Governance

Regardless of its size every change project requires a process for GOVERNANCE and MANAGEMENT OVERSIGHT.  On the ‘objectives‘ page I explained the kind of information that would be needed in a change strategy document. There is another key document that change projects require, especially when these are conducted within a larger organisation. This is the project charter or terms of reference document.

The project terms of reference should refer to the strategy document which provides important context for the project. In addition to this the terms of reference should explain what it is that the project will achieve, by when and by whom. It will also explain what controls will be put in place to manage and oversee the progress of the project. Typically, projects will have a governance board comprising senior managers, relevant experts and important stakeholders in the success of the project.

BPs Containment Cap Project taken from Chris Dugglebys BIZCHANGERS site (photo courtesy of BP p.l.c.)
As well as senior managers, a change project governance board should also include relevant experts and appropriate stakeholders (Containment Cap Project photo courtesy of BP p.l.c.)

The exact composition of a change project governance board will depend upon the goals, strategy and anticipated activities of the project. The senior managers should have the authority to sanction resources for the project (e.g. agree the budget and any required amendments to it). If the project is a major component of a small company or a start-up venture the senior managers may actually be the company owners, members of the board of directors or representatives of the financing organisation.

The relevant expert(s) on the governance board are present to provide specialist guidance to the change project. For example if the project involves engineering the relevant expert could be someone who has experience in the technical area concerned. If the project will take place overseas the expert may have relevant knowledge about the location, politics and potential risks of the area involved.

Stakeholders are often invited onto a governance board because of their importance in ensuring success at the implementation stage. For example if a change project involves the reorganisation of a sales order handling process a senior representative from the sales team impacted by the new process will be able to provide input about how it will be received in practice. This will allow relevant modifications to be made and ensure that a key user has ownership in the success of the change.

Governance Board stakeholders not only provide guidance but also promote shared ownership in the successful outcome of the project (Static Kill project photo courtesy of BP p.l.c.)
Governance Board stakeholders not only provide guidance but also promote shared ownership in the successful outcome of the project (Static Kill project photo courtesy of BP p.l.c.)

One of the first tasks of the change project Governance Board will be to sanction the project terms of reference document and approve the resources needed for the project to begin. For larger or more complex projects, involving several participants, a table listing the delegations of authority may be required. This allows the governance board to focus on approving the overall project budget and the smaller items of expenditure within the budget can be delegated to the relevant people responsible for the areas concerned.

Typically larger, more complex projects will have a work stream structure.  Work streams operate like departments within the overall project structure. Examples of project work streams may be: Communications, IT, HR, planning/control, procurement, engineering, construction, logistics, HSE, etc. Each work stream would be expected to report performance against its planned targets into the governance board’s regular meetings. Specifically any deviations/shortfalls in performance should be reported to the board to allow steps to be taken to remedy the situation or to manage/mitigate the impact on the overall project’s goals.

More complex transformation projects are usually managed using a project work stream structure (Azerbaijan Chirag Oil Project Graphic courtesy of BP p.l.c.)
More complex transformation projects are usually managed using a project work stream structure (Azerbaijan Oil Project Graphic courtesy of BP p.l.c.)

To be effective a project governance board should meet regularly and all relevant members for the particular stage in the project life cycle should be present to receive updates on performance, decide upon any changes needed and ensure resources are approved for the next stage in the process. Sometimes the board will need to act upon major concerns or deficiencies in the project’s progress or the participants. For example if a key individual is not delivering as expected it may be necessary to consider replacing that person or to review the resource allocation to ensure improved performance.

Another important activity of a change project governance process is to manage changes within the change project. Any experienced project manager will know that one of the biggest risks to on-time, in-budget, safe completion of a project is ‘change’.  Yes even a change project requires a management of change process. If there are significant changes to the original scope of the project these must be clearly defined, justified, budgeted, pre-approved and then controlled against the revised budget. Important change orders and their progress should be reviewed at governance board meetings.

In summary, a change or transformation project governance process should include:

  • A governance board including senior management, relevant experts and appropriate stakeholders.
  • A terms of reference or charter document (who does what and when)
  • Regular well attended project governance and progress review meetings
  • A delegations of authority document (including financial, safety, people and operational authorities)
  • A management of change process
  • A work stream structure if the project is complex

The next area to consider in your change/transformation project is the planning process – an explanation of this can be found using the link here.

Night time view of the Chemicals JV Formosa BP Chemicals
As President of this Asian Joint Venture during its construction, commissioning and first year of operation I used all the project governance processes described above, The project was completed on-time, in-budget and there were no injuries to the 700 workers on the site (Photo Chris Duggleby).

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