Concept Symposium 2010 Concept Symposium 2010
Oscarsborg, Norway 16 – 17 September 2010
Symposium web-site: http://www.conceptsymposium.no/
Concept Research Programme: http://www.concept.ntnu.no/english/
Project Governance
Procedural Staight Jacket or Procedural Staight Jacket or
Freedom of Arts?
Dr Ralf Müller Dr Ralf Müller
Umeå University
Norwegian School of Management BI SKEMA Business School
SKEMA Business School
CONCEPT Symposium, 16-17 September 2010, Oscarsborg, Norway
Corporation C t Project
Management
Corporation Corporate governance
Management
Projects Governance of project
Portfolio
project management
Program Project
Governance of
Project Project
projects, programs
and portfolios
Project governance – a definition
• Governance of portfolios, programs, projects, and project management, coexists within the corporate governance framework.
• It comprises the value system, responsibilities, processes and policies that allow projects to
p p p j
achieve organizational objectives and foster
implementation that is in the best interests of p
all the stakeholders, internal and external, and
the corporation itself. p
What does project governance do?
• Defines the objectives of an j organization / project.
P o ides the means to achie e those
• Provides the means to achieve those objectives.
• Controls progress.
Outcome
e.g.project outcome
St k h ld g p j
(Brown & Eisenhardt, 1997)
Shareholder Theory:
Companies
Stakeholder Theory:
Companies i i b fi
Flexible
Economist Versatile Artist
Companies maximize RoI for their shareholders
(Clarke, 2004)
maximize benefits for a wide set of
stakeholders
(Clarke 2004)
Conformist Agile pragmatist
(Clarke, 2004) (Clarke, 2004)
Compliance e.g.project process
(Brown & Eisenhardt, 1997)
Shareholder orientation Stakeholder orientation
Flexible Economist Versatile Artist Paradigm
Outcome control
Flexible Economist Paradigm
• Highest possible Return on Investment (ROI)
Project management as core
Versatile Artist Paradigm
• Balancing requirements of a wide range of stakeholders
• Tailoring of methods
Project management a core
control focus
• Project management as core competence
• Professional project managers
• Guided by tactical Project
• Project management a core competence
• Project management a profession
Management Offices (PMO) • Guided by a strategic PMO
Conformist Paradigm
• Maximizing shareholder return
Agile Pragmatist Paradigm
• Balances the diverse
Compliance focus
(behavior
• Maximizing shareholder return
• Project management a subset of development processes for
technical products or services.
P j t t i
• Balances the diverse
requirements of a variety of stakeholders by maximizing their collective benefits
M i i l b t i t
control) • Project management is
understood as on-the-side task • Maximize value by strict prioritization of user needs.
Institutions for project governance
P j t t
Project management governance
Board of Directors Project governance
• Sponsor & Steering Group
• Board of Directors
• Middle management PMO
• Program management
• Portfolio management
• PMO
Institutional setup for project governance
Customer
interface Board of Directors
Type of business Level of maturity
PM capacity
Customer Steering Group
Ultimate success responsibility Program Project
PROGRAM Strategic goals /
PM capacity PMO?
Project Management
Program
continue/ stop / hold, resources Project
continue/ stop /hold, resources
Framework of methods, tools and
processes to use Project Portfolio
Management
P j l i Best practice
Support
Project/
program
continue/
stop/hold, resources
Management Office
Project/program/
tf li t d hi
PROJECT
Project selectionProject priority Goal setting Program info
Support portfolio stewardship
Usually made up of top project
managers
PROJECT
Focus:
scope time
’Go’ decision for projects
& programs
Contribution to portfolio objectives Providing appropriate
j t Project info
g
Develops tools/
methods/policies /quality standards
Ad i S t
scope, time, cost, end results
and others
project managers Setting the framework
of skills, knowledge and resource PPM project /
Admin. Support Reviews, trains,
consults
Prepares project Middle Management
Provide resources
and resource availability PPM project /
program info transfer
Prepares project
/program info Middle Management
Nb. of PMs Skills profile Areas of specialization Centralized pool or distributed
Governance structure
• Governance defines the processes, roles, and bili i f h i h diff
accountabilities of the managers in the different
governance institutions
Very Strong Resistance
Governance of project management
Very strong technology
focus
Strong project control
focus
Resistance to change
existing practices Constraints
Methodology C tifi ti Advanced
Methodology
Steering
Certification
PMO
Training
Bench- Incremental
Project
Management Committee
Reviews &
PMO PSO
Mentoring
Bench marking
Maturity Management
Governance steps
e e s &
Audits Mentoring atu ty
Models
Better project results
Role and career for
project
Project management
as strategic
E bl results
needed project
managers as strategic
capability Enablers
Governance perspectives towards j
projects
• A transaction to be performed
– Goal: Minimize transaction costs
contract process method and output – contract, process, method and output
• An agency performing the transaction – Goal: Minimize agency costsGoal: Minimize agency costs
– Adverse selection problem – Moral hazard problem
• A legitimate piece of work
– Goal: a socially acceptable endeavor
conform with society’s and stakeholders values and – conform with society s and stakeholders values and
expectations
Legitimacy
Legitimacy is a generalized perception or
assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions.
(Suchman 1995)
Legitimacy
• Morale legitimacy
– Ethical approval of actions. Congruency with broader norms of the society
• Cognitive legitimacy
– Comprehensibility and taken-for-grantedness
• Pragmatic legitimacy
– Benefit in the eyes of stakeholders or society
(Suchman 1995)
tive Steering Group (legitimacy perspective)
perspect
Instance of governance
Theory p governance
Agency T
Project Manager (Agency) Project management
Implementation
A Initiation Planning Close-out
( g y)
TCE perspective Project process
TCE perspective
Project in governance context
Legitimacy
Project
Transaction Agency
Board of Directors
(legitimacy perspective) Strategic
Objectives
Portfolio Manager (Agent)
Portfolio management Strategic
PMO
Program Manager
Steering Group or Manager Project
(Agent)
g p
Program management Management
Office
Project Manager
(A t)
Project management (Agent) TacticalPMO
Project management PMO
Linking Governance of Project and Project
Governance of
g j j
Management Through the Organizational Governance Paradigm
Governance of
tf li Governance
project management portfolios,
programs and projects
paradigm
The four governance paradigms tie
h d i
th t h h
together and categorize:
• the corporate governance approach chosen, either primarily stakeholder or primarily
h h ld i t d shareholder oriented
• The ways of managing a project, given the implication stemming from TCE, agency
theory and legitimacy.
• the project management capabilities and
practices deemed appropriate for all projects
p pp p p j
throughout the organization
Thank You
References
• Brown, S., & Eisenhardt, K. M. (1997). The Art of Continuous
Change: Linking Complexity Theory and Time paced Evolution in Change: Linking Complexity Theory and Time-paced Evolution in Relentlessly Shifting Organizations. Administrative Science
Quarterly, 42(1), 1-34.
• Clarke, T. (2004). The Stakeholder Corporation: A Business Philosophy for the Information Age Theories of Corporate Governance: The Philosophical Foundations of Corporate p p Governance (pp. 189-202). London, UK: Routledge.
• Müller, R. (2009). Project Governance. Aldershot, UK Gower Publishing
Publishing.
• Suchman, M. C. (1995). Managing Legitimacy: Strategic and Institutional Approaches. Academy of Management Review, 20(3), 571-610.
