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Project governance and control

Better Practice results: Increased confidence in decision-makers that the project implementation will be well-managed and that project status updates provided to the decision-makers will be timely, accurate and useful.

Business cases normally provide information on proposed governance arrangements, covering issues such as the arrangements for:

• oversight and control of the project – often using a project board;
• the day-to-day management of the project; and
• reporting to the decision-maker on progress, problems, and review points.

Given the importance of sound governance to subsequent implementation success, it is an important consideration for project sponsors and decision-makers when considering a project.

Accordingly, is better practice for the project sponsor to:

• describe their own role in governance – for example, chairing the project board;
• consult with parties who will represented on the governance body to gain commitment to specific people or positions being involved;
• tailor the governance arrangements and reporting milestones to the importance, complexity, cost and level of risk for the project;
• identify key milestones and triggers for reconsidering the continuation of the project; and
• make a judgement on whether there is adequate internal capability to effectively govern the project.

The governance approach may be affected by options being considered for the project. For example, a different governance approach may be used for an option involving partner entities, compared to options being delivered within the entity. This means that governance aspects of the business case need to be considered jointly with other aspects of the business case.

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Project governance committee

Useful principles in the design of the governance committee (or project board) are:

• Include representatives of the business area who will use the products of the project.
• Include representatives of the proposed suppliers or developers.
• Consider inclusion of those more indirectly affected, such as clients.
• Be clear on the powers of the committee. To maintain clear accountability, a common arrangement is that the committee will advise the project sponsor, who chairs the committee and is the decision-maker. However, in some circumstances it may be appropriate for the committee to have decision-making power.
• Make arrangements to manage potential conflicts of interest. Wide representation on the project board provides definite benefits in identifying and resolving issues, but may result in actual or potential conflicts of interest.

There are particular issues in setting up governance arrangements for cross-entity projects, which are discussed in the next section.

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Milestones

Of particular interest to decision-makers are the key reporting milestones and points for review identified in the business case. These will usually include:

• the completion of any significant procurement activity;
• the completion of major project phases (see page 72 for a discussion of implementation approach and project phases);
• when significant variations of cost, time or deliverables become apparent; and
• the reaching of milestones where it is prudent to reassess the viability of the project – that is, potential exit points for the project. Depending on the degree of uncertainty in the project, these can be defined as either a point where specific approval is required to continue, or where approval to continue is granted subject to defined benchmarks having been achieved.

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Governance capability

Finally, it is important for the project sponsor to consider whether their area has the experience and track record to effectively govern the project. If a business area is still developing its project governance capability, it is preferable to acknowledge this in the governance section of the business case and explain the additional steps that will be taken to fulfill the governance plan. For example, project management and secretariat services to the governance committee may be contracted to specialist providers.

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