Acando White PaperOnly in fairy tales are Emperorstold that they are naked. Insight

www.acando.co.uk

White Paper Emperor Final Spreads.indd 1 08/10/2012 12:35

Acando - White Paper

Acando White PaperOnly in fairy tales are Emperorstold that they are naked. Insight

Most organisations don’t do project governance. Instead conversations like this are heard up and down the corridors of our businesses:“I don’t care what the report says. I don’t care you’re going to deliver late with less functionality. Because that’s not going to happen. You will be on time, and it will work. Now stop wasting time in my o� ce and go make it happen.”

12 months later the project is canned after being £45m over budget, £165m spent and delivering zero benefi ts. The implementation partner is kicked out and the senior executives keep their jobs. No questions asked.

Of course it’s not always as harsh and bullish as the last conversation. Equally harmful is the ‘nice’ conversation that still pays total disregard to project governance:

“This project is pushed for time. The deadline is very tight. The team is a little smaller than ideal, so we’re going to have to work e� ciently and hard. But if we can pull together we can deliver this.”

The project delivers 35% late and the attrition rate of team members in the project is 25%. And there are 101 other examples - from a business case that doesn’t add up, to an incapable delivery team, or huge risks not mitigated or understood prior to project kick off . Up and down the

country projects are not governed, billions are wasted and we’re all guilty of standing by and letting it happen.Those organisations that think they do governance - don’t. There’s a great quote by Warren Buff et which pinpoints what’s really happening.

“In some mergers there are truly synergies – even though often times the acquirer pays too much for them – but at other times the cost and revenue bene� ts that are projected prove illusionary. Of one thing, however, be certain. If a CEO is enthused about a particularly foolish acquisition, both his internal sta� and his outside advisors will come up with whatever projections are needed to justify his stance. Only in fairy tales are emperors told that they are naked.”

The APM advocate 11 facets of project governance, but

Human Systems only 8. Totally Optimised Projects rack the number up to 26 whilst ITGovernance.co.uk scale it down to only 6 and the HM Treasury have one

more at 7. This di� erence in opinion only reverts us back

to the title of our section - So what is governance?

White Paper Emperor Final Spreads.indd 2 08/10/2012 12:35

www.acando.co.uk

It might not be the CEO and might not be a merger, but whatever your project and whatever your organisation, political power is at play. Your emperor is naked and you’ve not told him. Those in power all get to play the game their way and we’re all guilty of letting it happen. If you think this doesn’t happen in your organisation, you don’t know how your organisation really works.

All of these are examples of a complete lack of project governance. Paying lip service to project governance is not governance. It’s a waste of time.

So what is governance?

Part of the contributing factors to why governance is rarely done, is that there is scant agreement on what project governance actually is.

The defi nitions of what is encapsulated in project governance and what is not are so wide and varied it’s not surprising most organisations don’t do it – they’re confused! The Association of Project Management advocate 11 facets of project governance, but Human Systems only 8. Totally Optimised Projects rack the number up to 26 whilst ITGovernance.co.uk scale it down to only 6 and our esteemed HM Treasury have one more at 7. This diff erence in opinion only reverts us back to the title of our section – so what is governance?

PWC tried a diff erent approach in a survey by asking those responsible for project governance, what their roles and responsibilities were and what project governance meant. 110 people were questioned. Only 2 could answer the question of what their roles and responsibilities were. So less than 2% of people entrusted with project governance in our organisations actually know what it means! And again we go back to the section title – so what is governance?

The real answer is that no one can agree – and it doesn’t really matter! The relevant question is what is governance there for rather than getting hung up on the intricacies of a defi nition.

White Paper Emperor Final Spreads.indd 3 08/10/2012 12:35

Acando - White Paper

Acando White PaperOnly in fairy tales are Emperorstold that they are naked. Insight

GovernanceDelivered Top Down

Part of the contributing factors to why governance is rarely done, is that there is scant agreement on what project governance actually is.

There are two diff ering approaches to implementing project governance – top down and bottom up. I’m a key advocate of top down governance and we will start by taking a quick look at how to implement this approach.

“Absolutely key in this endeavour are… the frankness and openness of mind with which issues are discussed and tackled by all directors” – UK Corporate Governance Code 2010.

Rather than try to defi ne project governance, instead I focus on what we want governance to achieve. The list should be individual for each organisation and dependent on how they deliver projects and what goes wrong in those projects. The list will depend on your project maturity, what goes wrong in your projects and what you need to control - but for most organisations the list goes something like this:

1. Stop things going wrong (and thiscan normally be narrowed down stillfurther to cost and time overruns).

2. Deliver the right benefi ts.3. Avoid non-value-adding projects.4. Make sure the right ‘big’

decisions are made.

Now that we have defi ned the objectives of our governance function, we needto determine who sits on our governance board. There are three very simplerules when setting up a governanceboard – keep it small; keep it senior;no project stakeholders.

Keep it small. Groups often take decisions that are at odds with the decisions that they would take as individuals. Even to the extent that as a group they would take decisions that they personally regard as perverse. Groups avoid personal responsibility for group actions. All of these inhibit good decision making and therefore your governance board should be small. Three peopleare ideal.

Keep it senior. If there’s going to be anyone in the organisation that can say“I don’t care what the governance board says, here’s what we’re actually going to do” and make that statement stick, either the wrong people are on your governance board or you don’t have the right level of sponsorship. Your board needs to have the power to make decisions which do not need to be ratifi ed. If you’re governance board can’t cancel your organisations largest project, it’s at the wrong level.

No project Stakeholders. If stakeholders sit on your governance board, the politics are still at play and you’re still paying lip service to governance. Even better – have external third parties sit on your governance board. We now have our governance board and our governance objectives. Now to defi ne the roles of those who sit on the governance board.

White Paper Emperor Final Spreads.indd 4 08/10/2012 12:35

www.acando.co.uk

Long TermThe board need a long term view. Short term project decision making leads to bad decisions. The board are not the slave of budgeting cycles, or individual objectives or bonus plans. They take the long term view of the project.

Negative not positiveThe board should assume every project is going to fail. It’s then up to the project owners to show them the data that will prove the project will succeed. If they can’t, the project should be stopped. Now.

What 30% is wrong?Most organisations have (at least) 30% of their projects overspend and/or under deliver. If the governance board isn’t stopping 30% of projects, it isn’t carrying out its remit successfully.

The implementation of these roles can be brought down to a simple list of questions. Every project should have to answer those questions and if the answer isn’t appropriate, the project stops. The list of questions is particular to your organisation but should include things such as is the project benefi t still worthwhile to achieve? Are we going to achieve it? How does this project compare to our lessons learnt? What’s the Plan B? Projects without a satisfactory answer are stopped.

And fi nally some key points to ensure the politics don’t creep back in. Publish the decisions made and the reasons

why; Publish the data that informed the decisions. This will educate and inform those responsible for your project portfolio and will create a culture of openness and honesty which is essential in project governance.The reason I prefer this approach is that it makes a diff erence day one. The changes are quick, radical and obvious for all to see. But they’re also blunt (sometimes too blunt) and require strong executive support (which rarely exists). I still believe this approach gives the best results, but will provide a brief treatment of bottom up governance too.

White Paper Emperor Final Spreads.indd 5 08/10/2012 12:35

Acando - White Paper

Acando White PaperOnly in fairy tales are Emperorstold that they are naked. Insight

GovernanceDelivered Bottom Up

A bottom up approach to project governance is the process of fi xing the problems of poor projects at source. It’s about defi nition, common metrics, project maturity, intervention rather than cure. It’s often considered a less radical approach. It’s often the more frequently adopted approach. In organisations where projects are OK but can be improved, in organisations where there is no strong leadership for the top down approach, the bottom up approach can deliver good results. Of course, most organisations use this as an excuse when really they should be doing top down governance – make sure you’re not one of them! And the big diff erence between the two approaches for me is that top down delivers benefi ts day one. Bottom up can take years to deliver the same benefi ts.

Step One – create common language and metrics. Too often in projects subjectivity makes it hard for those tasked with governance to really understand what they should be doing. Project A is rated Red, Project B is rated Amber and Project C is rated Green – but which one is really the one that is in trouble? Without a common objective language and objective metrics, it’s hard to know. Instead you hear “If I rated my projects according to the defi nitions mine would be permanently red” or “I set my project to amber this month so that the sponsor takes notice and answers the questions I asked”. Creating a strong culture of common metrics avoids these problems. But don’t under-estimate how long this can take – especially in a very politically charged company.

Step Two – identify which projects need support. Now that our projects share common metrics, it’s easier to identify those which need support. Projects can be graded based on their size, complexity,risk profi le, budget, etc, and given PMO support according to these criteria. Again, this is a focus of education, of changing the causes. It takes time, but done properly it works.

Step Three – improve the capability of those delivering projects. Now we’ve stemmed the tide of money our projects were losing (although potentially this has taken 12-18 months to get this far) we can start the process of getting better. We instil programmes of improvement in our project managers, in our project processes, in our stakeholders who are paying for our projects. We grade competences of everyone involved in projects and put in personal improvement plans to raisetheir capability.

Step Four – fi nd the problems before they become problems. In this intervention step, support is provided to projects where they need it before problems arise. The common metrics, the understanding of capabilities, the PMO support, all help to identify where this is. And then by applying the support, you avoid the prospect of having to stop a project but instead improve and steer it around problems before they become terminal.

In really focused organisations you can fi nd both approaches to governance being used. The top down approach is put in day one to shake things up, let everyone know we’re serious and to stop the rot. And then the bottom up approach is put in alongside. Over time, the top down approach is needed less, intervenesless and projects succeed.

A quick note on stopping projects.Several times throughout top down governance I have advocated stopping projects. This is not necessarily a terminal decision for a project. If a project is wrong, if it’s not going to deliver, it should be stopped. But if it can be changed, better managed, better controlled, restructured and convince it will now deliver benefi t, it should be allowed to restart.

White Paper Emperor Final Spreads.indd 6 08/10/2012 12:35

www.acando.co.uk

For more insight, comments and opinion visit our website www.acando.co.uk

About the AuthorPhil Jacklin is the Managing Director of Acando UK, a global consultancy providing project management services. He has managed consultancy fi rms for over 15 years, all providing project management services to blue chip clients across the globe. In this capacity Phil has provided governance across numerous projects, employed and recruited hundreds of project managers and advised many of his clients on how to improve their project management capabilities.

You wouldn’t run a £20m organisation this way...Why do we accept running a £20m project so poorly? We spend weeks or months approving the business case, but then spend 5 minutes choosing the project manager and put no controls in place to make sure it will deliver (or we might say we do but it’s really lip service because everyone has working practices in place which avoid the controls). You wouldn’t run a £20m organisation this way - you’re not legally allowed to! So why do you think it’s OK to run a £20m project this way?

It’s not di� cult. In fact, it’s really simple. But almost no one does it. What’s your excuse?

White Paper Emperor Final Spreads.indd 7 08/10/2012 12:35

United Kingdom Head Offi ce

Oak HouseGround Floor, Sutton Quays Business ParkClifton RoadSutton WeaverWA7 3EH

Tel: +44 (0) 1928 796800Email: projectsuccess@acando.com

Delivering perfect projects around the world...

Manchester / London / Helsinki / Stockholm / Gothenburg / Malmö / Linköping / Ludvika / Falun / Västerås / Hamburg / Frankfurt / Düsseldorf / München / Stuttgart / Zurich / Trondheim / Oslo / Vantaa / Wilmington / Singapore

www.acando.co.uk

The only project management company to be accredited by the APM.

White Paper Emperor Final Spreads.indd 8 08/10/2012 12:35