Governing Programmes and Projects

Executive salary caps are a red herring

Posted in Governing Programmes and Projects, News and Features on October 15th, 2009 by Raymond Young – Be the first to comment

Reflections on AICD seminar: ‘Directing Tomorrow Today’

The Australian Institute of Company Directors (AICD) has over 23,000 members, but fewer than 140 CEOs earn more than 10 times the average salary according to the Productivity Commission. Why should the other 22,860 members support AICD efforts to oppose government legislation on salary caps for executive pay? Does the AICD only represent the top 150 ASX companies or are directors simply out of touch? (and I am one of them!)

You cannot blame the government for trying to curb the excesses that lead us into the GFC. It was inevitable new legislation would be introduced. The public are angry and now that the economy is starting to recover, they expect something to be done.

Since the beginning of this year I have been urging boards and their management teams to be proactive and not wait for knee-jerk legislation (Preparing directors for the governance backlash). Anyone can make a mistake and we needed to restore confidence. We needed to show the public we can be trusted to self regulate and effectively govern the things that really matter. Recent AICD seminars on ‘Directing Tomorrow Today’ raised the question for me of whether we have the stomach to do the job.

Two statistics highlight the issue: (a) 60-75% of business failures are due to managerial incompetence[i], (b) 50-67% of all project investments deliver no business benefits whatsoever[ii]. Projects matter because they are the primary way of delivering strategy. I haven’t met anyone [yet] who deliberately sets out to fail yet these statistics are endemic. The problem relates to managerial over-optimism [iii] and surely it is the board that has to take overall responsibility to see it is addressed.

The AICD oppose legislation on remuneration because it is a primary role of the board to ensure risk is aligned to reward (and their implication is that additional legislation is unnecessary). However, the problem is a lot older than the GFC, there has been no shortage of advice pointing to the right direction (How much governance is enough?). During the AICD seminar the discussion focused on the appointment of the CEO and how they would be remunerated, but failed to recognise the problem needs to be dealt with at more than the CEO level. Boards need to implement workable solutions to ensure risk is matched to reward for all strategic initiatives and intercede often enough to ensure their managerial team deliver what they promise. There is even an Australian Standard providing guidance on how to do this: AS8016, HB280.

So the new legislation on executive remuneration, in my opinion, is a red herring. Our inaction has forced the government’s hand to do something. Are we our own worst enemy in not being able to self regulate on the things that actually matter?

Let me repeat some advice offered at the beginning of this year:

  • Following the GFC – governance practices will almost certainly be questioned
  • New governance requirements are likely to be introduced
    • Historically new requirements are introduced reactively
    • There is a risk new requirements will not add value
  • We should anticipate these developments
    • It takes longer for management to respond than for the board to ask
    • We should identify the key areas that need to be governed
    • We should check we have effective systems to monitor the key areas, and introduce new mechanisms where necessary
    • Governing major projects is one area worthy of attention
    • New Standards AS8016, HB280 have much to offer.

[i] M Van Vugt, “Follow me,” New Scientist 198 (2008): 42-45

[ii] R. Young, “What is the ROI for IT Project Governance? Engaging the board and top management.,” in 2006 IT Governance International Conference (Auckland, New Zealand, 2006)

[iii] D Lovallo and D Kahneman, “Delusions of success: how optimism undermines executive’s decisions,” Harvard Business Review 81, no. 7 (2003)

Bridging the top management conceptual divide

Posted in Governing Programmes and Projects, Strategic Programmes on October 14th, 2009 by Raymond Young – 3 Comments

Executive Summary

Top management support is crucial for project success, but top managers are not interested in project level concerns. Programme management is the crucial link because programmes deliver the business benefits required to realise strategic goals. web name generator However the project and programme management community will have to learn engage at the strategy level and focus on the achievement of strategic goals. The current approaches are too heavily influenced by project management concepts to be effective in engaging top management.


The need for top management support

IT governance guru John Thorp has advocated for some time the need to manage projects at the programme level in order to realise the desired benefits. I’ve come to the same conclusion from a different angle:

There is now strong evidence that top management support is the most important critical success factor and is not simply one of many factors [i].

If so, then it is very difficult for projects to succeed if top managers do not consider project management to be a matter of direct concern and they don’t [ii].

If projects don’t succeed (in delivering business benefits) then corporate strategies aren’t implemented. Everyone loses. (This almost certainly appears to be the case with one of the best performers in the public sector: the State of Victoria; and it is likely to be the case with the rest of us. It is well known that two thirds of projects deliver no value at all [iii]).

This situation is very dysfunctional with as much as 3% of GDP is being lost because project managers can’t get the attention of top managers.

We can engage top managers through programme management

We believe there is a conceptual chasm between the top management and project management community. They do not have a common language and do not work together to achieve common goals. We have documented our analysis in Bridging the TMS-PM conceptual divide. Our major findings are:

Project management is increasingly being used to implement strategy; an application it was not designed to meet. Projects deliver products that might enable a strategy but they rarely if ever deliver strategies.

Portfolio management is not a solution because the focus is on the selection of projects. If projects cannot deliver a strategy then no matter how well you select projects, it will not result in a strategy being delivered. For strategic goals to be met, it is essential that portfolios are portfolios of programmes not portfolios of projects. This is not how PPM (project portfolio management) is currently practiced.

Programmes are the vital link between strategy and the realisation of strategic goals. We must as John has stated, focus our attention at the programme level. Plan for, select and fund entire programmes (or not). Our point of difference is that we believe mainstream programme management is currently too immature, too inflexible and too influenced by project management to engage the top management audience. Programme managers cannot assume strategy is delegated from on high and only needs to be implemented. The practice of programme management much be enhanced to deal appropriately with much lower levels of certainty than practitioners of strategic planning and programme management have traditionally assumed.

Finally active governance by top managers is essential to go beyond planning to actually realise the desired benefits over time. The future is inherently unpredictable and top level governance is required to steer or navigate around unexpected obstacles. Governance is not how the project management methodologies have portrayed it: to have a steering committee or a project board. Governance is an attitude and requires an active questioning. The 6Q Governance™ framework, an enhancement of HB280 and AS8016, is an excellent guidance that we recommend to all.

But we need to lift our game and learn to contribute to strategy

However, we face an uphill battle overcoming a considerable misdirection of effort being promoted by the project and programme management community. This might seem an arrogant statement but we would ask you to consider how many project managers operate at the level of the board or C-suite? An earlier blog summarised a professional presentation for ISACA that considered board level decision-making. The quotes below are taken from the ‘decision-making’ module of the AICD Company Director’s Course and we believe the last quote may apply particularly to the current thinking in the project and programme management communities. If we are to engage the top managers we need for our success, we need to do it at their level so that both they and we can succeed. The level at which we must engage is strategy and the achievement of strategic goals.

“Decision-making is a process rather than something that occurs in a single point in time”

“The process … begins when we need to do something but we do not know what”

“People in organisations such as managers must pass through stages in mastering greater and greater complexity. This is not a matter of handling more and more information, but learning what information is important – what not to think about – to focus on what is really important” Jaques (1998)

“When a person is out of their depth in terms of the level of complexity they have to handle, they will implement mechanisms to maintain control such as cutting the debate, seeking to silence people … often unconscious behaviours designed to avoid their own lack of understanding”


[i] R. Young and E. Jordan, “Top management support: Mantra or necessity?,” International Journal of Project Management 26, no. 7 (2008): 713 – 725, http://www.sciencedirect.com/science/article/B6V9V-4T8R1VR-1/2/cbb9982c137815f208ac6ca820c3b45f.

[ii] L. Crawford, “Senior management perceptions of project management competence,” International Journal of Project Management 23, no. 1 (2005): 7-16, http://www.sciencedirect.com/science/article/B6V9V-4D636C6-4/2/b6479d1c140991c277782e9cfaff6ffb .

[iii] R. Young, “What is the ROI for IT Project Governance? Establishing a benchmark.,” in 2006 IT Governance International Conference (Auckland, New Zealand, 2006).

Governing programs for strategic success – implications from Victoria

Posted in Governing Programmes and Projects, Practice Areas on September 16th, 2009 by Raymond Young – 1 Comment

The State of Victoria is one of the international leaders in New Public Management and is frequently compared to the UK, Canada and New Zealand. We expected it to be at the forefront of practice because it leads the world in the application of management techniques to improve efficiency and effectiveness in the public sector.

But our research shows us that even for those at the forefront of practice, many of the approaches with the most potential to improve project success have not been incorporated.

Our research, commissioned by the Victorian Auditor-General’s Office, showed billions of dollars were invested in projects in Victoria, and yet often the expected strategic benefits are not being realised. Research we have undertaken on the private sector suggests it struggles with exactly the same issue. (In 2008, fewer than 178 of the 2224 ASX listed companies (8%) report their IT investment, and there is no apparent requirement to report investments in soft projects). If one of the best performers does not have the tools to help it achieve its strategic goals, what are the implications for the rest of us?

We have commented earlier that the tools with the most potential to address this issue (portfolio management, programme management, project governance) are too immature in their current state to be widely adopted and overcome the issue.

The specific issue that needs to be addressed is to increase the flexibility of tools to:

  1. provide feedback on the effectiveness of strategy, and
  2. contribute to changing and refining of strategy as it is implemented and lessons are learned (current approaches are too mechanistic).

To advance the discussion, we have just documented our findings in our paper Governing programmes for strategic success – implications from Victoria submitted to the 2009 International Research Workshop on IT Project Management, a special interest group of the International Conference on Information Systems (ICIS) 2009 (recognised as ‘the most prestigious gathering of IS academics and research-oriented practitioners in the world’). We are also considering presenting another version of this paper in Melbourne in Feb 2010.

This post extends the invitation to participate to the entire online community. We wish to go beyond project management and ‘find more appropriate programme and portfolio management approaches that can be adopted with confidence by senior decision makers’. All contributions will be acknowledged and there is the opportunity to incorporate them into an advanced course being developed initially for the University of Sydney.

Please read the blog posts on this site, download the academic paper and share your initial thoughts by posting below. I encourage you not to hold back, and to help shape an initiative that will improve education / health / police / environment / defence / business results by 4-8 times.

We all win if governments get better results with lower costs.

Deficiencies with programme management?

Posted in Governing Programmes and Projects, Strategic Programmes on September 7th, 2009 by Raymond Young – Be the first to comment

Executive Summary

Having raised the question in a earlier post of why billions of dollars invested in projects were not resulting in the realisation of strategic benefits, and then exploring portfolio management, this post explores whether programme management may play a part.

It appears programme management is indeed the vital link but may be deficient in two critical areas:

  1. Current conceptions of programme management are often immature and inconsistent.
  2. Current guidelines may not be flexible enough to support strategy.
    1. The level of certainty that exists with strategy is far less than programme managers have traditionally assumed.
    2. It is not optimal to work on the basis that top managers set strategy and programme managers implement strategy.
    3. Programme management must adapt to the context within which it operates. This flexibility of practice is important to:
      1. support some level of challenging, feedback and dialogue on strategy, and
      2. easily redefine the program as new information comes to hand.


this post is an extract from an academic paper prepared for the IT Project Management SIG meeting at the2009  International Conference for Information Systems

Making Sense of Program Management

Programme management in contrast to project or portfolio management is not a mature discipline. There are less than a dozen textbooks and almost all of them start by commenting on the dearth of available guidance. This situation may have arisen because the origins of program management were in the US aerospace and defence industries where it was kept secret for decades. It was only in the 1980s as people moved did program management take hold in the commercial sector but even then it was sometimes only the term being misapplied to the management of large or multiple projects [1]. The US understanding is probably best captured by the Project Management Institute’s recently published Standard for Program Management with its focus on new product development. However, the UK’s Office of Government Commerce’s developed Managing Successful Programmes in the late 1990s to focus on the delivery of change and has begun to dominate the way programme management is being understood internationally [2].

However, there remains however considerable confusion [3]. Some successful project managers have been promoted into programme roles only to flounder [2]. It was an important clarification to find that project management and program management had different theoretical foundations and that programmes could not be treated as scale-ups of projects [4]. It was found that project management had been applied successfully mainly in the domain of new product development. Program management was characterised more as a tool for strategy implementation in domains that included manufacturing, quality, organisational change, change in work and industry and product development [5]. It is not well understood that programme management competence relates more to general management skills and generic leadership qualities than to project management skills [6].

Deficiencies with implementing strategy

A problem has arisen because strategy is becoming more complex and is increasingly less about the technical skills to develop new products and more about the leadership skills to introduce organisational changes to react to rapidly changing environments. A strategy may sometimes require development of new products and services but to be effective the strategy will still require organisational change to develop the capacity to deliver new services [7]. We are starting to realise that the programme management practices that we have inherited are not particular supportive of strategic thinking and are inadequate for strategy implementation.

Programme management practice has yet to reflect the insights from thirty years of experience with strategic planning. Strategic planning has been found to be fundamentally different to strategic thinking [8]. The WW1 battle of Passchendaele is an example of how a strategically desirable option was found to be tactically impossible. After four months and the loss of over a quarter of a million lives, the generals eventually found they were sending their men through a sea of impassable mud. This particular failure was inexcusable, because the map is not the reality and the general should have seen for himself. However, corporate leaders do not have this option because they are not dealing with a physical environment that can be inspected but a future environment which cannot. It is necessary for a strategy to be informed by the results of a strategic plan. A chosen strategy must be tested on an ongoing basis, whether it is working as expected, or whether an alternative strategy is a better option. The level of certainty that exists with strategy is less than the practitioners of strategic planning and programme managers have traditionally assumed. It is not appropriate to work on the basis that top managers set a strategy and programme manager implement the strategy. There must be some level of questioning, feedback and dialogue.

Deficiencies with programme management

This insight is rarely if ever reflected in practice. Mainstream programme management is strongly influenced by the project management tradition and programme management practices may have been codified too rigidly. Practice tends to be programme-centric and a clear boundary between the project and business domains is maintained [9]. Guidelines suggest a level of documentation rigour that works as a disincentive to challenging and redefining the program as new information comes to hand and the guideline underemphasise the need to adapt to the context in which a programme operates [2]. Responsibility for the realisation of benefits is often assigned to business managers outside a narrowly defined programme [10]. One major text provides an example of a program to develop a new product independent of another program to market the product without emphasising the need to coordinate decisions to realise a strategic goals such as profitably entering a new market [1]. When organisations view programmes in this way, they tend to shoe-horn programmes into project-level thinking, fail to focus adequately on building and maintaining support for the strategic programme goals and lose most of the benefits sought in setting up programmes in the first place  [11][2]

Effective programme managers have been shown to frequently adapt the formal guidelines in subtle and creative ways, or ignore or contradict them completely. Arguably the common guidelines were found by them to either be not useful or not make sense. They seek more to engage stakeholders than to manage them as the methodologies might suggest. The current codification into a common set of transferable principles and processes appears to be inadequate and some even question whether it is possible [2].

Conclusion

The conclusion is that programme management is far from uniform and is immature as a discipline. It is as much about coping as it is about planning and rational decision making, as much about re-shaping the organisational landscape as it is about delivering new capabilities. There is the suggestion that the tendency towards prescription based on ‘one size with minor variations’ approach may warrant re-examination [2]. These insights may explain why programme management concepts have not had more influence or lead to the realisation of more strategic benefits within the Victorian public sector or beyond. This would appear to be a crucial deficiency that justifies further work. It does not seem acceptable to allow governments or corporations to continue to invest tens of billions of dollars and not realise the strategic benefits that we expect of them. This finding seems particularly important in the context of the massive fiscal stimuli being funded by governments around the world to counter the GFC.

References

[1]       D.Z. Millosevic, R. Martinelli, and J.M. Wadell, Program Management for Improved Business Results,  Hoboken, NJ: John Wiley & Sons, 2007.

[2]       S. Pellegrinelli, D. Partington, C. Hemingway, Z. Mohdzain, and M. Shah, “The importance of context in programme management: An empirical review of programme practices,” International Journal of Project Management,  vol. 25, 2007, pp. 41 – 55.

[3]       A. Stretton, “Program Management Diversity – Opportunity or Problem?,” PM World Today,  vol. 11, Jun. 2009.

[4]       M. Lycett, A. Rassau, and J. Danson, “Programme management: a critical review,” International Journal of Project Management,  vol. 22, 2004, pp. 289 – 299.

[5]       K. Artto, M. Martinsuo, H.G. Gemünden, and J. Murtoaro, “Foundations of program management: A bibliometric view,” International Journal of Project Management,  vol. 27, 2009, pp. 1 – 18.

[6]       D. Partington, S. Pellegrinelli, and M. Young, “Attributes and levels of programme management competence: an interpretive study,” International Journal of Project Management,  vol. 23, 2005, pp. 87 – 95.

[7]       D. Williams and T. Parr, Enterprise Programme Management: Delivering Value,  Basingstoke, Hampshire: Palgrave Macmillan, 2004.

[8]       H. Mintzberg, “The fall and rise of strategic planning,” Harvard Business Review,  vol. Jan-Feb, 1994.

[9]       M. Thiry and M. Deguire, “Recent developments in project-based organisations,” International Journal of Project Management,  vol. 25, 2007, pp. 649 – 658.

[10]     CCTA, Managing Successful Programmes,  London: Central Computer and Telecommunications Agency (now called OGC), 2000.

[11]         S. Pellegrinelli, “Programme management: organising project-based change,” International Journal of Project Management,  vol. 15, 1997, pp. 141 – 149.

Deficiencies with Portfolio Management?

Posted in Governing Programmes and Projects, Practice Areas, Strategic Programmes on September 7th, 2009 by Raymond Young – Be the first to comment

Executive Summary

Having raised the question in a earlier post of why billions of dollars invested in projects were not resulting in the realisation of strategic benefits, this post explores whether project portfolio management has a part to play.

Project portfolio management (PPM) practice may be deficient in two main areas:

  1. PPM not is practiced in a way that supports strategy development.
    1. It is common practice to focus on project risk, a lower order concern, but even then fewer than 33% of organisations report they diversify projects to manage portfolio risk.
    2. PPM is mainly used to manage resource conflicts
    3. Investments in software are therefore not justified in most cases.
  2. PPM focuses decision-making at the wrong level.
    1. For strategy to be implemented and strategic outcomes realised the key is to select the right programme rather than the right project (projects alone rarely deliver the desired strategy).
    2. PPM must support programme management more adequately.

Portfolio Management

this post is an extract from an academic paper prepared for the IT Project Management SIG meeting at the 2009  International Conference for Information Systems

Project portfolio management (PPM) is a well established field, particularly in the US. It has an extensive literature and is supported in industry by an established and growing PPM software market. Portfolio management has its conceptual foundations in portfolio theory applied to the selection of financial investments to reduce risks and increase returns [1]. This theory was applied to the domain of project portfolio management to select IT projects [2] and PPM software vendors market on the basis of being able to reduce risk and increase returns on a portfolio of project investments [3].

However, the question is whether PPM adds any strategic value [4]. Portfolio selection has been justified in the context of selecting new product development projects [5], but it is far less convincing when applied to the implementation of strategy. A significant problem arises because there is a disconnect in the way strategy is developed and way the strategic is planned [6].  Strategy development is fluid and emergent. Strategic planning, especially when following the current approaches to PPM is relatively inflexible and mechanical. Project selection tends to be based on first degree criteria identified through risk management tools [7]. In contrast upper level strategic decisions have traditionally relied on non-linear processes and higher level considerations. As a result relatively few organisations use PPM strategically. Fewer than 33% of organisations report they diversify to reduce portfolio risk [4] and in our experience PPM is never used to inform or implement strategy. PPM is mainly used to manage project resource issues.

The potential of PPM appears to only be justified when other aspects are in place such as top management commitment, agreed benefits measurement and a willingness to deal with project interdependencies and resource constraints  [4]. Some believe that PPM, because it is meant to deal with fairly stable environments, can only be effective if combined with programme management which is meant to deal with more turbulent environments and emergent strategies [7]. We would agree and add that by definition, strategic outcomes can only be achieved when a whole program is undertaken. If strategic outcomes are to be realised, it makes no sense to select individual projects, selection criteria must be at the program level.

The Victorian public service investment frameworks are quite closely aligned to the concepts of project portfolio management because they emphasise selecting the right projects. However some Victorian managers believe the tools and frameworks are simply guidelines with little voluntary application and little influence in practice. This conclusion can be applied more generally because Victoria  is a leader in New Public Management and for many represents best-practice. This discussion goes some way to explaining why PPM concepts have not had more influence or lead to the realisation of strategic benefits. The crucial deficiency seems to the absence of meaningful linkages to programme management.

References

[1]    H. Markowitz, “Portfolio Selection,” The Journal of Finance,  vol. 7, 1952, pp. 77-91.

[2]    F. McFarlan, “Portfolio appraoch to informatiuon systems,” Harvard Business Review, 1981, pp. 142-150.

[3]    CA, “Leading Market Research Firm Finds PPM Software Delivering Over 500 Percent ROI – CA,” 2009.

[4]    B.D. Reyck, Y. Grushka-Cockayne, M. Lockett, S.R. Calderini, M. Moura, and A. Sloper, “The impact of project portfolio management on information technology projects,” International Journal of Project Management,  vol. 23, 2005, pp. 524 – 537.

[5]    A. Jamieson and P.W. Morris, “Moving from corporate strategy to project strategy,” The Wiley Guide to Project, Program, and Portfolio Management,  Hoboken, NJ: John Wiley & Sons, 2007, pp. 34-62.

[6]    H. Mintzberg, “The fall and rise of strategic planning,” Harvard Business Review,  vol. Jan-Feb, 1994.

[7]    M. Thiry and M. Deguire, “Recent developments in project-based organisations,” International Journal of Project Management,  vol. 25, 2007, pp. 649 – 658.

How much governance is enough?

Posted in Governing Programmes and Projects, Practice Areas on August 19th, 2009 by Raymond Young – 1 Comment

Governing IT and project risk

Boards have been looking for credible advice for some time now on how to deal with IT risk [i]. The jury is still out – deliberating how much time should be spent governing IT and IT projects. Research released today may have tipped the balance towards more rather than less [ii].

Evidence gathered over a 10 year period has shown that IT project failures result in a 2% average drop in the share price. The fall is somewhat greater if it is a failure of a new project and less if it is an operating failure with a current system. Investors were shown to be quite well informed with larger falls when the failure was more severe and more again when there has been a history of failures.

So how much time should be spent governing IT projects? Today’s research suggests it is the amount justified to minimise the likelihood of a 2% fall in the share price, with particular focus on new projects and avoiding repeated failures. It is clearly not the minimal amount of time that Deloitte have identified as the practice with many boards, that in their words is “tantamount to negligence” [iii].

Boards approve around 40% of all projects [iv] and the minimum standard must be (a) at the time of funding to ask four of the six key questions recommended by Standards Australia [v] and (b) to address the remaining two questions by having mechanisms in place to monitor performance.

The guidelines (tabled below) are clearly more to do with good governance than rocket science. However, the statistics reported in the table also show that not one of the guidelines is addressed adequately more than 40% of the time[vi]. The best interpretation of these statistics is that less than 0.2% of projects are governed effectively. Surely we can do better.

Key governance criteria

% time effective

(1)   clarify what success looks like

40%

(2)   understand the scale of change required to realise the benefits

40%

(3)   confirm the sponsor is personally motivated to drive through the necessary change and accountable for the business benefits

5-13%

(4)   determine how to measure and reward success.

33-66%

(5)   have a culture to listen and resolve unexpected problems

???

(6)   monitor benefits realisation and intercede as necessary

0 – 13%

Note: The HB280 guidelines are usually a good starting point for most organisations. There will be times when more detailed help might be required and we have developed the 6Q Governance™ toolset to help institutionalise better practice. However, our approach is focused on the transfer of skills/competencies and not dependent on any tools.


[i] R.C. Young and E. Jordan, “Lifting the Game: Board views on e-commerce risk,” in IFIP TG8.6 the adoption and diffusion of IT in an environment of critical change, (Sydney: Pearson Publishing Service, 2002), pp. 102-113

[ii] Anandhi Bharadwaj, Mark Keil, and Magnus Mähring, “Effects of information technology failures on the market value of firms,” The Journal of Strategic Information Systems,  18 (2009), 66 – 79

[iii] Deloitte, What the Board Needs to Know About IT: Phase II Findings: Maximizing performance through IT strategy (Deloitte LLP,  2007)

[iv] KPMG, “Global IT Project Management Survey: How committed are you?.” 2005

[v] R. Young, HB 280-2006 Case Studies – How Boards and Senior Management Have Governed ICT Projects to Succeed (or Fail) (Sydney: Standards Australia,  2006)

[vi] References are available but not included to manage word length. Academic references have been cited over industry sources to increase rigour. Please contact the author for details.

Post-GFC: project failure leads directly to bankruptcy

Posted in Governing Programmes and Projects, Practice Areas on August 17th, 2009 by Raymond Young – Be the first to comment

Here’s a situation that may be playing out in companies globally:

A company is on the verge of bankruptcy. It has been particularly hard hit by the global financial crisis and is losing several million dollars a month. It desperately needs to reduce costs and their accounts are not up to the intense scrutiny. A number of key initiatives are being undertaken and the auditor has added the requirement to consolidate the accounting systems. The board has no choice but to agree, but there couldn’t be a worse time to do a new IT project. The chairman has overseen a number of IT projects and “not one of them has succeeded”.

IT said that the systems can be integrated in two months so the edict from on high is that it has to be done before Christmas. The new boss is claiming not to be on top of the detail and plans to delegate responsibility for the accounting system project to a manager. The manager understands the business processes but hasn’t been involved in the decision.

It wasn’t so long ago that the press was reporting on a similar IT project that failed just before Christmas.  I helped Standards Australia produce a handbook for boards and top managers of lessons learned from a whole range of similar disasters (HB280-2006).  In the case above, not one of the guidelines is being followed. It seems no one ever learns. The price this time will be jobs, followed soon after by bankruptcy.

For many, the GFC has all but removed any margin for error. Will boards also pay the price? The precedent was set in 2006 when the CFO, CEO and chair of the audit committee resigned from Australian Pharmaceutical industries following an IT project failure.

Where are the auditors?

My friendly advice in such cases is often rejected with the put down “have you ever implemented XYZ system?” There is little understanding that the real issues actually relate to governance. People fall into the trap of thinking they are IT projects, deferring to the vendor and assuming the business benefits will flow automatically from implementing a system. Fifty years of experience proves it doesn’t.

Perhaps we in the profession need to do more. It is disturbing that I often hear that auditors are not suggesting clients follow the 2006 guidelines in HB280 nor the related Standard on the corporate governance of projects (AS8016 forthcoming).

In the building industry, clients are not expected to know whether concrete has been poured correctly or the steel is of the right thickness. We have building inspectors to certify minimum standards have been met. It is completely dysfunctional to defer to vendors just because it is an IT project! Why aren’t our auditors providing ‘project inspectors’. It is not part of the formal auditor training, but it is common practice for audit firms to subcontract specialists when they don’t have the expertise. I’m arranging to provide these services for a mid-tier firm as I write, so clearly it can be done. Why is this not a common service?

Where were the directors?

Perhaps the most disturbing thing of all is that boards know projects have a high failure rate [i]. Why do they and senior management expect a different result when they continue to follow the same process? Governing projects is not rocket science. There are only six basic issues that have to be addressed:

  1. Make sure you know what success looks like (IT is generally only an enabler, it is rarely the real objective).
  2. Make sure you know what has to change for the benefits to be realised.
  3. Make sure you appoint a sponsor who is personally motivated to make the changes happen, and make them accountable for the benefits.
  4. Make sure you have a way to measure if the benefits have been realised (Do not use on-time on-budget. This is desirable but not the ultimate objective).
  5. Make sure you listen. Establish the right culture so that bad news is not filtered out.
  6. Make sure you monitor and intercede as necessary (Something always goes wrong and there are times decisions can only be made at the board and top management level. Political considerations cannot override the need to have the right person accountable. When the consequences include bankruptcy, we all lose).

This advice is usually enough for most people, but there are times more detailed help might be required. We have developed 6Q Governance™ to be the project inspector’s toolkit and when appropriate, we can work with you to transfer our skills.


[i] R.C. Young and E. Jordan, “Lifting the Game: Board views on e-commerce risk,” in IFIP TG8.6 the adoption and diffusion of IT in an environment of critical change, (Sydney: Pearson Publishing Service, 2002), pp. 102-113

Deficiencies with programme/portfolio management?

Posted in Governing Programmes and Projects, Practice Areas on August 12th, 2009 by Raymond Young – 2 Comments

Executive Summary

Victoria is considered to be one of the international leaders in New Public Management and their approach to project investments was expected to be at the forefront of practice. Our research has shown however, that their key investment frameworks (based on tools developed by the UK’s Office of Government Commerce) do not adequately support their strategic goals.

Our evidence suggests there are major deficiencies with best-practice. We are taking the lead to address this by developing approaches to help boards and top managers to govern projects effectively. However the significant deficiencies with program and portfolio management have yet to be addressed. A call is made for others to contribute.


No adequate tools to govern programmes/portfolios to realise strategic goals

Projects in the public sector

We were recently commissioned by the Victorian Auditor-General’s Office to undertake a study to explore ‘The role of projects within the Victorian Public Sector’. We subsequently extended our study to include New South Wales and found that projects are increasingly important across the whole public sector. Projects now consume around 20-30% of budget[i] and are the main enabler of government policies such as improving health/education and reducing crime/traffic congestion.

The significance of the studies is that they have highlighted a very major flaw in the way projects are typically managed. Victoria is considered to be one of the international leaders in New Public Management and their approach to making project investments was also expected to be at the forefront of practice. It was therefore a revelation to discover their key investment frameworks (based on tools developed by the UK’s Office of Government Commerce) did not adequately support their strategic goals!

The deficiencies can most clearly be seen by considering the impact of the huge project investments over past decade in education and health (estimated to be between $10-20b). The Victorian Department of Education and Early Childhood Development is considered one of the best in Australia, and their effort is undeniable, but their results have not contributed to the government’s 10-year goals. Literacy has generally not improved and numeracy has actually decreased [ii]. Waiting times for health services appear to have been largely static despite almost a billion dollars a year being poured into health related projects. What is going wrong?

Projects in general

Please understand I am not taking the boot to public sector. As a citizen of NSW I am envious of the quality of life the Kennett, Bracks and now Brumby government have delivered for Victorians. A quick comparison with the post-melt-down corporate sector reveals the Victorians govern better than almost anyone in both the public and private sector. Yet their track record with project investments echoes the dysfunctional pattern found all over the world (where half to two-thirds of project investments fail to deliver any benefits at all [iii]). If the ‘best’ cannot get it right, there must be something wrong. Something is missing.

What we have found is that the Victorian investment frameworks are “directed mainly at asset investments”. Their strength is that they select investments based on the benefits to be delivered rather than the cost or the time. Their weakness is that selection is at the project investment level rather than at the program level.

  • Asset investments alone (such as IT, schools, hospital or roads) seldom directly lead to the realisation of strategic goals such as reduced crime, increased literacy, or reduced waiting times.
  • Programs of projects are almost always required (e.g. build school + change bus routes + recruit quality staff + develop and implement quality curriculum + manage parent/community perceptions = increased literacy). It is pointless to fund an individual project unless all the other critical inter-related projects are also funded.
  • Effective governance is also required. Organising and funding whole programs is important, but can easily go off track after approval. Strategy is emergent and needs to respond to the changing environment. Governing is the high-level ‘steering’ of the program through the emergent issues that cannot be planned for (e.g. bushfires, swine flu, global financial crises, etc.)

Deficiencies in best-practice?

Our studies suggest there are major flaws in the way projects are managed. Value is reported to be lost in three major areas [iv]:

  • The traditional emphasis on project management has the potential to increase value by 15% (by avoiding rework and over engineering).
  • The approach taken by the Victorian government is better and may represent current ‘best-practice’ because it has the potential to increase value by 33% (by investing to reduce underutilised infrastructure).
  • The most potential value to be realised is in avoiding duplication of project effort through governance of programmes and portfolios (52%)

This understanding is show schematically below:

Relationship between governance and PPPM

New program / portfolio tools needed?

The solution appears to be more effective governance using programme and portfolio tools as appropriate [v]. e8 Consulting has been focussed on developing governance guides such as 6Q Governance™ to supplement the governance Standards AS8016 and HB280. However, further study has revealed that the disciplines of portfolio and program management to be very immature.

  • The leading programme methodology Managing Successful Projects (MSP) is overly mechanistic and not closely followed by practitioners because it is relatively ill suited to implement strategy [vi].
  • The dominant portfolio approach in practice seems to be based on the selection of projects and more suited to new product development than the implementation of strategy [vii].

These and other early findings [viii] suggest we may have to develop the tools ourselves. We hope it isn’t so and post this blog in the hope that others can comment on our findings and collaborate to find a faster way forward.


[i] We estimate project expenditures to be around $6-8b pa in VIC and $8-12b pa in NSW

[ii] VAGO, Literacy and Numeracy Achievement (Victorian Auditor-General’s Office,  2009)

[iii] R. Young, “What is the ROI for IT Project Governance? Establishing a benchmark.,” in 2006 IT Governance International Conference, (Auckland, New Zealand, 2006)

[iv] Doug Watters, “IBM Strategy and Change, survey of Fortune 1000 CIOs.” August 17, 2004

[v] Sergio Pellegrinelli and Cliff Bowman, “Implementing strategy through projects,” Long Range Planning,  27 (1994), 125 – 132

[vi] Sergio Pellegrinelli, David Partington, Chris Hemingway, Zaher Mohdzain, and Mahmood Shah, “The importance of context in programme management: An empirical review of programme practices,” International Journal of Project Management,  25 (2007), 41 – 55

[vii] Michel Thiry and Manon Deguire, “Recent developments in project-based organisations,” International Journal of Project Management,  25 (2007), 649 – 658

[viii] Alan Stretton, “Program Management Diversity – Opportunity or Problem?,” PM World Today,  11 (2009)

Breakthroughs in IT project failure – Governing effectively

Posted in Governing Programmes and Projects on July 27th, 2009 by Raymond Young – Be the first to comment

IT projects failure has been an issue almost since the dawn of computing [i] and recent data suggests the failure rate is not only not improving but actually getting worse (Standish 1994-2009). It is clear that the traditional approaches are not improving results despite more than fifty years of intensive effort.

Project governance is emerging as a radically different paradigm to solve the problem. The approach emphasises project success (realisation of business benefits) over project management success (on-time on-budget). It is based on the research which suggests that top management support (TMS) is the most important success factor [ii].

The implications are very significant:

  • If TMS is the most important CSF, then much of our current research and practice is misdirected
  • A major shift in emphasis may be required:
    • Boards and top managers may have to accept that they personally have the most influence whether a project succeeds or fails
    • Boards, top managers and their advisors may have to accept that the current ‘expert advice’ has less impact on success than previously believed.

To avoid an overly long blog, I’ve attached a presentation below that visually presents much of this research and provides an authoritative overview of project governance. It was originally delivered at the University of Sydney as a topic in INFO6007 Project Management in IT, an elective course in their Masters of IT [iii].

The presentation provides a definition of project governance based on the leading edge [iv] project governance training provided through my consulting practice. The financial implications are also presented but this is more fully developed in another paper [v].


[i] D.T. Caminer, “And How to Avoid Them,” The Computer Journal,  1 (1958), 11-14

[ii] Raymond Young and Ernest Jordan, “Top management support: Mantra or necessity?,” International Journal of Project Management,  26 (2008), 713 – 725

[iii] It is currently proposed to develop this topic into an additional elective ‘Advanced Project Management’ by incorporating topics in program, portfolio and change management and advanced communication skills. This advanced elective is scheduled to be delivered in January 2010.

[iv] The project governance training delivered in conjunction with Jed Simms of Capability Management has been described by Harvard Professor James McKinney as ‘world-class, 2-3 years ahead of the competition’

[v] R. Young, “What is the ROI for IT Project Governance? Establishing a benchmark.,” in 2006 IT Governance International Conference (Auckland, New Zealand, 2006)

Boardroom readiness for business project governance

Posted in Governing Programmes and Projects on July 27th, 2009 by Raymond Young – Be the first to comment

For any investment to deliver the expected benefits, top management have to play their part. They have to govern the investments that have been authorised. Boards have to have ways to hold sponsors accountable for the promised benefits and have ways to intercede effectively whenever the expected benefits turn out to be unrealisable.

My research has shown that Boards and top managers have the most influence whether a project succeeds or fails [i]. However, other research suggests the governance of investments is far from adequate:

Expected benefits are only ever documented 67% of the time (but 27% of the time the benefits are exaggerated to get funding [ii]). Board members openly admit there are times when “we knew we were being lied to but no one was willing to raise the issue” [iii] and major auditing firms have suggested the common practice was “tantamount to negligence [iv]“.

Only 5-23% of boards hold project stakeholders responsible for the promised benefits [v] and fewer than 13% of organisations track the benefits through to realisation [vi]. None of the board members I spoke to said they had a consistent mechanism to terminate projects.

Major cultural change in board practice is required. Are boards ready to govern projects? My answer is yes. My early research has shown:

  1. Director education supports the concept of project governance (through the concepts of Strategic Execution and Decision Making, both of which are major modules in the AICD Company Directors Course).
  2. Three out of four directors acknowledge that projects seldom deliver the expected benefits.
    1. Their review of the new Australian Standard (AS8016, HB280) was positive because “it provided the right guidance for boards”.
    2. They rated project governance as a medium priority for the board.
  3. The main issue identified was a lack of mental bandwidth because of the heavy burden of compliance with new regulation.
  4. The solution presented was to keep things simple:
    1. talk about strategy and focus on what success looks like,
    2. talk about the role of the sponsor and the board,
    3. focus on the other HB280 questions:
      1. How much change is required?
      2. How should success be measured?
      3. Is there the culture to surface and resolve unexpected issues?
      4. Are the benefits on track to being realised?

These findings were presented at ISACA’s Oceania CACS conference on ‘Delivering Value’ held in Sydney from 8-10 September 2008 (see below). The research confirmed the trend identified in my earlier presentation ‘The emerging demand for business project audits’ (14 March 2007).


[i] Raymond Young and Ernest Jordan, “Top management support: Mantra or necessity?,” International Journal of Project Management,  26 (2008), 713 – 725

[ii] Chad Lin, Graham Pervan, and Donald McDermid, “IS/IT Investment Evaluation and Benefits Realization
Issues in Australia,” Journal of Research and Practice in Information Technology,  37 (2005), 235-251

[iii] Standards Australia, HB280 How Boards and Senior Management Have Governed ICT Projects to Succeed (or Fail) (Sydney: Standards Australia,  2006)

[iv] Deloitte, What the Board Needs to Know About IT: Phase II Findings: Maximizing performance through IT strategy (Deloitte LLP,  2007)

[v] J. Thorp, “Unlocking Value – Delivering on the Promise of Information Technology” (Sydney, 2008)

[vi] KPMG, “Global IT Project Management Survey: How committed are you?.” 2005