Causes of governance problems

A good governance structure does not guarantee good outcomes, but a bad structure will most likely diminish project success!

A key objective of governance is to make decisions efficiently, effectively and transparently. Sound governance is not always clearly established resulting in:

·      failure to communicate fully and appropriately on a timely basis;

·      failure to specify or accept decision making authority and responsibilities;

·      indecision, lack of project direction and control;

·      confusion between the project and organisational decision-making structures;

·      non-alignment of key stakeholders;

·      over emphasis on reporting that reduces meetings to status updates rather than interactive decision making;

·      confusing contract management and decision making; and

·      failure to sustain governance processes and practices through to delivery of benefits to the organisation.

Other factors contributing to governance failure are:

·      excessive or inappropriate committee membership;

·      weak leadership or lack of governance skills,

·      poor project team cohesion or inappropriate probity practices leading to confusion, team turn-over and low morale;

·      poor previous experience of project governance, which means project managers do not understand the role. This results in inadequate or inappropriate support for effective project governance (e.g. lack of transparency, poor communication, withholding of ‘bad news’);

·      imbalance in the focus on immediate project issues at the expensive of future operational factors (for example value engineering decisions removing sustainability measures which reduce project costs but increase future operational costs).

Organisations and committees can be overly risk-averse, insisting on consensus in decision making, which can:

·      result in delays;

·      compromise outcomes through unnecessary input from peripheral interests;

·      distract from the best value result by reducing the impact of the essential facts; and

·      confuse accountability for the decision.

About this guideline

This guideline outlines the nature of governance, expected project governance skills and responsibilities as well as providing model structures. The next chapter describes effective governance practices for projects and provides a context for project governance with respect to governance at the organisational and government level. Subsequent chapters explore key roles and responsibilities, related skills and structural arrangements for effective management and monitoring of programmes and projects – with specific variations to adapt to unique project arrangements and requirements. These variations may arise because of the procurement methodology or as a result of the complexity surrounding the particular investment. Finally the guide explores lessons learnt about governance, management and monitoring arising from Gateway Reviews and the work of the Victorian Auditor-General.

Agencies should provide a detailed governance plan as part of a project’s business case, setting out key accountabilities and responsibilities, as well as issue escalation mechanisms. For High Value/High Risk (HVHR) projects, including transformational information and communications technology (ICT) projects, this should include involvement of central agencies. The regular reporting to, and monitoring of, projects by government (e.g. through the quarterly Major Projects Performance Report) are important elements of project governance.

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