governance 1 complete

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CVEN90045 Engineering Project Implementation

Organisation & Governance Requirements

for a Civil Infrastructure Project

Lecture 1 - 2013

Organisation & Governance

Prepared by Peter Bishop C.P.Eng.


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Governance & Organisation 1

Definitions:Governance is the process of managing & controlling aproject with proper checks & balances at all stages.

Who will

approve this

pipe

connection ?


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Definitions:The governance process must take into account therequirements of all key stakeholders to ensure thatthe project delivers optimum outcomes includingthose of the project owner.

We will incorporate

your requirements

into the approval

process


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Definitions:The primary stakeholder is the project owner & one ofits objectives is to ensure that the project is acceptedby key stakeholders. (accepted by, notnecessarily acceptable to)

They havent

used our good

idea !!


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Establishing Good Governance: The Owner (Project Manager) can initiate the

governance process by setting up an appropriateorganisation structure involving relevant

stakeholders.

How would you then use the organisation

structure to control decisions (checks &balances) during the implementation ofthe project?


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Establishing Good Governance:

The governance (managing & controlling process) issuperimposed by defining the relationship between

participants (stakeholders) in the proposedorganisation for project implementation;

This relationship can be a defined and applied bylaw, by contract or by mutual agreement;


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Typical Contract Organisation for a Project

Owner/Principal

Construction

Superintendent

Specialist

TechnicalAdvisors

Principal

Designer

Suppliers &

Sub-contractors

Construction

Contractor

Banker

Design

Reviewer

Accountant Lawyer

Insurer

External

Stakeholders A

External

Stakeholders B

Informal

Obligation

Statutory

obligation

Individual

contracts




Conventional Project Management Organisation:

Stakeholders

Owner/Principal &

Project Manager

Suppliers &

Sub-contractors

Specialist

Technical

Advisors

Principal

Designers

Manager

Contract

Superintendent

Construction

Contractors

Manager

Owners Advisors




Alliance Project Management Organisation

Suppliers &

Sub-contractors

Specialist

Technical

Advisors

Owner/Principal

Lawyer

Insurer

Accountant

Banker

Independent

Auditor

Alliance

Agreement

Sub-Alliance

Partners

Project Manager

Principal

Designer

Owner/Principal Construction

Contractor

Stakeholders




Governance Control Measures:The governance process can be used to apply mandatory

requirements or discretionary requirements. For example:

A contractual obligation is a mandatory form ofgovernance;

A statutory obligation is a mandatory form of governance

such as environmental legislation, or OH&S legislation;

A Steering Committee or Community Reference Group can

provide opinions that are used to provide confidence that the

Project direction is generally satisfactory.




Governance Controls :The governance process is provided byparticipants having powers or authorisationswithin the organisation to:

IncreasingPowerofAction

DirectApprove

Certify

Endorse

Recommend

Check

Review

Advise




Governance Controls (contd) :A direction is a binding and high level control measure

reserved for the most impactive issues during

implementation. (Board of Directors).

Approval is the most powerful process in the

governance arrangement & is reserved for major

financial & technical gateways during implementation.

Certificationis a powerful control involving a

professional signing off (personal or corporate

liability) that a process or outcome complies with

contractual or statutory obligations.




Governance :It is important to include governance gateways along the

delivery path of the Project.

Why ?




0

1

2

3

4

5

6

DegreeofImpa

ct

Impacts of Change During Project Development & Project Delivery

Strategy or

Pre-feasibility

Business CaseFeasibility Procurement Construction Commissioning

Ability to make a

change to the

project scope




0

1

2

3

4

5

6

DegreeofImp

act

Impacts of Change During Project Development & Project Delivery

Strategy or

Pre-feasibility

BusinessCaseFeasibility Procurement Construction Commissioning

Ability to make a

change to the

project scope

Cost to make a

change to the

project scope




The time needed to exercise the governance controls

can be time consuming and may slow down the

implementation by having too many gateways ;

Approval Bottle-neck

Recommendation

Request

For

Approval

ReviewComments




How can you reduce the potential

bottle neck caused by thegovernance process?


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Delegation:This can be improved by delegating the powers

(authorisations) to lower levels in the organisation.

The delegated powers may be to certify or approve

matters up to a certain value, risk level, or complexity.

The delegation may also be to empower less

experienced personnel to review, check and recommendcertification or approval.


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Governance & Organisation 1Governance Action Examples Authorisation Above $1M or

High Risk Level

Authorisation below $1M or Low

Risk Level Delegated to:

Direct: Owner's Board of Directors Owner's General Manager

Approve: Example 1, Change of Project

Scope

Owner's General Manager Project Manager

Approve: Example 2, An increase in the

depth of foundations

Construction Manager Senior Engineer for Foundation Area

Approve: Example 3, An extension of time

to a critical program activity

Contract Superintendent Superintendents Representative

Certify: Example 1, Contractors monthly

payment from the Owner

Contract Superintendent Superintendents Representative


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Governance & Organisation 1Governance Action Examples (contd) Authorisation Above $1M or

High Risk Level

Authorisation below $1M or Low

Risk Level Delegated to:

Endorse or Recommend: Example 1, The

design of a crane foundation.

Contractors temporary works

designer.

Sub-contractor responsible for crane

supply and erection.

Endorse or Recommend: Example 2, A

change to the project cash-flow.

Project Construction Finance

Manager

Site Cost Engineer

Check: Example 1, A claim from a

Contractor for extra costs from the Owner

Superintendents

Representative

Site Engineer

Check: Example 2, A change to the quality

standard of material.

Chief Design Engineer Senior Engineer for each discipline.

Review, comment & advise High Credibility Specialist Recognised Specialist


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Governance for External Stakeholders: The lecture about stakeholders describes how to

determine the importance of particular stakeholdersin the organisation. based on a simple riskassessment (mapping) process.

Using the stakeholder map and the implementationwork breakdown structure, the organisation can bedeveloped to engage the stakeholders to the degreewarranted by their importance to the achievement

of the Owners project objectives.

The governance for internal stakeholders is usuallymore definitive than for some external stakeholders.


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External Stakeholders:The Project Owner may wish particular external

stakeholders to review and comment on some proposed

decisions.

Governance can be applied to this involvement by

forming the stakeholders into a "Steering Committee

that may represent several interest groups.

The Steering Committees decisions may have

sufficient weight to influence project decisions or even

the direction of the project.


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External Stakeholders (contd):

Does the Project Manager have to adopt

all the proposed recommendations or

resolutions put forward by

external Stakeholders?


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External Stakeholders (contd):The comments from an external stakeholder may be

taken by the Project Owner as an opinion to be

considered on its merits and adopted or not based on a

judgement of associated risks and benefits.

However, the external stakeholders must be advised of

the decision to adopt or not and be given reasons for

this.


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Conflict of Interest:Individuals may adversely affect project implementation

because of personal or corporate interests that are different

from those of the project organisation or different from those

of others in the organisation.

The organisation and governance arrangements must avoid

conflicts of interest and they must include methods to manage

conflicts of interest if they arise.


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Conflict of Interest (contd):Conflicts of interest are dealt with at the time of entering

into a contract arrangement (contractual obligations);

Less rigorous agreements with committees or advisors

( voluntary members particularly) are less explicit in theconflict of interest obligations.

Typically committee members will be asked to sign a

confidentiality agreement and a conflict of interest statement.

Actions by organisation members may not show a blatant

conflict of interest but behaviour may adversely influence

others in the organisation.


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Matrix Management Definition:Matrix management is a style of management where an individual has two

reporting superiors (bosses) - one functional and one operational.

This is commonly seen in project management where an engineer, for example,

reports to the chief engineer functionally, but reports to the project manager onoperational project issues.

Matrix management also is common in branch offices. The accountant in the

Melbourne office reports functionally to the Vice President of Accounting in

headquarters in Sydney, but reports operationally to the Regional Manager in

charge of the Melbourne office.

Generally the functional reporting relationship is stronger, because the

functional manager controls the individual's compensation and evaluations.


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Matrix Management Definition:Matrix management is a style of management where an

individual has two reporting superiors (bosses) - one

functional and one operational.

Functional

Manager

Functional

Manager

Functional

Manager

Functional

Manager

Project

Manager

Engineer 1 Engineer 2 Engineer 3 Engineer 4

Project

Manager


Project

Manager



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Matrix Management Example:Matrix management is a style of management where an

individual has two reporting superiors (bosses) - one

functional and one operational.

Managing

Director

Manager

Engineering

Regional OH&S

Manager

Contracts

Manager

Purchasing

Manager

Project

Manager 1

Site Engineer 1 Site Engineer 1 Site Engineer 1 Site Engineer 1

Project

Manager 2


Project

Manager 3



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Documentation of Governance Arrangements:To implement effective governance, the roles and responsibilities

of all members of the organisation must be clearly documented,

including the relationship between each.

The project management plan must include:

roles and responsibilities;

Authority levels;

Dispute resolution method;

Reporting obligations.

Reference documents (contracts, agreements, statutes)


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Governance Role of the Professional Engineer:As a professional Engineer, you may be operating in a project

organisation as an employee of the Owner, or as an employee of

one of the entities participating as a service provider or as an

external stakeholder.

How will you know what your obligations are in

the project Governance arrangements?


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Governance Role of the Professional Engineer:Your employment conditions will include obligations to your

employer including respect for confidentiality and notification of

any conflict of interest risks.

Project- specific responsibilities may be added to your employee

obligations.

Your Employer will have signed a contract or agreement thatspecifies governance obligations and you must be made aware of

these obligations to meet you personal obligations.


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Governance & Organisation 1Governance Role of the Professional Engineer:

Owner/Principal &

Project Manager

**

Suppliers &

Sub-

contractors

**

Specialist

Technical

Advisors

**

Principal

Designers

Manager

**

Contract

Superintendent

**

Construction

Contractors

Manager

**

Owners Advisors

**

**Professional

Engineer

Stakeholders **


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CVEN90045 E i i P j t I l t ti


Governance Role of the Professional Engineer:

In all roles in the organisation you will be expected to behave

ethically as an individual professional engineer.

End of L ecture Part 1

I am not

a

Professional

Engineer

governance 1 complete

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