Text Box: The word ‘governance’ comes from an ancient Greek word meaning ‘to steer’ or ‘to guide’ with connotations of ‘wise and responsible’. In the modern context governance encompasses processes by which organisations are led and held to account. That is, the processes that enable decisions important to the future of an organisation to be considered, determined, communicated, monitored and assessed. It refers to the authority, accountability, stewardship, leadership, direction and control exercised in the organisation.

Introduction

 

Context

This guide is a technical supplement to the investment lifecycle and high value/high risk guidelines (lifecycle guidelines). Users should refer to the lifecycle guidelines as a basis for developing concepts and preparing business cases for which project governance is required. The other technical supplements include the following:

·      ICT projects business case development

·      procurement strategy

·      project budget

·      economic evaluation

·      project risk

·      sustainability

Project governance is important in enabling project success and should be scaled and shaped to address the level of complexity of the particular investment. Project governance sets a firm framework which guides project success, creating transparency and confidence in decision making, clarity of roles and responsibilities and consideration of stakeholder interests.

 

 

Purpose

The purpose of this technical guideline is to:

·      provide best practice guidance, templates and techniques; and

·      promote the effective governance of programmes and projects in a consistent, transparent and robust way, by providing guidance to assist organisations to:

–      plan, govern, control and report on all projects through an appropriate and well understood governance and management regime;

–      establish an approved project baseline (business case and/or project plan) before progressing to project delivery and maintain its currency for agreed changes;

–      apply an appropriately scaled project governance methodology;

–      appoint a project sponsor or senior responsible owner (SRO) to be accountable for ensuring projects are effectively delivered and investments cost effectively realise their expected benefits;

–      utilise risk based planning and management to inform decision making and the execution of project activities; and

–      develop investments with a comprehensive vision from ‘the project’ through necessary transition to the operational delivery of benefits, including change management for effective implementation of the ‘project’s’ deliverables.

Background

Project governance operates in a continuum from concept inception, through the various decision points and milestones, to operation and benefit delivery. The optimal shape of the governance, management and monitoring structure will change along this continuum as well as between projects. However, it must always be characterised by clarity around roles, responsibilities, accountabilities[1] and controls, in particular decision making processes, and involve appropriately skilled participants at all levels.

Project governance decisions should reflect the strategic reasons for the original decisions to approve, fund and resource projects. Project governance bodies and structures must recognise and manage risk in a way that is most likely to achieve the project’s desired outcomes, but which mitigates the impact of project failure where necessary.

… a culture of value that reinforces accountability and transparency

Governance is also about setting and supporting a culture of value and transparency. This requires a shared understanding of what constitutes value for the organisation and the processes and practices to achieve value outcomes through active change and benefit management. For example, this includes the principle that the public sector should manage projects to the lowest cost for the required performance and not to the full project budget. It also includes the principle that some failing projects will need to be terminated early to achieve the best value- maximise value or minimise losses.

 

Inadequate project governance may contribute to project failure. Issues relating to inadequate governance are a common subject in Gateway reviews as well as reports prepared by other independent commentators such as the Victorian Auditor-General and the Ombudsman.

Gateway review recommendations group the major causes of project governance issues in major capital infrastructure projects into two categories:

·      inadequate project governance structure; and

·      unclear or poorly defined roles, responsibilities and accountabilities.

Some case studies of governance issues identified in Gateway Reviews and Audit Reports are included in Appendix A: Case studies of project governance issues.