Organisational and project governance

Principle 4.  Distinguish between project governance and organisational structures.

Ministers and their departments have accountability for delivering against the resources allocated to them. This will include developing strategies and plans to meet future service needs and drivers which provide the context for the government’s consideration of resource investments opportunities. The organisational governance needs to monitor and challenge the effective application of the resources allocated.

Project governance structures are established because organisation structures generally do not provide the necessary framework to deliver a project. Projects require flexibility, high levels of sustained focus and timely decision making, which the hierarchical nature of organisation governance does not necessarily enable. Project governance structures draw the key decision makers out of the organisation structure in a focussed context. Project governance is a subset of organisational governance which ultimately is subject to overall government oversight and accountability (Figure 2). Following project completion accountability for investment outcomes transitions to organisational governance.

Figure 2 Relationship between project and organisational governance

The importance of risk management

Effective management of the government’s risk exposure is critical to financial sustainability and an integral part of governance and sound management practice. The risk management standard[1] recommends organisations have a framework that integrates the process for managing risk into the overall governance, strategy and planning, management, reporting processes, policies, values and culture.

The Victorian Government Risk Management Framework encompasses the broader risk exposure of entities. Project risk management is an important element feeding into the organisational risk considerations.

The standard provides that good risk management practices:

·      increase the likelihood of achieving objectives and delivering government’s desired outcomes;

·      encourage proactive management, governance and controls;

·      increase ability to adequately identify opportunities and threats and treat risk;

·      improve compliance with legal and regulatory requirements;

·      improve financial reporting and management;

·      improved stakeholder confidence and trust;

·      provide a reliable basis for planning, priority setting, decision making and use of resources;

·      enhance health and safety performance;

·      improved loss prevention and incident management; and

·      improved organisational learning and resilience.

Key roles and responsibilities

Text Box: Funding agreements Where the Commonwealth Government or other external organisations fund projects, there is usually a funding agreement that includes: timelines, triggers for payments, risk allocation, processes for decision making, reporting and accountability. The project sponsor and/or project steering committee should be fully informed of the terms of any funding agreement. This is because there may be important implications for project management governance processes.

A specific project governance framework should be included in the project’s full business case and in the project management plan. For complex projects, a separate project governance document may be required which, for example, may incorporate memoranda of understanding or funding agreements between key stakeholders.

 

Principle 2.  Service delivery ownership determines project ownership.

Within an organisation there are usually a number of individuals with sufficient seniority and experience to fulfil the role of SRO, but it is important to choose the right person.  Investments involve undertaking projects to provide assets for the delivery of services. The primary reason for investing in a project is to achieve a service outcome. Therefore the service outcome should always be the focus of the project from an investment perspective. Hence, the person accountable for the success of the project should be that person best positioned to maintain a service outcome focus for the investment, the person that is accountable for the service outcome in question.[2]

As a minimum, projects must have:

·      a project sponsor or senior responsible owner (SRO) who is responsible and accountable for the project and who secures its outputs and outcomes (the sponsor is the link between project and organisational governance);

·      a project manager and/or director who will manage the project on a day-to-day basis, report to the project sponsor and deliver the outputs on behalf of the project sponsor;

·      an operation (or asset) manager who will manage the project outputs after project closure, including the change management processes for effective implementation, and who is responsible for the realisation of agreed outcomes (benefits); and

·      a steering committee that provides strategic direction and monitors the project.

 

 

Task

Key: A accountable
         R responsible
         S support

Sponsor

Steering committee

Project  manager
 / director

Operations manager

Overall investment outcomes

A & R

R & S

R & S

R

Day-to-day project management

 

 

A & R

 

Project assurance and monitoring

A

R

R & S

S

Table 2 Key tasks and roles

Figure 3 provides a representation of some key components of a project governance and management structure. A fundamental requirement is that the relevant people must have:

·      clearly defined roles, responsibilities and accountabilities;

·      an appropriate mix of skills, experience and training; and

·      enough time, resources and support from their agency to fulfil their responsibilities.

 

 

Figure 3 Project governance structure