Project Governance And Its Principles: An Overview

Principles of Corporate Governance

Discuss about the Project Governance And its Principals.

Project governance contains all the key elements those are needed to be present in the project management in order to run the project successfully. In case, if a project fails, the root cause analysis starts from the project governance principals (Müller et al. 2016). Project governance, is not a general set of rules. The project governance is made on the basis of the requirements and the type of the project (Ahola et al. 2014). According to the Project Management Body of Knowledge the project governance is termed as “oversight function that is aligned with the organization’s governance model and compresses the project life cycle. “Alignment with organization’s governance”:  The alignment of the factors of the project governance is important as, the factors are needed to be fitted with the objectives of the project (Too and Weaver 2014). The alignment needs to be considered on the basis of – stakeholders of the project, responsibilities and roles, project governance principals and the engagement of the stakeholders in the project. Apart from that the monitoring and control of the governance plans during the project cycle is needed to be done.

The principals of the corporate governance helps the policymakers and the project managers to create a framework for the successful running of the project, which will deliver sustainable results and will be economic. The principal focuses on both the financial and non financial factors of the company.

The corporate governance defines the engagement between the company, the board of the company and its stakeholders. The governance principal contributes the best possible way to deliver the contribution of the stakeholders of the company and employees of the company for the growth pg the company s well as the success of the project.

The principals regarding the corporate governance were originally developed by the OECD in 1999 and at 2004 it was updated. The principals are divided into six chapters, which is helpful for creating the project governance framework.

1. “Ensuring the basis for an effective corporate governance framework”: This chapter enlightens the importance of the corporate framework in maintaining the transparency and helps to allocate the resource in an efficient way (Pemsel, Müller and Shao 2014). This chapter also includes the new principals of the stock market and the importance of the new governance policy.
2. “The rights and equitable treatment of the shareholders and key ownership functions”: In this chapter the rights of share holders along with the rules of participation is discussed. The structures along with the voting rights are also included in this chapter. The new included things in this chapters are the use of new information and technology tool in the stakeholder’s meeting, procedure of the transaction between the stakeholders and the clarity in the execution plan.
3. “Institutional investors, stock markets and other intermediates”: This is a new chapter included in the principal, which deals about the usefulness of the good economic incentives throughout the investment chain. It also describes the mechanism about reducing the conflict in the project. It also provides the idea about the cross boarder listing and the delivery of the fair price at the stock market.
4. “The role of stakeholder in corporate governance”: this chapter deals with the role of stakeholders in the project which includes the fair corporation between the company and its stakeholders (Cardenas, Voordijk and Dewulf 2017). It also includes the law which enable the stakeholder to access the right information and helps to prevent the violation of the law.
5. “Discloser and transparency”: The disclosing fields of the company are discussed in this chapter. The company needs to share its market value, risk assessments, percentage of profit with the stakeholders so that they can understand the current position of the company in the market (Macheridis 2017). Apart from that the new thing which is included in this chapter is the reorganization of the new trends and its application on the company.
6. “Responsibility of the board”: This chapter discusses about the role of the board members in making the policy of for the company. The selection of strategy and the maintaining the diversity and the integration on the organization are depended on the policy of the company (Bekker 2015). The new thing which is included in this chapter is the role of directors in the risk management, internal audit and tax planning. Another new principal which is added in this chapter is the evaluation of the recommendation and the training of the board members.

The application of the corporate governance in the project management:

• Creation of the framework: Initially, a ideal framework is needed to be created in order to implement a successful project (Guo et al. 2014). The chapter 1 of the corporate project governance principal can help the project managers to create the framework, which helps to maintain the transparency in the framework.
• System management: chapter 2, 3, 4 of the project governance principal can help the project manager to manage the system. The system management includes the proper governance of the entire framework and the implementation of the system is also evaluated in this phase (Tsaturyan and Müller 2015). The relation between the company and stakeholders   and the assessment of the risks are important things which are needed to done in this phase.

From the relevant data discussed about the project governance principal, it can be said that the success of the project is dependent on the few crucial factors-

• Creating the ideal framework: The framework of the project is needed to be created in such a that it ensures the fulfillment of all requirements and is transparent in nature. The stakeholders and the members of the organization are needed to be aware of the specifications and requirements of the project mentioned in the framework.

Example: the initial stage of implementation of the software application needs the requirement specification along with the document mentioning the next step is choosing the ideal framework (Yan, Huo and Deng 2014).  In case, if there needs a software prototype before the final implementation of the project, the waterfall model may not be ideal to be adopted.

• Monitoring the execution of the entire project: the main objective of the project governance is to monitor the project during the execution and identify the areas where changes are required (Tracey,Heide and Bell 2014). The main challenge of the project governance is to avoid the scope creep of the project. In order to avoid this, requirements at the planning phase are needed to be clear for both the stakeholders and the company.

Application of Corporate Governance in Project Management

Example: In case of software project management the monitoring of the project, weather it is fulfilling the entire requirements along with maintaining the quality is done.

• Risk management: Possible risks associated with the project are needed to be maintained by the proper governance during the project life cycle (Zwikael and Smyrk 2015). The identifying and managing the risks are not very highlighted matter in the project management. However, according the OECD principals, the importance of the risk management by the members of the board has been discussed.

Example: In a software project management, there are certain risks associated within the project (Biesenthal and Wilden 2014). These risks can be technical or non-technical such as the delivery time of the project, and the certain possible conflicts in the project.

• Transparency and the responsibility: The events in the project management needs to be clear and should be transparent and the responsibility of the happening of the project task is on the members of the project management team.

Example: In a software project, the requirements and the deliverables are needed to be clear for both the consumers and the project team members.

• Giving the right information: Accessing and providing the right information about the progress of the project should be done, so that both the stake holders and the company officials are aware of the current status of the project.

Field	Yes	No	Not Applicable
Each project has the individual decision maker and the project manager.	a
There is a clear documentation of the requirements along with the clear division of roles among the team members.	a
Requirement specification document is approved by the both client and the project manager.			a
Stakeholders are involved in the project. Some members of the stakeholders are present in the internal audit committee.	a
All major project factors are controlled by the board members and the risks associated with the project is managed.	a
Clear governance to maintain the sustainability of the project.	a
The evaluation of the requirement for the independent review.	a

 

Conclusion and Recommendations

It can be recommended from the above discussion that the project governance is an important factor for managing the project in an efficient manner (Loch,  Mähring and Sommer 2017). In most of the time the project governance as the project management rather than treating it as a part of project management (Joslin and Müller 2015). This overview is needed to be changed. The project governance has certain set of rules and factors which are applicable for the successful execution of the project and project managers need to follow them accordingly.

References

Ahola, T., Ruuska, I., Artto, K. and Kujala, J., 2014. What is project governance and what are its origins?. International Journal of Project Management, 32(8), pp.1321-1332.

Bekker, M.C., 2015. Project Governance–the definition and leadership dilemma. Procedia-Social and Behavioral Sciences, 194, pp.33-43.

Biesenthal, C. and Wilden, R., 2014. Multi-level project governance: Trends and opportunities. International Journal of Project Management, 32(8), pp.1291-1308.

Cardenas, I.C., Voordijk, H. and Dewulf, G., 2017. Beyond theory: Towards a probabilistic causation model to support project governance in infrastructure projects. International journal of project management, 35(3), pp.432-450.

Guo, F., Chang-Richards, Y., Wilkinson, S. and Li, T.C., 2014. Effects of project governance structures on the management of risks in major infrastructure projects: A comparative analysis. International Journal of Project Management, 32(5), pp.815-826.

Joslin, R. and Müller, R., 2015. Relationships between a project management methodology and project success in different project governance contexts. International Journal of Project Management, 33(6), pp.1377-1392.

Loch, C., Mähring, M. and Sommer, S., 2017. Supervising projects you don’t (fully) understand: Lessons for effective project governance by steering committees. California Management Review, 59(2), pp.45-67.

Macheridis, N., 2017. Governance of higher education–implementation of project governance. Tertiary Education and Management, 23(2), pp.85-102.

Müller, R., Zhai, L., Wang, A. and Shao, J., 2016. A framework for governance of projects: Governmentality, governance structure and projectification. International Journal of Project Management, 34(6), pp.957-969.

Pemsel, S., Müller, R. and Shao, J., 2014. Organizational Enablers for Project Governance and Governmentality in Project-based Organizations. In PMI Research and Education Conference 2014.

Too, E.G. and Weaver, P., 2014. The management of project management: A conceptual framework for project governance. International Journal of Project Management, 32(8), pp.1382-1394.

Tracey, P., Heide, J.B. and Bell, S.J., 2014. Bringing “place” back in: regional clusters, project governance, and new product outcomes. Journal of Marketing, 78(6), pp.1-16.

Tsaturyan, T. and Müller, R., 2015. Integration and governance of multiple project management offices (PMOs) at large organizations. International Journal of Project Management, 33(5), pp.1098-1110.

Yan, L., Huo, S.S. and Deng, X.W., 2014. A Research of Project Governance Mechanism on Improvement of Public Project Management Performance-Taking Agent Incentive as Mediating Variables [J]. East China Economic Management, 28(2), pp.137-142.

Zwikael, O. and Smyrk, J., 2015. Project governance: Balancing control and trust in dealing with risk. International Journal of Project Management, 33(4), pp.852-862.