Project Governance Model: Definition And Steps to Create it

Updated July 21, 2022

Organizations benefit from a structured set of rules to clarify every member's role in a project. Project governance communicates the procedures and assigns the different responsibilities to help a team manage a project successfully. If you work in project management, it's helpful to understand what project governance entails. In this article, we discuss project governance, what it means and how it can help you succeed in your project.

What is project governance?

Project governance is the collection of processes and rules that help you manage a project. It communicates the different activities of the organization and tells you who is responsible.

What project governance describes

Project governance describes the following:

Information: Project governance provides the method to share information. Sharing consistent data can be crucial to your project's success.
Structure: Project governance details the entire organization's structure along with the immediate project team. Your project is more likely to succeed when the environment supports it, such as when the senior management provides a vision for project managers.
People. Project governance describes the objectives that project managers must achieve. These objectives are clear, achievable and sustainable. It is best if senior managers take the time to understand project managers' activities to establish appropriate goals.

Project governance vs. organizational governance

Project governance is different than organizational governance or daily governance. Organizational governance is a system of rules that helps the organization achieve its objectives. It provides practices and processes to run the usual business but doesn't give the framework that allows for delivering a project and changing the business.

Project governance covers the following aspects:

Regulations
Procedures
Processes
Responsibilities
Functions

Roles in project governance

There are three major roles in project governance:

Project owner: The project owner keeps the project manager accountable.
Key stakeholders: Key stakeholders can be suppliers, customers of the final product or people who fund the project.
Advisory group: An advisory group can be useful in projects where the number of stakeholders is so high that it could affect the decision-making process. It functions as a forum and allows the stakeholders to stay invested in the project.

In large companies, a project management office often ensures formalization and proper implementation of project governance. In smaller companies, it is usually the project manager who fulfills that function.

Why is project governance important?

Project governance is important because it can help you achieve projects successfully for the following reasons:

Right processes: Project governance informs stakeholders of the appropriate processes in a project. The rules should be specific to the type of project. For example, an IT project needs tech-specific methods such as data management.
Accountability: Project governance gives the organization a framework for decision-making that helps the executives, project team and other employees stay accountable and aligned.
Time and budget: Project governance helps you accomplish your projects on time and within budget. A project's stakeholders often work in different departments throughout an organization. Project governance brings them together for effective decision-making.
The right choice: Project governance helps you choose the right project for your organization by providing the appropriate information, people and structure.
Communication: Governance involves communication protocols to ensure the transfer of information to relevant parties.
Resource allocation: Governance prioritizes resources. It contributes to diminishing disagreements among staff members.
Scope: A well-structured governance model appoints the right stakeholders to moderate unauthorized additions to projects.
Stakeholder management: Project governance defines responsibilities for specific stakeholders and creates groups for oversight.
Project culture: A governance model can boost engagement and commitment to the project's success.
Estimates: Governance committees collaborate with different departments like IT, project management and finance to ensure estimates include all aspects.
Project governance as a success factor: Providing the right resources, planning and goals can help the project succeed.

What is the governance model?

A governance model is the coordinated interaction of three elements:

Decision-making structures

Organizations often use charts to define decision-making structures. Many three-tier governance models clearly display the hierarchical flow of control. Governance charts benefit from pre-defined roles and responsibility matrices that offer more clarity and allow precise decisions about who can take what decision in the organization.

A governance model typically presents the below elements in a diagram:

Steering committee: These are the executives in charge of the strategic investment, decision-making, planning and organization.
Board of directors: CEO and finance representatives are usually placed in charge of accountability and supervision.
Advisory committees: The advisory committee consists of multiple departments' representatives.
Sponsors: These are the team members who support the project and are held accountable.

On these charts, macro decisions belong to executives, stakeholders and other decision-makers on this chart. It is important to realize, though, that many choices happen at the micro-level. The impact of much small micro-decision from team members who work toward their individual objectives accumulates and creates momentum toward finishing the project. Examples of small decisions include changing a design or a decision about taking a risk.

Operating procedures

Procedures define the expectations of a project in an effort to achieve collective results. Although processes must be specific to your project, some are essential and required to deliver a project successfully. These include:

Plan management: Having a plan to achieve results
Communication management:Communicating to stakeholders
Interdependency management: Deciding how to work with other teams
Scope management: Managing scope boundaries
Risk management: Determining how to avoid risks
Issue management: Eliminating obstacles that prevent the plan from progressing

To determine which processes your project requires, it helps to first understand the methods that can best help you achieve the project's goal. With the goal in mind, you can select the existing processes or adapt or mix them so that they best fit your needs.

To make sure that the process stays relevant to your project, you can review them in advance for the next phase.

Collaboration enablers

The collaboration enabler gives a project's stakeholders a system to share their observations and knowledge. Rather than relying on collective memory, organizations can benefit from a tool in which team members log decision data as the project evolves. It allows you to answer many questions and remember why a specific decision was made no matter where you are in the project. This transfer of information in real time can transform random data into valuable insight.

Finally, an adequate model should define the following:

The reporting structure for employees and stakeholders
How the board supervises risks
Who has authority over legal, audit, finance and risk matters.

How to use the project governance model

Follow these steps to create and use the project governance model:

1. Identify the stakeholders

Stakeholders can be high-level executives, employees or third-party people related to the project. Once you identify them, explain to them the importance of project governance to facilitate the transition.

2. Prioritize your business goals

The steering committee prioritizes business goals and initiatives. Committee members can develop the goals in which they have expertise. Then, they collaborate to identify the ones to focus on.

3. Create the right processes

Create processes to clarify the communication flow and determine how to get approval. Write rules and set standards that allow all stakeholders to work together toward the same goal.

4. Select the committee members

Pick employees from different departments and assign them a clear role to complete the project. You can compose your committee by choosing people who have proven themselves able to provide, examine and control the strategic direction of a project and give policy guidance to stakeholders and the project team. These members will recommend project approaches and discuss general strategies to plan and implement the project. The steering committee members usually include senior managers and high-level representatives of project clients.

5. Communicate clearly

Educate all project participants on the committees and the processes involved in the project. Providing education to project members shows that management invests itself in the project governance and helps to engage all staff members.