Governance and Governmentality for Projects

Enablers, Practices, and Consequences

Ralf Muller, Ralf Muller

• Publisher: Routledge
• Year: 2016
• ISBN:
  9781317405733
• Edition: 1
• Topic: Business
• Subtopic: Government & Business
• Index: Business

This research-based book takes an organization-wide perspective to describe the governance and governmentality for projects in organizations. Governance of projects defines and directs the ways managers of projects, programs, and project portfolios carry out their work. Governmentality is the way the managers of these managers present themselves to those they lead.

Governance and Governmentality for Projects starts with introducing existing theories, models and paradigms for governance and governmentality. It then develops a chronological framework of the ways governance and governmentality for projects is enabled in organizations, how it subsequently unfolds in organizations of different types and sectors, and the consequences of different governance approaches for project results, trust, control, and ethical issues in projects. Special emphasis is given to the link between corporate governance and the governance of project, programs and project portfolios. Three real-life case studies exemplify the research findings described in the book.

Through its structure this book describes the development of governance and governmentality in the realm of projects from its organizational origins, via observable practices, to expected consequences of different implementations. Aimed at academics, post-graduate students in business and management, reflective practitioners, standards or policy developers, those in governance roles and others in need of a detailed knowledge of the spectrum of project related governance in organizations, this book will help develop a comprehensive understanding of the theoretical and practical underpinnings of the subject, their interaction, and implications for implementation. This allows for understanding and developing of both generic and idiosyncratic governance structures, such as those needed in project-based organizations.

1 Introduction

Ralf Müller

This is a research-based book on governance and governmentality in the realm of projects, or organizational project governance, as we call it in the remainder of the book. Our aim is to provide the reader with a chronological framework of project-related governance and governmentality as it unfolds in organizations and how this framework links into corporate governance.

The book starts with a brief theoretical underpinning of governance and then builds a framework for organizational project governance. The framework starts with the organizational prerequisites and drivers for the establishment of governance structures for projects in organizations. This is followed by the strategic and tactical governance practices applied in the private and public sectors today and the impact of these practices on organizational and project success. The framework finishes with the outline of some of the consequences, in terms of issues and behaviors, seen in projects and organizations applying the different governance approaches shown in this book.

The book is written for academics, postgraduate students, reflective practitioners, standards or policy developers, those in governance roles, and others in need of a detailed knowledge of the spectrum of project-related governance in organizations. The reader learns not only about the practices and approaches to governance and governmentality, but also about the theoretical implications that stem from the research findings. Therefore, it is a source for both those in search of different practices and those in search of understanding. To that end, it is a “why and what” book, and not a “how to” book. For the latter the reader is referred to the large number of consultant books on the market. For the former this book will be a source of many new insights and perspectives.

The Dawn of a New Perspective

Project management has a proud history of one-time, unique undertakings, carried out as standalone endeavors outside the day-to-day operations of organizations, or as standalone organizations limited in lifetime by the duration of the project. This view has changed in recent decades as projects and project management became more and more the business model for the delivery of products or services to customers internal and external to the organization, with ever-smaller undertakings being named projects. The emergence of portfolio management showed how projects could become the operations of an organization. More recently, the boundaries between operations and projects became blurred even more with the popularity of agile and Scrum methods, which make it hard to identify where the repetitive processes claimed for operations end and the unique processes claimed for projects start. Given the success of these approaches, these developments were a positive for the world of projects and their management.

Is the same true for the governance of projects? Not really. Biesenthal and Wilden (2014) found the first mention of governance in academic project management journals was around the end of the last century, after which it started to increase exponentially, especially from about 2005. Research in project-related governance commenced from a contract perspective and then moved into the specific structures of different project types, such those for large capital projects (e.g., Miller & Hobbs, 2005) or projects in specific industries, such as NASA (Shenhar et al., 2005), construction (e.g., Pryke, 2005), public sector projects (e.g., Klakegg, Williams, & Magnussen, 2008), the governance of interfirm projects (Ruuska, Ahola, Artto, Locatelli, & Mancini, 2011), or the governance and governmentality of Olympics projects (Clegg, Pitsis, Rura-Polley, & Marosszeky, 2002).

Similarly, the focus broadened from individual projects to organizational project settings; for example, with the identification of different organizational structures, contingent on project size and number of customers in an organization (Turner & Keegan, 1999), or the importance of a balance between project, program, and portfolio thinking for organizational success (Blomquist & Müller, 2006). Recent years have shown the emergence of more fundamental questions around the nature of governance per se and its embeddedness in the organizational context (e.g., Ahola, Ruuska, Artto, & Kujala, 2013; Müller, 2009; Too & Weaver, 2014). The most recent studies look into the prerequisites for governance, such as the organizational enablers for project governance (Müller, Shao, & Pemsel, 2016).

From early on, the theoretical base of many of these publications followed the traditional corporate governance theories, such as transaction cost economics (e.g., Reve & Levitt, 1984; Winch, 1989) or agency theory (e.g., Bergen, Dutta, & Walker, 1992). Thus, the theoretical base of project governance was strongly influenced by corporate-level governance theories. However, a similar link in the understanding of the governance function or its underlying principles is missing. The literature on governance in projects largely ignores the link between, or the embeddedness of, project-related governance and corporate governance (for a discussion of this, see Chapter 2).

This gap is addressed in this book. The parts on enablers, practices, and consequences discuss their particular contribution to corporate governance through their contribution to the four good governance principles defined by the Organization for Economic Co-operation and Development (OECD) in its report by the Business Sector Advisory Group on Corporate Governance (Millstein, Albert, Cadbury, Feddersen, & Tateisi, 1998). Through this, we show the integration of project-related governance into organizational project governance and its embeddedness in corporate governance. This is further described in Chapter 2.

Positioning Governance

The literature used in this book is mainly of an academic nature, as we build on empirical research and sound theoretical contributions. However, some practitioner literature should also be mentioned, as it is representative of the wide variety of governance approaches. In Chapter 2 we present the two general approaches to governance, which are the non-prescriptive, principle-based approach and the prescriptive, rule-based approach. Both are exemplified in the popular guidelines.

A non-prescriptive, principle-based approach is described in the Guide to Governance of Project Management by the Association for Project Management (APM) (APM, 2004). Their guide addresses the area where corporate governance overlaps with projects and seeks to guide board-level directors in addressing portfolio direction, project sponsorship, project management effectiveness and efficiency, as well as disclosure and reporting. To accomplish this, the guide provides eleven principles for the governance of project management (APM, 2004, p. 6):

1. 1 The board has overall responsibility for governance of project management.
2. 2 The roles, responsibilities and performance criteria for the governance of project management are clearly defined.
3. 3 Disciplined governance arrangements, supported by appropriate methods and controls, are applied throughout the project life cycle.
4. 4 A coherent and supportive relationship is demonstrated between the overall business strategy and the project portfolio.
5. 5 All projects have an approved plan containing authorisation points at which the business case is reviewed and approved. Decisions made at authorisation points are recorded and communicated.
6. 6 Members of delegated authorisation bodies have sufficient representation, competence, authority and resources to enable them to make appropriate decisions.
7. 7 The project business case is supported by relevant and realistic information that provides a reliable basis for making authorisation decisions.
8. 8 The board or its delegated agents decide when independent scrutiny of projects and project management systems is required, and implement such scrutiny accordingly.
9. 9 There are clearly defined criteria for reporting project status and for the escalation of risks and issues to the levels required by the organisation.
10. 10 The organisation fosters a culture of improvement and of frank internal disclosure of project information.
11. 11 Project stakeholders are engaged at a level that is commensurate with their importance to the organisation and in a manner that fosters trust.

This principles-based guide does not suggest a particular process. It does not assume governance to be the rigid application of a methodology, but the flexible and intelligent application of the above principles. The guide also refers to the UK Listing Authority’s Combined Code, 2003, and the Sarbanes-Oxley Act, 2002.

A prescriptive, rule-based guide can be found in the Project Management Institute’s (PMI) Practice Guide for Governance of Portfolios, Programs, and Projects (PMI, 2016). This practice guide provides detailed processes and activities at different organizational levels, such as portfolios, programs, and projects. It distinguishes between governance elements, such as governing bodies (boards and executive committees), governance roles and authorities (for organizational leaders, steering committees, sponsors, portfolio managers), governance domains and functions (such as alignment, risk, performance, and communications; oversight, control, integration, and decision making), and portfolios, programs, and projects (to optimize investments; deliver outcomes and business value; create a unique product, service, or result) (PMI, 2016, p. 5). The guide provides in-depth guidance on processes, responsibility assignment matrices, framework, and their implementation.

A slightly different approach is chosen by the ISO Standard for Project, Programme and Portfolio Management—Guidance on Governance. At the time of writing, this guide was still under development, and reference can only be made to a draft version that the author is currently reviewing. It describes the context and guidelines for the governance of projects, programs, and portfolios. The draft standard provides guidance on the elements, responsibilities, and activities in governance. At each level of project, program, and portfolio management, it addresses the governing body, as well as responsibilities of governance in taking forward the organizational values, addressing policies, risk, decision making, sustainability, statutory requirements, and reporting. To that end, the draft version lends itself to a more principles-based approach to governance.

The three examples above show some variety in the approaches to governance, but also differences in the understanding of governance per se. While the ISO Draft Standard links governance closely to the organizational value system and responsibilities, just as in this book (and in Müller, 2009), the APM guide mainly addresses the board of directors’ principles, and the PMI guide focuses on the activity level with detailed processes, tasks, and tools. To that end, the three publications complement each other and, taken together, offer a broad scope of governance approaches from which practitioners can draw.

Both the PMI guide and the Draft ISO Standard emphasize the differences between management and governance. Governance is associated with key words, such as authorizing, defining, directing, monitoring, etc., whereas management is described as working within the limitations set by governance and with key words such as implementing, communicating, selecting, and optimizing. Too and Weaver (2014, p. 1385) describe the difference as:

The governance system defines the structures used by the organization, allocates rights and responsibilities within those structures and requires assurance that management is operating effectively and properly within the defined structures. The role of management is to manage the organization within the framework defined by the governance system; this applies particularly to the governance and management of projects.

In this book we use a similar distinction. Management is a goal-oriented activity, whereas governance defines the framework (including the limitations) within which management is executed. For example, achieving a project’s objective through the partnership of several organizations is a management activity, but the definition of the types of contracts that are acceptable for any of the organizations is a governance task. Or even more broadly: driving from Norway to a holiday resort in the south of France is a management activity, while the maximum speed at which we are allowed to drive, the tolls we have to pay for the motorways, etc. are governance responsibilities of various institutions in the countries we pass through and are independent of our goal-oriented task, namely, the holiday tour.

The use of terms varies significantly throughout the literature. For example, “governance principles” are described by some writers and institutions as: change culture, leading change, envisioning and communicating a better future, adding value, learning from experience, adapting to change, or managing by stages. However, strictly speaking, these are management tasks, not governance principles.

We mentioned above that governance is the framework within which management tasks, such as those described, are executed. Governance is established based on governance principles, which are the fundamental norms, rules, or values that are desirable and guide the establishment of governance practices (see Chapter 2). Governance principles are different from management principles, as the former typically underpin the ways in which management is steered, and thus provide norms, rules, and values for setting up a framework to steer management, whereas management principles refer to the organization of work and the people used to execute work. Examples can be found in the governance principles of corporations, such as General Electric (General Electric Company, 2016), which refer to principles such as role, size, and selection of board members, which translates to role, size, and selection of steering group members in projects, programs, or portfolios. This is different from management principles, such as those defined by Henry Fayol (2016), which refer to ways in which work execution is organized, such as through division of work, centralization of power for work-related decision making, processes for ordering material, remuneration of workers etc. This translates to principles of organization of work within a project. Hence, governance has a different perspective and builds its practices on a different set of principles.

Governance practices are the “lived” practices of governance in an organization, which include, but are not limited to, the totality of governance structures, processes, policies, etc. implemented across organizational levels, such as projects, programs, or portfolios. Governance structures define the means by which governance tasks, their coordination, and their supervision are directed toward the achievement of governance objectives.

Governance objectives are the particular goals or values that should be accomplished through governance. The nature of governance objectives is often different from that of management objectives, as the former are typically long-term and often independent of the goals of a management task. Moreover, governance objectives may be difficult to measure, as they may include aspects such as ethics, religion, or other value systems that do not always lend themselves to a rationality exercised thorough measurement. Thus, governance objectives may differ from management objective...

Table of contents

• Cover
• Title
• Copyright
• Contents
• List of Tables
• List of Figures
• About the Editor
• About the Contributors
• 1 Introduction
• 2 Organizational Project Governance
• Part I Concepts, Theories, and Models
• Part II Organizational Enablers for Organizational Project Governance and Governmentality
• Part III Practices in the Private and Public Sector
• Part IV Consequences for and of Governance
• Part V Cases of Organizational Project Governance
• Index