Here’s an interesting but worrying set of statistics on project governance
The first comes from the Economist Intelligence Unit in their 2010 paper “How mature financial services firms deal with troubled projects”. They found that:
- Only 20% of project governance groups provided the kind of proactive supervision that projects need in order to be successful
- Almost half – 47% – didn’t get involved until the project was in serious trouble, or didn’t get involved until the project had a problem that the project manager couldn’t solve or didn’t get involved at all.
Next, and even more worrying, is the finding of Drs. McManus and Wood-Harper in their 2004 study into 214 information system (IS) project failures in the European Union:
- A significant proportion of projects ran into trouble. 24% of the projects were cancelled before completion, while one third of the projects overran cost and/or time
- Worse still, they found that once a steering group authorised an injection of funding to keep a troubled project going, they would continue to provide additional funding for that project, even after the prospects of achieving the benefits had all but disappeared. In this way they threw good money after bad, rather than taking a serious look at whether to cancel the project.
What’s the solution?
So, what can you do to ensure that the projects in your programme or portfolio are subjected to timely, appropriate and ongoing reviews? How can you ensure that if the projects under your control aren’t delivering, that they are prevented from proceeding further? What can you do to ensure that governance groups take their responsibilities seriously, instead of letting project managers miss their objectives and put business goals at risk without fear of the consequences of failure?
The key to enforcing good governance is to do three vital things:
#1 Schedule reviews in from day one
Build in a series of governance reviews of project progress before the project is allocated its initial funding. One good way to build in periodic reviews is to insert them right at the outset of the project, at the planning stage. By building reviews into the project plan they become an integral part of the project itself, not just an administrative exercise and an unplanned extra. These reviews should be scheduled in advance for the whole project, rather than hastily arranged as the project comes up for its review. In that way:
- Those responsible for ensuring governance will know well in advance that they need to approve the project on an ongoing basis
- Those responsible for managing the project know what they need to deliver in order to receive further funding, and
- Those responsible for collating the information needed by the steering board know what documentation needs to be submitted or circulated to the steering board and can set aside the time to do so.
#2 Turn off the money taps
Instead of giving projects all of their required funding up front, agree the budget needed by the project but only allocate it on a staged basis. Funding for each phase should only be provided if the project has completed the work planned for, if it has demonstrated that it is still on course to deliver as required by the sponsors and if the steering board is satisfied that the benefits can still be achieved.
Each stage review should present the results of that stage in terms of actual versus planned results for the schedule, the costs and effort expended. The review should also provide a revised high level implementation plan, an update on the management of key risks and restate the benefits expected and whether these benefits are likely to be delivered.
#3 Know when to quit
If the goal of the project is to deliver benefits then it stands to reason that the project should be cancelled if the benefits can no longer be achieved. The problem is that when projects are in full swing people can get too caught up in what is going on to take a step back and decide whether their is a realistic prospect of a successful outcome.
The solution is to determine the exit criteria at the start of the project, before people invest too much time, money and emotion into the initiative. Decide on suitable exit criteria for all projects at the beginning of the project; these are the indicators that the project is unlikely to deliver on its objectives and signal that the project should be terminated.
By developing both a clear view of what success looks like and the circumstances under which the project is no longer worth pursuing you can ensure that if the time comes to scrap the project everyone associated with the project will agree that termination of the project is to correct choice, rather than letting their pride take over so that they see it as a personal or team failure and try to fight closure.
So there you have it, three steps to ensuring that projects under your control get the governance that they need in order to ensure that they deliver as planned or are terminated before too much time, effort and money go to waste.