Four fast ways to increase your project portfolio’s value (4)
There appears to be an assumption that as you progress up the executive ranks the knowledge, understanding and skills required to be effective in a Sponsor or Steering Committee role is somehow magically bestowed on you without any effort.
This is not the case. Most Steering Committees try to do a good job but don’t know what ‘a good job’ is.
Project governance is a practice area that is not so much mis-understood as not understood – even by project practitioners. Because executives and their egos are involved this is a topic that is too often ignored – with significant consequences to the business value generated from investments.
Steering Committees are accountable for the value delivery processes – identifying, protecting and delivering the available business value. As long as this focus is ignored, the value of the portfolio will continue to be compromised,
It is time to focus on ensuring the executives in project governance roles know what to do, why, when and how to do it effectively. The impact on your project investment portfolio’s returns will be significant.
The impact of poor steering committees
A Steering Committee can destroy more value in five minutes than a project team can destroy in five weeks. I’ve seen Steering Committees take tactical cost control decisions on projects that destroy the whole rationale and value of the investment.
Ineffective Steering Committees are dangerous, not neutral. They will make decisions or not make decisions that can destroy the potential value of the investment. They will fiddle while their investment ‘burns’ – pouring good money after bad while, often, de-scoping thereby destroying any remaining value.
It is worth bearing in mind that all of the major IT project disasters of the past 30 years have been overseen by otherwise competent executives who did not understand their Steering Committee role or how to execute it effectively — especially when things were going wrong.
Surveys of Steering Committee members across multiple organizations found that over 90% of executives and managers admit that they do not know what their role is or how to perform it effectively. Not a great statistic. The reason for this is that being a Steering Committee member is very different to any other role a manager usually encounters.
The nature of the role
Project governance – the Steering Committee role – is not the same as operational management, but executives bring their operational management knowledge, skills and assumptions to project governance and thereby ensure their ineffectiveness.
As an operational manager you manage part of several cross-organizational processes and control your area’s costs of operation. Your primary control lever is cost control. As a result, the accounting systems are also set up to enable and support cost control. So, when managers focus on project investments they focus on the costs and their control.
But, as a Steering Committee member you are governing an end-to-end investment value delivery process and need to control both the total available value and the costs of delivery (in that order).
Governance is not the same as operational management
Unlike operational management where you manage parts of end-to-end processes, with an investment project you have control of the whole end-to-end process – from idea to benefits realization. You may not directly control or manage every element but you do need to ensure that every element of the investment cumulatively contributes to the successful delivery of the agreed business outcomes, benefits and value in full.
Governance is not the same as project delivery management
As the Steering Committee you are governing the ‘value delivery process’ – not the project delivery process. The project manager is running the project delivery process; you have a different focus – on business value delivery.
The primary focus of the Steering Committee is on the delivery of the optimum net business value — ie the maximum available value for the least practical cost. This requires every decision made on the project to be made with a clear view as to its impacts on the available business value as well as the cost to deliver.
Governance is value delivery management
In the Steering Committee’s context, time and cost take on a new meaning. Being over time (late) is important to the Steering Committee as each day lost loses a day's value of the benefits. Being over budget is important as each dollar over the lowest practical cost reduces the net value of the investment. So, whereas the project team and Steering Committee are both concerned with time and cost, they are concerned for different reasons.
This example illustrates that project governance is not some form of ‘super-project management’. The focus of the Steering Committee is far broader. The Steering Committee needs to focus on three key areas (in order of priority):
- The business value to be realized – ensuring it is identified, protected and fully delivered
- The business changes to be implemented – ensuring they are supported, enabled and delivered
- The project to be delivered – ensuring it fully and efficiently enables, delivers and supports the delivery of the agreed desired business outcomes, benefits and value.
Project governance is a unique set of knowledge, processes and skills
Most executives (and project practitioners) do not understand what project governance is. It is neither applied operational management nor some version of super-project management. It is a separate set of knowledge and knowhow that needs to be learned and appropriately supported.
Here, orthodox project delivery methodologies do not help. For example, orthodox ‘percentage complete’ progress reporting (aided and abetted by systems that produce very pretty graphs) can disguise real progress and problems rather than make them visible; plus the accounting systems tend to focus on the costs and largely ignore the benefits, their value and the dynamics surrounding them.
So you have
- A role that is different to operational management and project management (but rarely recognized as such)
- That can and does directly control the net business value realized from an investment (an aspect rarely focused on)
- That is not supported by orthodox methodologies, tools or techniques.
Is it any wonder the effectiveness of Steering Committees is so poor?
How to improve Steering Committee effectiveness
Someon, often the SPMO (Strategic Project Portfolio Management Office), needs to clarify the roles, fix their operation and support the ‘ecosystem’ to enable effective governance.
Few people have a good idea as to what the project governance/steering committee roles should be. Many role definitions are half a page of either banality or misconceived definitions of the Steering Committee’s role. Neither output helps busy executives get across what their role is, what is important, or how it needs to be performed.
Executives need to understand what they are there to do, why, when and how. A clear, specific easy-to-understand Steering Committee role definition is a necessary start.
While Steering Committees have been around for 25-30 years their operation is still ineffective. People turn up to meetings once a month, make some decisions and disappear. This leads to massive ineffectiveness.
Being a Steering Committee member is a continuous role that needs to be pursued throughout the month not just at the monthly meetings. For example, on many occasions, Steering Committee members have made or been party to decisions made in other forums that totally undermine their own projects and their potential results. They make or authorize these decisions because they are not thinking of the potential impacts of these decisions on their projects – a dereliction of their Steering Committee role.
You need to educate executives as to their role and how to be an effective Steering Committee member. Shock, horror! – Train executives? Yes, as we have identified above, project governance is neither operational nor project management – it is a different knowledge and skill-set. It needs to be learned.
To overcome executive resistance to being trained we frame this learning within the 40-40-20 principle:
- They know 40% of what they need to know.
- They think they know another 40% of what they need to know, but this needs to be confirmed or corrected.
- And there is 20% of what they need to know that they don’t know (but they don't know what this is).
Hence the training is designed to give them the 20% they don’t know and confirm or correct the uncertain 40% - so there is potentially up to 60% of new or revised learning to be gained.
As long as we continue to put improving Steering Committee effectiveness in the ‘too hard basket’ or define it as ‘a problem whose name we dare not speak’, the value of all projects will continue to be diminished or even destroyed by ineffective Steering Committees. It is time to take action.
Explore more about the TOP Project Governance approach