Concept Symposium 2010 Oscarsborg, Norway 16 – 17 September

Concept Symposium 2010
Oscarsborg, Norway
16 – 17 September 2010
Symposium web-site: http://www.conceptsymposium.no/
Concept Research Programme: http://www.concept.ntnu.no/english/
Project Governance
Procedural Staight Jacket or
Freedom of Arts?
Dr Ralf Müller
Umeå University
Norwegian School of Management BI
SKEMA Business School
CONCEPT Symposium, 16-17 September 2010, Oscarsborg, Norway
Corporation
C
Corporate
t governance
Project
Management
Projects
Portfolio
Program
Project
Project
Project
Governance of
project
management
Governance of
projects, programs
and portfolios
Project governance – a definition
• Governance of portfolios, programs, projects,
and project management, coexists within the
corporate governance framework.
• It comprises the value system, responsibilities,
processes and p
p
policies that allow p
projects
j
to
achieve organizational objectives and foster
implementation
p
that is in the best interests of
all the stakeholders, internal and external, and
the corporation
p
itself.
What does project governance do?
• Defines the objectives
j
of an
organization / project.
• Provides
P o ides the means to achieve
achie e those
objectives.
• Controls progress.
Outcome
e.g.project
gp j
outcome
(Brown & Eisenhardt, 1997)
Shareholder
Theory:
Companies
maximize RoI for
their shareholders
(Clarke, 2004)
Flexible
Economist
Conformist
Versatile
Artist
Agile
pragmatist
Compliance
e.g.project process
(Brown & Eisenhardt, 1997)
Stakeholder
St
k h ld
Theory:
Companies
maximize
i i b
benefits
fi
for a wide set of
stakeholders
(Clarke 2004)
(Clarke,
Shareholder orientation
Flexible Economist
Paradigm
Outcome
control
focus
• Highest possible Return on
Investment (ROI)
• Project management as core
competence
• Professional project managers
• Guided by tactical Project
Management Offices (PMO)
Conformist Paradigm
Stakeholder orientation
Versatile Artist Paradigm
• Balancing requirements of a
wide range of stakeholders
• Tailoring of methods
• Project management a core
competence
• Project management a
profession
• Guided by a strategic PMO
Agile Pragmatist Paradigm
shareholder return
• Balances the diverse
Compliance •• Maximizing
Project management a subset of
requirements of a variety of
focus
development processes for
stakeholders by maximizing
technical products or services.
their collective benefits
(behavior
• Maximize
• Project
P j t managementt is
i
M i i value
l
by strict
b
t i t
control)
understood as on-the-side task
prioritization of user needs.
Institutions for project governance
Project governance
• Sponsor & Steering Group
• Program management
• Portfolio management
Project
P
j t managementt
governance
• Board of Directors
• Middle management
• PMO
Institutional setup for project governance
Customer
Project
Customer
interface
Project/program/
portfolio
tf li stewardship
t
d hi
Usually made up of
top project
managers
g
Develops tools/
methods/policies
/quality standards
Program
continue/ stop /
hold, resources
PROGRAM
Framework of methods, tools and
processes to use
Best practice
Support
Program info
Project info
PROJECT
Focus:
scope time,
scope,
time
cost, end results
and others
Strategic goals
Project//
program
continue/
stop/hold,
resources
’Go’ decision
for projects
& programs
Project Portfolio
Management
P j
Project
selection
l
i
Project priority
Goal setting
Contribution to
portfolio objectives
Providing appropriate
project
j t managers
Ad i S
Admin.
Supportt
Reviews, trains,
consults
Prepares project
/program info
Type of business
Level of maturity
PM capacity
PMO?
Ultimate success responsibility
Project
continue/ stop
/hold, resources
Management
Office
Board of Directors
Steering Group
Provide
resources
PPM project /
program info
transfer
Middle Management
Nb. of PMs
Skills profile
Areas of specialization
Centralized pool or distributed
Setting the framework
of skills, knowledge
and resource
availability
Governance structure
• Governance defines the processes, roles, and
accountabilities
bili i off the
h managers in
i the
h different
diff
governance institutions
Governance of project management
Constraints
Very
strong
technology
focus
Strong
project
control
focus
Methodology
Incremental
Project
Management
Governance
steps
E bl
Enablers
Better
project
results
needed
Resistance
to change
existing
practices
Advanced
Training
C tifi ti
Certification
Steering
Committee
PMO
PSO
Bench
Benchmarking
e e s&
Reviews
Audits
Mentoring
Maturity
atu ty
Models
Role and
career for
project
managers
Project
management
as strategic
capability
Governance perspectives towards
projects
j
• A transaction to be performed
– Goal: Minimize transaction costs
– contract,
contract process,
process method and output
• An agency performing the transaction
– Goal: Minimize agency costs
– Adverse selection problem
– Moral hazard problem
• A legitimate piece of work
– Goal: a socially acceptable endeavor
– conform with society’s
society s and stakeholders values and
expectations
Legitimacy
Legitimacy is a generalized perception or
assumption that the actions of an entity are
desirable, proper, or appropriate within some
socially constructed system of norms, values,
beliefs, and definitions.
(Suchman 1995)
Legitimacy
• Morale legitimacy
– Ethical approval of actions. Congruency with
broader norms of the society
• Cognitive legitimacy
– Comprehensibility and taken-for-grantedness
• Pragmatic legitimacy
– Benefit in the eyes of stakeholders or society
(Suchman 1995)
perspecttive
A
Agency T
Theory p
Steering Group
(legitimacy perspective)
Instance of
governance
Project management
Initiation
Planning
Project
Manager
((Agency)
g
y)
Implementation
Project process
TCE perspective
Close-out
Project in governance context
Legitimacy
Project
Transaction
Agency
Board of Directors
(legitimacy perspective)
Strategic
Objectives
Portfolio management
Portfolio
Manager
(Agent)
Steering
g Group
p or
Program management
Program
Manager
(Agent)
Project
Management
Office
Project management
Project
Manager
(A
(Agent)
t)
Tactical
PMO
Strategic
PMO
Linking
g Governance of Project
j
and Project
j
Management Through the Organizational
Governance Paradigm
Governance of
project
management
Governance of
portfolios,
tf li
programs and
projects
Governance
paradigm
The four governance paradigms tie
together
h
and
d categorize:
i
• th
the corporate
t governance approach
h chosen,
h
either primarily stakeholder or primarily
shareholder
h
h ld oriented
i t d
• The ways of managing a project, given the
implication stemming from TCE, agency
theory and legitimacy.
• the project management capabilities and
practices deemed appropriate
p
pp p
for all p
projects
j
throughout the organization
Thank You
References
• Brown, S., & Eisenhardt, K. M. (1997). The Art of Continuous
Change: Linking Complexity Theory and Time-paced
Time paced Evolution in
Relentlessly Shifting Organizations. Administrative Science
Quarterly, 42(1), 1-34.
• Clarke, T. (2004). The Stakeholder Corporation: A Business
Philosophy for the Information Age Theories of Corporate
Governance: The Philosophical
p
Foundations of Corporate
p
Governance (pp. 189-202). London, UK: Routledge.
• Müller, R. (2009). Project Governance. Aldershot, UK Gower
Publishing.
Publishing
• Suchman, M. C. (1995). Managing Legitimacy: Strategic and
Institutional Approaches. Academy of Management Review,
20(3), 571-610.