Today, businesses operate in an environment of unprecedented change. Often new businesses take advantage of new technologies or use innovation to challenge existing models of product or service delivery. Uber, Airbnb and Telsla are great examples of this. Established organisations often struggle to keep up due to entrenched cultures and structure, legacy technology platforms and pre-existing capital commitments. Only those organisations that master the ability to continually innovate and change will keep up.
The statistics regarding the number of change initiatives or ‘projects’ that fail are staggering. On average 48 per cent of projects fail to meet their baseline, time, cost and quality objectives.
Projects fail for many reasons;
- Inadequate or no specification of the business case.
- Unclear goals or a failure to understand or deliver both short and long-term objectives.
- Inadequate resourcing or turnover of project staff.
- External events (e.g. change of government, business takeover).
Historically, project management has been associated with operational initiatives such as construction, product development, manufacturing and technology change. However, research now shows that strategic change projects are as prominent as projects relating to construction, product development, manufacturing and IT.
Change projects are driving new culture change and business transformation. Failure to effectively implement these organisational change strategies increases the risk of ongoing viability. This means boards and senior management teams need to understand the performance of projects within their respective organisations and what it means to the ‘bottom-line’. They need to have better visibility and oversight; the traditional conventional view of project management, focused on the concept of ‘on-time on budget,’ is no longer sufficient.
Project success goes beyond just providing an output of a unique product or service within a given timeframe or budget. What is more valuable is the realisation of expected benefits or strategic outcomes. For example, Sydney’s infrastructure projects, Lane Cove tunnel and cross-city tunnels, and Brisbane’s CLEM7 tunnel, were successfully delivered on-time and on-budget. However, the jury is out in relation to achieving expected benefits, as investors lost money and traffic congestion has not reduced.
Conversely, if we look at the Sydney Opera House project, which has been rated as one of the ‘world’s biggest planning disasters.’ It was originally scoped to be completed in four years and at $7 million cost, however ended up being delivered in 14 years and at a $100 million cost. However, this project has created one of the most recognised landmarks in the world and coincidentally became one of Australia’s most valuable assets.
Organisations need a paradigm shift when it comes to understanding what successful project delivery looks like and the tools to enable project teams to measure success.
Strong project governance is critical. It provides a platform that clearly defines the purpose, scope and intent of a project, as well as the intended benefits now and into the future. This aligns the business case of a project including, critically, its budget and human resource effort, to the organisational strategy more distinctly by providing measurable elements over the life of the project. The key aspect of effective project governance is to manage the project lifecycle.
What is good project governance?
There is no common approach to establishing good project governance as projects differ in size, nature and complexity. However, the following aspects are considered key:
- Executive buy-in – Executive level support/sponsorship is a critical pre-requisite for successful implementation, especially those involving significant changes to an entity’s structures, processes or culture. Without strong and visible leadership, any underlying changes will be ineffective.
- Stakeholder engagement – Identification and regular engagement and communication with stakeholders to inform them of the progress and ensure they are aligned to the project.
- Steering Committee – A core steering committee consisting of key stakeholders and project team, with clarity of roles and responsibilities, potential conflict of interests declared, accountability, and means to assess performance at the end.
- Accountability and responsibility – A single senior responsible officer accountable for the delivery of the project with appropriate authority, skills, resources and support structures.
- Roles and responsibilities – Clearly defined roles and responsibilities for project delivery and defined governance arrangements between the various parties involved in the implementation.
- Project management control process – Clearly defined project objectives, project plan, and strategies to help manage the plan; a milestone-based implementation plan as well as a resourcing plan.
- Risk and issue management – A risk management plan to identify and assess risks early in the project.
The requirement for effective project management delivery is a trend that is not going away and will continue to grow as a requisite skill for high performing organisations within the private and public-sector.
Does your organisation have the right project management governance to enable it to measure and understand project success beyond the on time and cost measures?
How Crowe Horwath can help
Crowe Horwath is a global firm with leading expertise in project risk management and project assurance.
At Crowe Horwath, we have Project Management Subject Matter Resources, who understand complex projects across different industries. We offer services tailored to help organisations implement effective project governance frameworks.
Our key service offerings include:
- Pre-Implementation Review:
Where we work with organisations to review project initiatives and advise on risks that need to be taken into consideration before the implementation phase.
- Project Management Assurance
Where we assist organisations to assess the design and operating effectiveness of project management framework including:
- Alignment of project objectives to the overall strategic objectives.
- Adequate governance and project reporting processes that focus on the risks and metrics that matter.
- Definition of the roles, responsibilities and performance criteria.
- Competency and capability of project team to deliver desired project outcomes.
- Project business case assumptions and risks are supported by relevant and valid data points to support informed decision making.
- Defined reporting project status and escalation of issues to required personnel.
- Post Implementation Review:
Where we work with organisations to assess the project delivery team performance, critically appraise the realisation of benefits delivered by the project and provide recommendations to help improve for the delivery of future projects.
If you would like further information, please contact your Crowe Horwath adviser, or email [email protected]
Masimba Mashumba, Associate Partner –Risk Consulting
 The Infrastructure Australia report “A Review of Project Governance Effectiveness in Australia” dated March 2013