Does organisational governance exist?

Governance99Governance and governing have historically was associated with the role of the Sovereign governing his (or occasionally her) ‘sovereign state’. Over the last five or six centuries the exclusive power of the Sovereign has largely been devolved to governments of one form or another but the functions of making laws, authorising the collection of taxes and providing direction to the citizens of the state remain fundamentally unchanged.

The concept of corporate (or organisational) governance grew out of this overarching concept; to imply there was a similar role within an organisation for a ‘governing body’ to take responsibility for the governance of the organisation. This concept of a governing body setting the ‘rules’ by which an organisation operates and providing guidance on the organization’s objectives has many parallels with the functions of a government.  A government may choose to declare war on another country and provide resources and directions to its military but, at least for the last 2 or 3 centuries, governments have learned not to interfere in the actual conduct of the military campaigns – fighting the war is the responsibility of the professional military. Similarly the governing body of an organisation can set the objectives for the organisation and define the rules by which members of the organisation should operate but is wise to refrain from becoming actively involved in managing the actual work.

The paramount reason for separating governance and management is the simple fact it is almost impossible to take an objective view of work you are actively involved in! With these thoughts in mind, I started to consider the functions and purpose of governance to contrast with the functions and purpose of management.

The functions of management were quite easy to define, the work was done 100 years ago by Henri Fayol in his 1916 book Administration Industrielle et Generale, while there has been some academic argument about the syntax of Fayol’s five functions of management, they have basically stood the test of time. These are outlined in The Functions of Management.

Defining the functions of governance was much more difficult. Almost all of the standard texts describing governance either define:

  • The objectives of ‘good governance’; for example Cadbury’s ‘holding the balance between economic and social goals and between individual and communal goals’;
  • The principles of ‘good governance’; for example the OECD Principles of Corporate Governance (2004 and the 2015 update); or
  • Elements of defined or required practice such as the ASX listing rules and the AICD Governance framework.

None of these sources actually describe what the governing body does or the extent of the governance processes within an organisation.  These are the questions I’ve been focusing on for the last couple of years.

The functions of governance have been described in The Functions of Governance, so far there has been no significant disagreement, that I’m aware of, that would indicate the need for change.  The functions of governance are also mapped to the functions of management and suggest a clear difference in purpose between governance and management that can be summarised as ‘governance sets the objectives and rules for the organisation, management works within the rules to achieve the objectives’.  A closely coupled, symbiotic relationship.

The responsibility for governance seems to be clearly defined by law makers and regulatory authorities.  The governing body is held accountable for the actions of the organisation it governs; this is the Board of Directors in most commercial organisations, in others the person, group or entity accountable for the performance and conformance of the organisation.

Having established the functions of management and governance, the fundamental question posed in this post is does organisational governance exists as a separate entity or is it simply an extension of ‘good management’.  To a degree this is a ‘chicken and egg’ problem.  Does the functioning of an effective governing body lead to ‘good management’ or does ‘good management’ embody the elements of good governance as an integral element in the overall functions of management (ie, Fayol’s five functions need expanding to include governance).

The consequence of the first option is the presence of a governing body which has as its primary function the oversight of the organisation’s management.  The consequence of the second is so-called ‘governing bodies’ such as a Board of Directors, are in effect simply the first, and most senior level of management.

There are a lot of writings that suggest the second option is at least considered viable by many commentators, a view I strongly disagree with.  However, this month’s magazine published by the Australian Institute of Company Directors  contained a number of articles on ‘cloud technology’ and ‘big data’ suggesting Directors should be making management decisions on a daily basis based on current sales information, etc.  Similarly there are numerous publications describing various mid-to-low level management committees such as project steering committees as ‘governing bodies’ responsible for the ‘governance of’ a project. However, a project steering committee is in essence no different to any other management committee responsible for overseeing the work of a management entity; therefore under this scenario, every management committee responsible for the oversight of a management function is a ‘governing body’. The consequence of this line of argument is the proposition that governance and management are integral and there is no significant difference in the entities that undertake the work. Every level of management from the Board down is responsible for delivering good management which incorporates governance.

The alternate view which I support is based largely in corporate regulations and laws suggests the functions and responsibilities the governing body and its management team are discrete and different. The governing body (singular) represents the owners of the organisation and is responsible for governing the organisation to achieve sustained superior performance. The governing body accomplishes this by:

  • Defining the objectives of the organisation;
  • Determining the desired ethical, cultural and other standards they expect the organisation to work within (‘the rules’);
  • Appointing management to accomplish the objectives, working within ‘the rules’; and then
  • Ensuring the conformance and performance of their management and the organisation as a whole.

The primary advantage of this approach to governance is the functions of management are separated from the functions of governance. It is virtually impossible to have an impartial view of the work you are actively engaged in and one of the key responsibilities of the governing body is to oversight the performance of its management; the law says so!

Therefore, I suggest good governance requires a clear separation of the management and governance functions for no other reason than the need for the governing body to be able to objectively oversight the performance of it management. But this raises practical issues.

It is virtually impossible for the governing body to meaningfully oversight the work of 100s of managers and 1000s of staff, contractors and suppliers. Some aspects of governance have to be delegated to the organisation’s management.  This requires the following:

  • A carefully designed governance framework. Roles, responsibilities, decision limits and escalation paths need to be defined.
  • Clear rules for managers to follow in the performance of their management responsibilities. Managers should be personally responsible for following ‘the rules’ and for ensuring the people they manage follow ‘the rules’. Complying with, and conforming to, the objectives, ethics and culture of the organisation should be a condition of employment and a clearly defined management responsibility.
  • Ensuring any governance function is separated from the management function being governed. Assurance and conformance cannot be in the same place as management responsibility for performance. For example, a project steering committee should be responsible for providing direction and support to the project management team to ensure the performance of the project and the achievement of the project’s objectives (a management function) – ensuring conformance with ‘the rules’ is also part of this management responsibility. Assurance that these objectives have been achieved is a governance function that has to sit in a separate reporting line. In many organisations the PMO may be the entity tasked with this responsibility.

However, while the governing body by necessity has to devolve aspects of its responsibilities to people and entities within the overall management structure, the governing body remains responsible for the design of the governance framework and accountable to the organisation’s owners and other external stakeholder for the performance and conformance of the organisation and the validity of any assurances provided by the organisation to regulatory authorities.

So where does this leave questions such as the use of ‘big data and ‘the cloud’? I would suggest the responsibility of the governing body is to understand the technologies sufficiently to be able to set sensible objectives and ethical parameters for the organisation’s management to work within and then to ensure their management are working to achieve these objectives. It is no more the responsibility of the governing body to ‘manage big data and use it to make decisions on a daily basis’ than it is the responsibility of a steering committee to ‘govern’ a project. The responsibility of the governing body is to govern; the responsibility of a management committee is to manage.

This concept of separate functions and focus is not intended to imply an antagonistic relationship. In the same way every high performance soccer team blends people with different skills and responsibilities into a tight unit, a goal keeper needs very different capabilities to a striker; a high performance organisation needs a blend of capabilities: effective governance, effective management and committed staff. Certainly members of a performing team support each other and will help to correct deficiencies and errors by others within the team (high performance organisations are no different); but if the team start to mix up the skills and responsibilities the overall team performance will suffer (the consequences of steering committees pretending to be governance bodies is discussed in a 2012 post Management -v- Governance).

In conclusion, the answer to the opening question is YES, I believe governance and management are different and their functions are different:

A high performance organisation that is capable of achieving sustained superior performance combines both governance and management in a clearly delineated governance framework, supported by a clearly delineated management structure.

Ethics and sustainability

Building ethics and sustainability into a project does not limit its success; in fact the reverse is often true. London’s Crossrail project is turning into an outstandingly successful project despite numerous challenges including finding hundreds of skeletal remains from the Black Death in the excavation for one of its major stations.  One can only hope Melbourne’s Metrorail project to construct a similar heavy rail tunnel under the CBD is as successful.

One factor in the Crossrail success has been the focus of the UK government on developing the skills needed to manage major infrastructure projects focused on the Major Projects Authority. This multi-year investment links proactive oversight and reporting, with research, support and training designed to create an organic capability to make major projects work (more on this later). Another is being prepared to ‘think outside of the square’ to solve major challenges – the focus of this post.

The challenge faced by Crossrail (and to a lesser extent Metrorail) is what to do with millions of tonnes of excavated materials when your project is situated under a major city??  The Crossrail solution has been innovative and coincidentally focused on restoring the environment of my youth.

Wallasea Island unloading wharf

Wallasea Island unloading wharf

Tidal marshlands may not be the scenery of choice for many but the marshes do have a fascination for those of us who grew up playing in and around them. My home and Charles Dickens 150 years earlier were the North Kent marshes.

Pip at the start of Great Expectations: “Ours was the marsh country, down by the river, within, as the river wound, twenty miles of the sea…”  and elsewhere “The dark flat wilderness, intersected with dykes and mounds and gates, with scattered cattle feeding on it… the low leaden line of the river… and the distant savage lair from which the wind was rushing, the sea…”

The landscape is not quite as bleak as it was (but still comes close in winter). The marshes have been drained and there are hops and orchards where there would once have been a windswept wilderness. But the Kent that Dickens knew can still be glimpsed if you know where to look, including the graves where Pip was first confronted by Magwitch in St. James’ churchyard at Cooling.

Seals at Wallasea Island

Seals at Wallasea

However, what may be seen as less than desirable real-estate to people not born on or near the marshes is essential habitat for a vast range of migratory birds and native wildlife.  Unfortunately, in the 150 years since Dickens, the draining, farming and urbanisation of the lands around the Thames and Medway estuaries has destroyed much of this valuable habitat. But the tide is turning.

The Royal Society for the Protection of Birds (RSPB) has been on the campaign trail for the last 30 years to re-establish the marshlands in North Kent and Essex.  One of their earlier successes was to convert the industrial landscape of the Cliffe marshes (my home village) into Cliffe Pools.

Cliffe Pools before the RSPB project

Cliffe Pools before the RSPB project

The chalk hills and clay marshes were home to whiting works from the early 1700s and Portland cement works from 1866. Several years after the last of the factories finally closed, the flooded quarries used to dredge clay and some of the former industrial sites were brought by the RSPB and are now a steadily improving wildlife reserve.

Cliffe Pools after the RSPB project

Cliffe Pools after the RSPB project

On the other side of the Thames, the RSPB and Crossrail have combined in to create a new marshland on a massively larger scale.  Wallasea Island in Essex is an on-going project that has used 3 million tonnes of clay from the Crossrail excavations to start the transformation of drained farmland into coastal wetlands and marshes.  Another 10 million tonnes will be required to complete future stages of the project.  The drained farmland was several meters below the high tide level, protected by sea walls (and under increasing threat from rising sea levels); coastal marshes need to be a bit above sea level. Massive amounts of fill were required for the ‘wild coast project’.

Crossrail solved their problem of ‘what to do with millions of tonnes of excavated spoil’ by shipping the materials to Wallasea Island and working with the RSPB to transform the area. A win-win outcome Crossrail were able to use costal shipping to remove the clay from London minimising road haulage and carbon emissions, and they avoided tipping costs from commercial landfill sites. 80% of the materials were transported by water or rail on a tonne per kilometer basis. The RSPB got a head start on a major project to reinstate a major area of coastal marshland and 1000s of birds are getting a new home.


When completed in 2025, the project will have created 148 hectares of mudflats, 192 hectares of saltmarsh, and 76 acres of shallow saline lagoons.

Wallasea Island is a work in progress, but with at least two major tunnelling projects in London still to come, the Thames Tideway sewage scheme and Crossrail2, and the infrastructure in place to take the excavated spoil completion of this project seems likely.


What is of importance form the perspective of this post is the Crossrail project is 65% complete and on time and on budget – being environmentally friendly and effective are not incompatible!  It will be interesting to see what the Metrorail project does with its excavated spoil.

New Articles posted to the Web #36

BeaverWe have been busy beavers updating the PM Knowledge Index on our website with White Papers and Articles.   Some of the more interesting uploaded during the last couple of weeks include:

And we continue to tweet a free PMI style of exam question every day for PMP, CAPM and PMI-SP candidates: See today’s question and then click through for the answer and the Q&As from last week. You are welcome to download and use the information under our Creative Commons licence

Scheduling Acronyms – use the correct terms!

Critical path scheduling has only been around for 60 years, is well documented by the originators of the discipline and central to the practice of project management. However, through ignorance, overt commercialism or laziness, far too many scheduling professionals continue to confuse the terms and degrade the practice.

If we can’t use the same correct term consistently for a function or process in scheduling why should anyone else take us seriously. The originators of the various concepts knew what they called each of the items discussed below, it is both professional and polite to respect their intentions and legacy.

CPM = Critical Path Method. (Also called CPA – Critical Path Analysis) This term emerged in the 1960s to describe the two variants of CPM, ADM and PDM. CPM uses a single deterministic duration estimate for each activity (or task) to calculate the schedule duration, activity start and finish dates, various floats and the ‘critical path’. CPM focuses on the activities.

ADM = Arrow Diagramming Method. Also called AOA (Activity on Arrow).  ADM was the first of the CPM techniques developed by Kelley and Walker in 1957.  This style of network diagramming has largely faded from use.

Activity-on-Arrow Diagram

Activity-on-Arrow Diagram


PDM = Precedence Diagramming Method. Also called AON (Activity on Node).  PDM was the second of the CPM techniques developed by Dr. John Fondahl, and published in 1961.  PDM is the standard form of CPM networking used today.


Precedence diagram


PERT = Programme Evaluation Review Technique. PERT was developed by the US Navy in 1957 in parallel with CPM and used an identical ADM network.   PERT differentiates from CPM in several ways.  Its focus in on the probability of achieving an event (eg, the completion of a phase or activity), the expected duration of each activity is calculated from three time estimates using a ‘modified Beta distribution’ (optimistic, most likely and pessimistic).  The ‘PERT Critical Path’ is calculated using the ‘expected’ durations and very simplistic probability assessments can be made based on the variability in the three estimates (but only on a single path).  PERT calculations for the ‘expected’ durations can be applied to PDM networks but are only of value if all of the links are ‘Finish-to-Start’. PERT is simplistic and significantly less accurate than the modern Monte Carlo analysis. For more on this see: Understanding PERT.


Calling any deterministic CPM schedule a PERT Chart is simply wrong; PERT is defined by three time estimates! Using PERT when you could use Monte Carlo is stupid – the information generated is less accurate. And inventing new names for existing processes is confusing and damaging.

CIOB QEII Award – RMIT University Melbourne

CIOBLast week I had the honour of representing CIOB at the RMIT University, School of Property, Construction and Project Management, Annual Industry Research and Awards Night (Melbourne, Australia).  I was there to present the CIOB QEII Award to Chris Mikha, the CIOB Student member who achieved the highest average over the Construction Technology course in the RMIT Bachelor of Applied Science (Construction Management).


The element of the evening that most impressed me was the breadth and depth of research undertaken by the School’s Honours students. As part of the final year research component of the Degree, the students produce create a poster as an info-graphic highlighting their research findings. Looking at the quality of the posters, out industry has a lot of talent joining its ranks!

The other key impression left on me was the success of the annual CIOB Global Student Challenge, Chris’s team missed out on a place in Hong Kong this year by a small margin but he though the challenge was one of the most important leaning experiences of his entire course. The decision by CIOB to take the game ‘global’ a few years back has certainly paid off!

Overall a very successful night all round.

Governance processes and terminology

Signpost "Governance"Governance uses a number of terms, this blog is designed to provide a set of referenced definitions for the different terms and suggest a hierarchy for use by an organisation’s governing body.


Defining Organisational Governance

Governance:  The use of influence or power to direct, control and regulate the actions and affairs of others. Organisational Governance, developing systems and using influence to direct, control and regulate the actions of the organisation’s management and staff (see: Defining Governance).

Governing: The action of using authority to direct, control and regulate an organisation; and taking responsibility for the performance and conformance of the people within the organisation.

Governing body: the person, group or entity accountable to the organisation’s owners, and the wider stakeholder community, for the performance and conformance of the organisation they govern (eg, a corporation’s Board of Directors).

Conditions Precedent

The conditions needed for developing and implanting an effective governance paradigm are for the governing body to determine the objectives of the organisation and understand the concepts of good governance.

Objective:  A specific result that the organisation aims to achieve within a time frame, using available resources; a goal or target to be achieved. The organisation’s objectives are derived from its vision and mission statement; apply to both the organisation and its governance, and underlie its strategic planning activities. Objectives should be specific and measureable.

Concept:  An abstraction or generalisation from experience or the result of a transformation of existing ideas.  The concept is reified (made real) by all of its actual or potential instances, whether these are things in the real world or other ideas and mediates between thought, language, and referents.

The members of the governing body need to reach consensus on their view of ‘good governance’, in the context of their organisation’s purpose and objectives before being able to move to more concrete developments. Implementing ‘good governance’ requires the creation of an effective framework within the organisation supported by the documentation of the organisations governance objectives.

The Governance Framework

Governance Framework: The system through which the organization’s governance arrangements operate including the management structures, enabling factors and interfaces through which the work of the organisation’s management is directed and controlled and regulated.

Whilst the governing body retains overall accountability for governance, some of the functions required to implement governance throughout the organisation may be delegated to managerial staff or organisational entities under the supervision and control of managerial staff. These delegated governance roles, their responsibilities, authority and interrelationships must be clearly defined; as well as the decision making, oversight, and points of involvement and intervention retained by the governing body. (see: Governance Systems & Management Systems)

Functions: The purpose the system has been created to fulfil or undertake; the purpose of the system.

The function of governance is to establishing the organisation’s objectives, ethics and culture; develop a framework that can implement these factors and require appropriate oversight and assurance processes (see: The Functions of Governance).

The function of management is to use the organisation’s human and other resources to achieve its objectives; working within the parameters set by the governing body (see: The Functions of Management).

Governance functions and management functions may be performed at different levels and in different parts of the organisation, but everyone involved in governance and management have a shared responsibility to work proactively towards achieving the objectives of the organisation; and the governing body remains accountable for the performance and conformance of the organisation.

Documenting governance objectives

The objectives, the governance framework is to implement, need to be defined and documented. The starting point is the concepts of ‘good governance’ agree by the members of the governing body. The concepts need to be ‘made real’ in the form of a set of principles that encapsulate the values, ethics and cultural objectives the governing body intend the organisation to embody (see: Ethics and Leadership). These principles are the further refined and defined in a set of policies, procedures and methodologies.

Principle: A fundamental truth or proposition that serves as the foundation for a system of belief or behaviour or for a chain of reasoning.  These are the fundamental propositions that define the way the system of governance will operate, and acceptable behaviours for the organisation.

Policy: A document describing what is to be done in particular situation that has been agreed by the organisation’s governing body and management. Policies are clear, simple statements of how the organisation intends to implement its governance principles, and are intended to influence and determine decisions, actions, and other matters.  Policies will frequently link to externally imposed obligations such as laws preventing the bribery of foreign officials. In addition to the policy statement, guidelines may be issued to assist in the implementation of the policy.

Guidelines: A recommended practice that allows some discretion in its interpretation, implementation, or use, intended to assist in achieving a policy outcome or streamline a particular processes according to a set routine or sound practice.

Procedure: An established way of doing something, a series of actions conducted in a certain order or manner.  Procedures document and describe how each policy (or element of a policy) will be put into effect within the organisation. Each procedure should outline:
–  Who will do what
–  What steps they need to take (see: The value of Standard Operating Procedures).

Each procedure may require specific practices or processes to be used to ensure a consistent outcome.

Practice: A method or rule used in a particular field or profession.

Process: A series of actions or steps taken in order to achieve a particular end. Each process takes a set of inputs, and applies defined tools and techniques in a methodological way to the inputs to create outputs.

A series of procedures (plus practices and processes) can be grouped together into a workflow, or methodology.

Methodology: A sequenced series of procedures for delivering an outcome (see: Methodologies). Methodologies describe:
–  What should be done;
–  When it should be done;
–  Who should do the work; and
–  How the work will be accomplished.

In a well governed organisation, it governance principles will influence the design of every methodology, process and procedure used in the conduct of its business.

Guild of Project Controls Body of Knowledge – GPCBoK

GPC-LogoThe global community of time and cost practitioners / managers are collaborating to develop The Guild of Project Controls Body of Knowledge™ (GPCBoK™).  The GPCBoK is a suite of process-based documents that demonstrate what 1000’s of contributors believe constitutes Project Controls.

The GPCBoK is intended to be an evolving global statement as to what we, the practitioners, believe constitutes our role as “project controllers”. The exciting part is that anyone with an opinion (and justification) is free to propose amendments and additional references.

The first section has been released; each week ‘The Guild’ be releasing the next module. At the footer of each of the Modules there are details of how you can get involved to change or improve upon this initial baseline.

To access the GPCBoK see:

Registration is required, membership of the Planning Planet web community (free – you just need to create a profile), or the Guild of Project Controls.

The Guild of Project Controls will be using the GPCBoK to underpin its emerging project controls certification framework.