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).

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[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