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].

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[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)

Boards appear to be genuinely interested in improving their performance [i]. They are also looking for guidance on IT issues but (a) their experience with IT advisers had been disappointing [ii] and (b) ‘best-practice’ had been found to be of little practical utility with no consistent impact on success [iii].

However new governance Standards (ISO38500, AS8016, HB280) are emerging that address board-level concerns and are focused on the realisation of above average returns. Within Australia, because of the large investments in IT, effective governance of projects could lead to 1-3% increases in GDP. It will be a major breakthrough if boards start to follow these guidelines and require business process audits as part of the regular governance process.

The leading indicators of change might be:

• appointment of board members with IT experience,
• business project auditing being offered by major consultancies,
• widespread adoption of the new governance Standards,
• the term ‘business projects’ entering into the common business language
• significant negative press over new project failures.

These suggestions were originally presented at an ISACA professional development session in Sydney on 14  March 2007. The slides can be seen by clicking on the link below.

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[i] R. Leblanc and J. Gillies, Inside the Boardroom: the coming revolution in corporate governance (Toronto: John Wiley and Sons,  2005)

[ii] 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

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

Executive Summary

• 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.

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A backlash against lax governance

The Global Financial Crisis (GFC) will inevitably lead to higher levels of scrutiny. It is likely to expose the high rate of failure of large investment projects. The Australian Institute of Company Directors highlight the problem in a number of modules in their highly regarded Company Director Course:

• ¾ of mergers and acquisitions never pay off
• most large capital projects fail to live up to expectations
• majority of efforts to enter new markets are abandoned in a few years
• 70% of new manufacturing plants are closed in their first decade

Leading audit firms have commented that management of such large-scale expenditures is a fiduciary duty and imply that current practice, with IT projects in particular, is “tantamount to negligence” [i]. Until now this matter has not received much attention and boards have not been held accountable. The backlash following the GFC is already being felt and the lax levels of supervision are unlikely to be tolerated in the future.

Boards and their advisors are strongly encouraged to implement regimes that will increase the success rates of their investments. The six questions from Standards Australia’s handbook on the corporate governance of projects [ii] is a framework that would make a difference. In the presentation below, some of our early work is presented to suggest how the questions could be implemented in practice.

A version of this article was originally prepared for submission to the Australian Company Director Magazine. The key points were also presented at an ISACA Summit held in Sydney on 31 March 2009.

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

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