corrections.

4 core project governance principles

There are 4 core principles that ensure the effectiveness of project governance frameworks:

1. Ensure a single point of accountability.
2. Make project ownership independent of asset, service, or other stakeholder group’s ownership.
3. Establish the separation of stakeholder management and project decision-making activities.
4. Separate project governance and organizational governance structures.

We mostly described these principles through the 8 project governance components above. 

However, the 4 core principles emphasize the importance of separating ownership, decision-making, and levels of governance.

How to create a project governance model

A governance model dictates how your company will manage projects and serves as a manifestation of your company culture and ethics. In short, it’s a tool that helps you reach strategic objectives.

Here are the 6 core functions of project governance that will guide you in making your own project governance plan:

1. Determining objectives — determine the objectives of the project and align them to deliver the organization’s broader strategic goals.
2. Determining ethics — define how an organization acts in regard to transparency, relationships, role conflicts, political issues, and illegal actions.
3. Creating cultures — determine to which extent the culture is supportive, innovative, risk-seeking or adverse, open and transparent, mature and professional, and tolerant.
4. Designing and implementing governance structure — determine the roles, responsibilities, and accountabilities of the stakeholders involved, as well as their interdependencies.
5. Ensuring accountability — establish the chain of decision-making authority and delegate responsibility to management.
6. Ensuring compliance — provide relevant stakeholders with assurance of the organization’s compliance with its regulatory, statutory, and legal obligations.

Benefits of project governance

The 5 most notable benefits of project governance include:

• Better project selection — only the projects with high ROI and those of strategic benefit to the organization are approved,
• Clearly defined roles and responsibilities — when everyone on the project knows what their job is, there is no waste of time or misinterpretation of roles,
• Improved change control — reacting to change in a timely and effective manner is paramount,
• Better risk management — when a project risk is deemed great enough, it’s best to escalate it up the chain of command, and
• Stage gate processes — projects are reviewed formally at key points throughout project phases, preventing significant losses, especially in Waterfall projects.

Randi Mays described how project governance helped her complete the process of role division for that project:

📖 Learn more about managing projects by browsing our Project Management Glossary of Terms, where you’ll find a wide range of project management terminology, from basic to advanced.

Implement a project governance plan with Plaky

Specialized project management software such as Plaky can help you apply the principles and components of project governance in your company.

Plaky helps you manage stakeholders and promote accountability by allowing you to:

• Create a board with a detailed overview of your project governance plan,
• Manage projects and include all their relevant information,
• Assign items to the people accountable for them,
• Set up due dates for each item,
• Include all stakeholders, and
• Communicate regularly through comments.

As you can see, all project information can be in one place, and you can easily create a communication plan too. Plus, transparency and accountability are guaranteed as project progress is visible to all stakeholders!

Looking for a tool that will help you implement project governance efficiently? Sign up for a free 14-day Plaky trial now!