Monthly Archives: April 2013


There are all kinds of skills, qualities, and talents you need to be a successful project manager, but credibility is the single most important quality every project manager must possess. You certainly need to be able to see the big picture, be a leader, motivator, inspector and persuader; but, all of these qualities mean nothing unless you are seen to be credible.

Credibility is a combination of being seen to be trustworthy, convincing, and reliable. It is built in the minds of other people who are ‘watching you’ or need to rely on you, particularly your team members, managers and other key stakeholders. People judge for themselves whether to take you at your word or not.

The Building Blocks of Credibility:

The key building blocks are set out below:
Trust is the foundation – when someone trusts you, you can build respect through ethical and effective behaviour. Trust is simply the assumption that you will behave properly and do what you say you will do; most pet owners trust their pets to behave! You earn respect by demonstrating ethical and effective behaviours. But respect is not enough – you can respect gallant losers and enemies.

The step from respect to credibility requires demonstrated competence, underpinned by knowledge (for more on competence see WP1056 Competency). When someone believes you are credible, that will listen to your advice and act upon your suggestions.

However, the beliefs perceptions and assumptions have to be real in the mind of the ‘other person’!


If your operating framework is not aligned with the other person’s belief framework you cannot be credible to them – it’s all in the mind of the other person.

You may be the greatest IT project manager in the world, but if the way you dress and the jargon you speak does not fit with a particular senior executive’s beliefs about how competent mangers dress and speak, you will not be credible to that executive.

The way to break through the ‘belief barrier’ is to build empathy.


Empathy is the capacity to recognise the emotions that are being experienced by another – the ability to ‘stand in their shoes’. Within business this is more generally characterised by a combination of beliefs and desires, and grasping these beliefs and desires is essential to being able to develop empathy.
The ability to imagine oneself as another person is a sophisticated imaginative process. An empathic interaction, however, involves you communicating an accurate recognition of the significance of another person’s ongoing intentional actions, associated emotional states, and personal characteristics in a manner that the other person can appreciate. It’s not the message itself that matters so much as the way it is communicated.

Put all of this together and you can build you credibility one stakeholder at a time.

Maintaining Credibility:

There are a number of things you can do as a project manager to maintain your hard earned credibility, including:

  • Do What You Say You Are Going to Do – Following through is easier said than done, and requires thoughtfulness to back up your words with actions…all the time. Your team is always watching how you behave. If you say you’re coming in early the next morning to knock out a tough part of the project plan, then make sure you show up early. Credibility starts with following through on your smallest commitments and migrates all the way up to your major promises.

    If you are not quite sure you can follow through; then don’t commit to it just yet. There’s nothing wrong with keeping your mouth shut and doing a bit more research before committing, and then following through on your promise.

  • Don’t Talk Too Much – The more incessantly you talk, the less credibility you will have. Certainly, project managers need to talk, usually a lot. The key is to find the optimal point at which you become and stay credible by moderating how much you say and what you talk about. You can always add a bit more ‘talk’ if needed, it is impossible to unspeak something that is already said.

  • Listen to Your Own Conversation – A very helpful practice is to listen to your own conversation and reflect on your dialogue with project team members. They’ll remember everything you say, so should you!

Some Simple Ways to Destroy Your Credibility

It takes years to build up a storehouse of credibility, and it is a great asset to have. Then, if and when you do make an honest mistake, that storehouse of credibility will bring you through the storm. However, there are certain things that will destroy your credibility within a matter of moments:

  • By Accident – Certain things are out of your. You must rely on others to do what they say they are going to do. You can follow up, cajole, and persuade as much as possible, but ultimately it is the responsibility of the resource to get the job done.

    Your superiors will understand for a little while if you are unable to deliver on a project because of other people’s shortcomings. However, these little accidents will ultimately undermine your credibility if they continue to occur.

  • By Covering Up – You will destroy your credibility if you deliberately conceal information, it is a breach of trust – the foundation of credibility.

  • By Being Manipulative – Another way to instantly lose credibility is to be manipulative. One technique of manipulation is convincing someone else that it’s in their best interest they get something done, when the reality is it’s in your best interest. Once the deception is uncovered your credibility is gone.


Build a solid base of credibility and your project management career will flourish. Trust is the foundation (for more on trust see: WP 10030 The Value of Trust). From this base your actions and competency build credibility. It’s hard earned, invaluable for influencing managers and ‘advising upwards’ effectively to help your managers help you, and it is easily destroyed!

PMOZ Excitement

The 2013 Project Governance and Controls Symposium held in Canberra last week was a great success – and planning for 2014 is underway, based on our first event, the Autumn Symposium in Canberra will become a highlight in the project controls and governance communities annual calendar!

Now to move onto PMOZ – PM Global’s major spring conference. We have been working hard on a revamp to make the program more flexible, accessible and exciting and moved to a city centre venue.

PMOZ 2013 will be held at the Grand Hyatt , Collins St., Melbourne from the 17th to 16th September (see more:

And, the framework for the conference program has been completely updated:

Tuesday Outline

Tuesday Outline

Wednesday Outline

Wednesday Outline

Early risers can attend an extended morning session on one or both days, and on Tuesday there is an extended twilight session.

‘9-to-5ers’ attend the normal PMOZ conference and for the dedicated ‘Dawn to Duskers’ you have access to everything an maximise PDUs ……

Each day starts with a focused workshop available to Early Birds and ‘Dawn to Duskers’ and there’s a similar twilight workshop on Tuesday for the Twilighters and ‘Dawn to Duskers’. Each workshop topic will be backed up by focused papers on the same general topic in the rest of the ‘half day’. Some of the options being considers for these three focused streams include :

  • Business requirements and the role of BAs
  • Positive dispute management – use facilitated options to avoid a costly fight.
  • Change management and value – the critical back end of project delivery
  • Project management in ‘Not for Profit’ and volunteer organisations with a focus on disaster recovery.

Four potentially hot topics and only three half days, we still have decisions to make……

In addition, the three main focuses of PMOZ remain in the program as well:

  • Projects in organisations, focused on project governance, innovation, portfolio and program management, leading to the delivery of benefits and value.
  • Planning and controls, focused on the tools and techniques required for effective project and program management. If the topic is a tool, technique or process used in project, program or portfolio management this stream is place to be!!
  • People and the profession, focused on the people side of project and program management, all of the hard to use soft skills.

As in previous years, a blend of academic and practitioner papers will be presented on a wide range of topics within each theme. The call for abstracts is being extended to allow time for potential presenters to adjust to this new structure – all papers and suggestions are welcome.

Attending this new, dynamic and exciting event is altogether different – first you need to decide which registration option is best for you and then nearer to the day, which of the streams to attend during your time at the conference, there has always been a choice of excellent presentations – it has now become more challenging! Perhaps we need a workshop on decision making? Alternatively you can use our White Paper on Decision Making to help you choose.

We look forward to seeing you in September.

Earned Schedule comes of Age

2013 is the 10th anniversary of the publication in The Measurable News (March & Summer 2003) of Walt Lipke’s seminal paper Schedule is Different, introducing the concept of Earned Schedule (ES) to the world. This milestone was celebrated at the inaugural Governance and Controls Symposium held in Canberra earlier this month.

One of the notable features around ES has been the amount of hostility towards the concept generated by traditional Earned Value advocates (for an overview of ES see:

Everyone who understands EV recognises traditional EV is a very useful cost predictor and also recognises that the traditional SPI and SV calculations lose relevance later in the life of a project and fail completely if the project overruns time (ie, in approximately 80% of projects SPI and SV are less then optimal). To resolve this problem, the traditionalists suggest ‘looking to the CPM schedule’ for answers and decry ES.

Unfortunately, whilst a reliable and accurate CPM schedule is a critical underpinning of any competent EV system, CPM itself is a ‘wildly optimistic process’, see:

One step towards eliminating this destructive debate was achieved this month – at last there is definitive research that validates ES as a technique. A research thesis from the AFIT (US Air Force Institute of Technology) Masters student, Capt Kevin Crumrine compares EVM and Earned Schedule indicators on US DoD ACAT 1 programs (for non-military types – ‘big’ programs). The thesis documents a series of five descriptive statistical tests conducted on the Earned Value data for 64 Acquisition Category (ACAT) I MDAP’s. The research found that Earned Schedule was a more timely predictor of schedule overages than Earned Value Management.

Unfortunately the statistical data did not compare ES with the CPM predictions. The thesis notes ‘One shortcoming to this research is the inability to map the Earned Schedule data to the critical path, but we consider Earned Schedule to be a strong tool for schedule prediction at the summary/contract level.’ The stated reason was ‘Our example produced earned value data no deeper than the Work Breakdown Schedule (WBS) level 3 (ex: WBS Element 1.2.3). The Critical Path data is collected much deeper, as detailed as WBS level 7 (ex: WBS Element This disconnect prevented us from conducting a detailed analysis’

My feeling is the detailed nature of Capt Crumrine’s analysis meant the researcher could not see the ‘wood for the trees’. The only date that really matters on most projects/programs is the completion date! The level the data is collected at does not matter; neither does the activity/work package that that actually drives the final completion. What matters is the end date!!! The fact ES is a better predictor then EV should be 100% accepted and proved by now, and if not this detailed thesis should remove any residual doubts.

What is not proved is does ES provide a more reliable end date than CPM? My assessment outlined in Why Critical Path Scheduling (CPM) is Wildly Optimistic is that ES should be more accurate. Given the mass of data collected by Capt Crumrine it would be a pity if this last step is not applied by a future researcher.

The key role of CPM is (or should be) making the best use of the currently available resources on a project – this is the antitheses of predicting outcomes based on current trends in the way ES does. All that’s needed is another Masters candidate!!

Capt Kevin Crumrine’s thesis, ‘A Comparison of Earned Value Management and Earned Schedule as Schedule Predictors on DoD ACAT I Programs’ is now in the CPM electronic library at If you are into analysis it is well worth the read.

How useful are BOKs?

We have the PMBOK® Guide, the APM BoK and many other BoKs and standards ranging from ISO 21500 to the PMI Practice standards.

We personally think they are useful and commit a significant amount of volunteer time to developing standards through PMI and ISO; as are certifications to demonstrate a person has a good understanding of the relevant BoK (and we make money out of running our training courses).

However, we are fully aware that passing a knowledge based credential does not demonstrate competency (and that passing a competency based assessment does not demonstrate transferable knowledge – both are needed see: Developing Competency).

We are also aware that too many organisations place too much emphasis on ‘ticking boxes’ rather then taking time to assess people or optimise solutions. The easy tick in the box may avoid ownership of a problem but also tends to avoid the solution itself……

For these reasons we commend the Association for Project Management (APM – UK, publisher of the APM BoK) for publishing a short video, based on a talk given by our friend and colleague, Dr. Jon Whitty to the APM in Reading UK in Nov last year. I hope it starts you thinking.

See the video:

PMI Standards Round-Up

PMI StandardsThe three standards released by PMI at the beginning of this year were the:

PMBOK® Guide Fifth Edition
Standard for Portfolio Management Third Edition
Standard for Program Management Third Edition

As a consequence, the global PM community now has a set of basic standards that will remain stable for the next four years through to the next cyclical update scheduled for late 2016. The tight integration between all three standards means minimal duplication of ideas and best practices.

Whilst each of the PMI Credentials tends to focus on one of these three standards, the key thing from an organisational perspective is they are integrated, and after this round of upgrades better integrated than ever!

The Portfolio Management standard focuses on the investment decisions needed to select the best projects and programs to start and maintain to achieve the organisations strategy within its resource constraints. Selecting the ‘right projects and programs to do’.

For guidance on ‘doing them right’, the Program Management standard focuses on the business outcome and integration aspects of program management and the PMBOK® Guide covers off the basic skills and capabilities needed to deliver the project outputs efficiently.

Each standard can be used in isolation; however, the real power lays in using all three as a framework for organisational improvement – Creating an effective Project Delivery Capability (download our PDC White Paper). The final missing link, PMI’s updated OPM3 standard will be released later this year.

This means that organisations interested in developing a best practice capability across the ‘enterprise’ aimed at achieving the maximum sustainable value from its investment in projects and programs now have an ideal opportunity to buy into current thinking via these standards and time to develop improved processes.

We have enjoyed working through the standards and writing this series of posts on the improvements (for previous posts click here) – but 4 months down the track we now consider these ‘new’ standards business as usual, have consigned the ‘old’ standards to history, and will make this our last post on the updates. Our very last PMP and CAPM course based on the ‘old’ standards will be run at the end of May (course details) and then we will be 100% aligned to the new and improved versions. We encourage everyone else to do the same.

Project Surveillance from an Expert!!!

Lisa-Wolf_webLast year at PMOZ 2012, I had the pleasure of listening to Lisa Wolf outlining the approach to project surveillance and health checks she has introduced and manages at one of the world’s foremost consultancy firms, Booz Allen Hamilton. Lisa’s presentation packed in more good advice than most people manage in a week!

This year Lisa is back in Australia at the PMI Australia Conference, Sydney Convention and Exhibition Centre: 1 – 3rd May 2013. Her Master Class on the 3rd May is a must attend for any PMO manager, Project Director or Project controls professional.

Lisa’s master class focuses on the approaches she has adopted and the lessons learned in setting up an internal project management surveillance function within Booz Allen Hamilton’s as well as her extensive experience assisting US Government agencies and other clients.

The term surveillance is derived from the French word ‘surveiller’ and has a military pedigree. It refers to keeping watch on a location or person. In the case of project management, the notion of surveillance begs the question, “What do you watch?” Observing a project manager first hand is unnecessarily overbearing and may not be warranted. What you can watch is a project manager’s outputs from baseline establishment through project execution, as well as the people, processes, and tools in place to ensure appropriate monitoring and control processes are effective.

During the workshop, Lisa will explore the ‘best practices’ that are essential for successfully establishing a helpful and supportive surveillance function, including the essential processes, procedures, and vital internal relationship-building will be explored. She has proved effective and helpful surveillance will improve project performance – you too can learn the secrets!

For more information see:

I’m certainly looking forward to catching up with Lisa in Sydney where I’m presenting our paper Communication ≠ Engagement on the 1st day.

I encourage you to take advantage of this unique opportunity to learn from a ‘master’ and look forward to seeing you in Sydney.

Project Governance and Controls Symposium

Canberra hosted the inaugural Governance and Controls Symposium this week – it was a relatively small event packed with highlights.

The first PTMC (Project Time Management Certificate) workshop to be held in Australia – based on feedback from the attendees, this will grow to become a very popular training.

A free networking evening looking at the future of ‘project controls’ in Australasia. During the meeting the final wind-up of the Australian Performance Management Association was completed.

The main symposium included three outstanding key note addresses supported by stream papers and an engaging panel session.

The two days of concentrated learning and discussion were finished with animated networking sessions. All together an intense and enjoyable two days for both project controls professionals, and the executive managers responsible for governing this area of an organisation’s business. Two of the key outcomes from the Symposium were:

  • Gary Troop, the President of the newly independent College of Performance Management (CPM) and symposium key note speaker announced a limited time offer to anyone in Australia to join the for US$25.  The CPM was a part of PMI from 1999 to 2012 but has reverted to an independent status to better serve the needs of the Earned Value community.  The College has a major on-line library of EV publications and plans to develop its conferences and webinars on a global basis – there is even talk of establishing an Australian Chapter – to be part of the exciting new development visit and become part of the worlds leading EV community.
  • The project controls professionals present in Canberra expresses a strong desire to see a network established to link all of the various ‘controls focused’ components within professional associations such as AIPM and PMI, independent bodies such as CPM and Planning Planet and individual controls professionals to help raise the profile of project controls, amplify the message from any one component member, and through the network assist in career development and finding the ‘right person’ for work when needed.

To help with this initiative, PM Global are starting to plan the second Symposium to be held in Canberra at around the same time in 2014 and discussions are underway to frame a proposal for a ‘no cost’ network designed to meet the needs of the ‘controls community’.

There’s a lot to do to maximise the gains made this week – watch this space……

In the meantime, if EV and /or ES is your ‘thing’ the US$25 offer is limited and needs prompt attention!  And to understand the link between controls and project governance see:

Thoughts on Climate Change

There has been an interesting debate running within the Australian Institute of Company Directors ‘closed’ Linked-In group. This post is an abstract of some of the more salient points that I feel should be in the wider community. A lot of the material may be common sense, but common sense is ‘that which is commonly considered right and proper when observed’, not ‘that which anyone and everyone has already thought of’.

My view expressed in the discussion is that the managers and directors of organisations destined to fail in the next 5 to 10 years will continue to pretend the climate is not changing (the cause of the change is irrelevant). This phenomenon of refusing to accept what is gradually becoming the ‘blindingly obvious’ is not uncommon among boards – there are still people who don’t accept smoking causes disease because only 50% of long term smokers are killed by the habit and they know someone who has smoked for 40 years and is still healthy… And whilst acceptance of the lethal effects of asbestos fibres are now more widely acknowledged, the mounting evidence of the danger was ignored by boards, architects and engineers for decades preferring short-term expediency over long term risk management.

Anyone with a basic grasp of science knows it is impossible to ‘prove’ climate change in advance; predictions are always based in probability. The simple facts of science are:

Fact 1 – there is no proof of any theorem in physics – all the scientists can state is that based on observation and experiment they have not been able to disprove the concept to date. The transition from Newton’s ‘gravity’ to Einstein’s ‘relativity’ to the 98% certainty Higgs Boson has been discovered is a case in point. Climate science is no different.

Fact 2 – there is overwhelming evidence the climate is changing significantly – the immediate consequences are more severe weather events (hot and cold; eg, tornados in the Murray Valley) and sea level rises caused by the sea waters expanding as they get warmer.

Fact 3 – these changes will have inevitable consequences on every business and every organisation.

The precautionary principle suggests prudent organisations make reasonable allowances for these observed effects. Optimist may hope they are temporary and will go away in a year or two, but how many boards really what to bet their future on an optimistic hope?

WHY the climate is changing is largely irrelevant (although green house gasses seem to be a major contributor). The issue for boards is recognising the reality that exists now and dealing with the real problems this is causing today, starting with insurance cover/premiums closely followed by increasing the resilience and diversity of supply lines.

Alun Stevens suggested the science is quite settled. He posted: I grant you there is a lot of noise, but the science is settled and quite unequivocal. To put it succinctly:

  1. Radiation absorption by CO2 warms the atmosphere. This has been known since the mid 1800s and is identical in process to microwaves warming meat. If your microwave works, CO2 warms the atmosphere. if CO2 does not warm the atmosphere we are all deluded about our microwaves.
  2. Other gases including water vapour also warm the atmosphere in the same way, but more effectively.
  3. The higher the concentration of these gases, the greater the absorption of radiation and the greater the warming.
  4. The CO2 concentration is rising. Every monitoring station across the globe has shown a rise including those in Antarctica and Tasmania where there is no local production of CO2.
  5. The increase in CO2 is due to human activity. I can never understand why this is disputed because it is quite easy to prove. The world has an extremely accurate estimate of the amount of CO2 produced each year because of very good records of production and consumption of fossil fuels. Some may have been missed, but this just means that the answer is a Lowest estimate. The amount of CO2 in the atmosphere is a bit more difficult to measure, but is still accurately known because of the spread of measuring stations and satellites. The increase in CO2 content of the atmosphere is less than the amount produced by humans. The rest of nature is therefore a net absorber of CO2 and ALL of the increase is due to humans.
  6. Methane concentrations have also increased. Some from increased animal production – ie human induced. Some from land clearing and related activities – human induced. Some due to thawing of the deep frozen stores in places like Siberia. Physics interlude – ice can only melt if heat is added to it. If the methane stores are melting, their heat content is necessarily rising. The methane rise is either human produced or secondary to rising temperatures.
  7. Water vapour content is rising. Another physics interlude – the capacity of gases to hold water vapour is dependent on their temperature. If the water vapour content has risen it is necessarily true that the temperature of the atmosphere has also risen. Water vapour rise is a secondary effect to rising atmospheric temperatures.
  8. There is an energy imbalance between the energy received from the sun and the energy being radiated back into space. There is some argument about this, but only about the size of the imbalance not about its existence or that it is increasing.
  9. The amount of energy coming in from the sun has not changed materially. There are solar maxima and minima, but the differences in energy output between them are not big and are much too small to account for the increase in the energy imbalance. The earth has also been on a very consistent orbit over the last 150+ years or so and the Milankovitch cycle effect has in fact been very slightly negative – ie reducing the amount of incoming energy. There has been no increase in earthbound events (e.g. volcanoes) that could explain the increased imbalance. The increase is due to retaining more heat which can only be due to the ‘greenhouse’ gases.
  10. The energy content of the globe is increasing. Less than 2.5% of this in the atmosphere. Over 90% is in the oceans with the rest in the continents (warmer rocks) and melting ice. There has been a significant reduction in ice volume. The only scientific argument is whether it is a lot or a lot more or even still more. Sea levels have risen. Some is due to the melting of continental ice (melting sea ice doesn’t change sea levels) and the bulk from expansion due to rising sea temperatures.

He continued: Although I am now an actuary, I started out as a physicist and have been interested in climate science for 40 years. Back then the question was whether rising aerosols in the atmosphere would cause global cooling or rising CO2 would cause global warming. The world responded strongly to the rising aerosols – sulphur, ash etc – so that concern disappeared. It did not respond to CO2 and we are now where we are.

The science was actually settled 20 years ago. All that has happened in the last 20 years is to settle it more and more accurately and to falsify all competing hypotheses. (As Pat rightly points out, that is what scientists do – falsify claims. Those that remain unfalsified, no matter how unpalatable, are the best estimate of the truth available.)

The outworking of all this is that the science is clear that:

  1. The earth is warming.
  2. The warming is accelerating.
  3. The warming and its acceleration is caused by CO2 and its increase.
  4. Human activity is the source of the increasing CO2.

Having got that off my chest, we now get back to what are actually the real issues, namely what does this mean and what should we do? Here there is some room for debate and argument. What is the likely extent of the warming? How quickly will it happen? What will be the impacts on the climate and weather at different temperature levels? What will be the impact on sea levels? What impact will weather and temperature changes and sea level changes have on human and other life and their activities?

The answers to these questions go to answering the sorts of questions that directors need to be asking. What should we do? How quickly must we do it? How much should we spend? Can we afford to do nothing?

This gets down to one of my current areas of interest – risk management. Boards have a responsibility to manage risks. It is one of their primary functions. Climate risks, like all other risks require a proper approach:

  1. What is the risk?
  2. What will be the impact of the risk?
  3. How likely is it to happen – in this case the question is more one of when rather than if?
  4. Can we absorb the outcomes?
  5. If not, how do we mitigate the risk, insure the risk or avoid the risk?
  6. How do we implement our decisions?

This all requires proper forward estimations which brings me to my final question (at last). How will you make quality estimations and therefore decisions? Will you just rely on the gut feel experiential approach of, ‘don’t worry, my experience shows that nothing has happened in my lifetime or that of my father and grandfather; things are always up and down; so nothing will change’? Or will you take into account the best scientific knowledge and properly model the potential outcomes?

To answer one of my questions – we cannot afford to do nothing. We have to manage the risk.

Alun concluded: I am a great believer that change is ALWAYS an opportunity to be exploited. This is a big change and it will be worth a very serious amount of money. There are opportunities in changing what we do now to prevent or reduce the impact of climate change. And, because of the tardiness out there, there are opportunities in doing new things to cope with and exploit the changes that will happen.

Interestingly this is not a global left/right political argument. Whilst the approach adopted by Tony Abbot in his announcements this week (Australian Liberal) and the US Republican party favour the easy option – shoot the messenger, treat each occurrence of an unusual weather event as a 1 off anomaly and pretend nothing serious is happening this is not a consistent ‘right wing’ position.

The UK Conservative party has a 100% commitment to reducing greenhouse gasses enshrined in law – the Prime Minister who set this objective in motion was Margaret Thatcher, hardly a ‘left leaning green’, but she was a trained scientist.

Conversely, many labour organisations oppose change to mitigate greenhouse gas omissions because of their short-term effect on their member’s employment. And the thing I find strangest is the farming community (at least in Australia) that has to adapt fastest and will suffer the most from extreme weather events, seems to be represented by bodies that want to deny the existence of a problem.

Somewhere there is a serious communication breakdown. Our innate biases tend to mitigate against dealing with the issue; some of the more potent include:

A reluctance to do things now for an uncertain future benefit,

A preference for what we know though direct experience compared to things we cannot see or touch, and

A tendency to ignore things we don’t like or that don’t fit comfortably with our current views (see more on ‘bias’).

Education in the broadest sense is the antidote to bias and this requires meaningful communication – something that has been seriously lacking.

Defining Governance

In a previous post, we defined management; this post seeks to achieve a similar definition of governance.

Governance is the act of governing. It is the way rules are set and implemented, and relates to the way decisions are made that define expectations, grant power, and verify the performance of people within the entity being governed.

To distinguish the term governance from government, governance is what a governing body does. It might be the governing body of a geo-political entity (nation-state – typically referred to as the government), a corporate entity (typically the Board of Directors), or another type of organisation. When looking at organisations and corporations (Corporate Governance), the governing body may be the individual that owns an organisation, but more typically is a small group of people at the apex of the organisation’s hierarchy.

Sir Adrian Cadbury (2002) defined the aim of corporate governance as aligning as nearly as possible the interests of individuals, organisations and society. Corporate governance is concerned with holding the balance between economic and social goals and between individual and communal goals. The governance framework is there to encourage the efficient use of resources and equally to require accountability for the stewardship of those resources. It is the system by which business corporations are directed and controlled.

Stewardship is an important governance concept. It includes:
Fealty: A propensity to view the assets at ones command as trust for future generations rather than available for selfish exploitation.
Charity: A willingness to put the interests of others ahead of ones own.
Prudence: A commitment to safeguard the future even as one takes advantage of the present.

The governance framework, set by the governing body, specifies the distribution of rights and responsibilities among different participants in the corporation, such as the board, managers, shareholders and other stakeholders, and spells out the rules and procedures for making decisions on corporate affairs. By doing this, it also provides the structure through which the company objectives are set, and defines the means of attaining those objectives and of monitoring performance.

The Functions of Governance
The governance function has two key aspects; the first is deciding what the organisation should be and how it should function. These governance decisions are communicated to management for implementation and the primary outputs from this part of the governance system are:

  • The strategic objectives of the organisation framed within its mission, values and ethical framework.
  • The policy framework the organisation is expected to operate within.
  • The appointment of key managers to manage the organisation.

These aspects are best developed using a principle-based approach that recognises and encourages entrepreneurial responses from all levels of management.

The second aspect of the governance system is oversight and assurance. The governing body should pro-actively seek assurance from its management that the strategic objectives and policies are being correctly achieved or implemented. The assurance and oversight functions include:

  • Agreeing the organisations current strategic plan (in conjunction with executive management). The strategic plan describes how the strategic objectives will be achieved.
  • Suggesting or approving changes to the strategic plan to respond to changing circumstances.
  • Requiring effective assurance from management that the organisations policy framework is being adhered to.
  • Requiring effective assurance from management that the organisations resources are being used as efficiently as practical in pursuit of its strategic objectives.
  • Communicating the relevant elements of the assurances received from management to appropriate external stakeholders.
  • Assurance to the organisation’s owners the strategy and policies are being adhered to by management and the organisation as a whole.
  • Assurance to a wider stakeholder community (including regulatory authorities) the organisation is operating properly.

The role of management is the mirror image of governance:

  • Providing input to develop the strategic plan
  • Implementing the approved strategic plan within the policy guidelines set by the governing body.
  • Providing assurance to the governing body that the management structure is:
    • Operating ethically and accountably
    • Providing effective stewardship of the resources available to the organisation
  • Providing timely and accurate information on achievements and issues.

Managing the organisation and making the executive level and operational level decisions needed to implement the agreed strategy and run the organisation within the ethical and policy framework set by the governing body are the core skills and responsibility of management.

Governance and sustainability
The key challenge for the governing body is balancing the competing needs of the organisations stakeholders, including but not limited to its owners, employees, suppliers, customers and society at large, so as to align as nearly as possible the interests of each stakeholder, the organisation and ‘society’ in a sustainable way.

Tripple bottom line

The four elements of sustainability are the three depicted above plus time. The current governors of an organisation need to be cognisant of sustaining the organisation into the future and governing so that the organisation can continue as a valuable contributor to the needs of its stakeholders in the medium and long term, as well as the current short term.

The Governance of PPP
Within this overall framework, the governance of project, program and portfolio management (PPP) is simply an integral part of the overall governance process. Whilst there are specific skills and elements associated with governing PPP these are governance requirements, the responsibility of the governing body.

Similarly the management of the organisation’s portfolios, programs and projects at both the overall enterprise level and the operational level is an integral part of the management process. So whilst there are specific skills and elements associated with the overarching management of the PPP domain at the enterprise level, these are management skills, and are the responsibility of the management team. In short, Governors govern, Managers manage.

Some final thoughts on Governance
Governance is a holistic process that requires careful balance. Decisions in any one aspect of the organisation being governed affect all of the others, some examples include:

  • A project failure can affect the organisations reputation and share price;
  • An accident to an employee may have direct personal liability implications for the Directors;
  • A poorly worded press release may damage the organisation’s reputation and have direct personal liability implications for the Directors.
  • There are a range of legislative requirement that impose significant ‘duties’ on the governors of commercial and other organisations including financial reporting and disclosure requirements, environmental, OH&S and employment requirements and taxation and superannuation requirements (eg, CLERP9, SOX, etc.). The governors are legally required to govern!

Because of this interconnectedness, governance operates at the organisational level which means you govern an organisation that does projects; you do not govern the individual projects; if the project teams are part of the overall organisational structure – you manage them! There is no effective difference between temporary project teams and permanent teams within the organisation.

Exceptions to this are when a project is set up as a temporary organisation external to the main organisation either as an isolated ‘skunk works’ or ‘major project team’ focused on developing something independent of the work of the main organisation, or as a joint venture between two different organisations. Then, as with any subsidiary, if the project organisation is operating as a largely autonomous entity, it becomes an organisation in its own right that requires governing and any parent organisation is one of the key stakeholders the governing body of the project has to consider.

To access our other papers looking at different aspects of governance see:

PMBOK 5 – Some final thoughts

PMI_PMBOK5We are now well into the process of updating materials and writing new questions based on the PMBOK® Guide 5th Edition – From being something new, the book is now becoming increasingly familiar:

  • Our daily PMP question has had a 5th Edition reference for the last 3 months, you can follow the questions on Twitter: see today’s question (the questions are good for PMP, CAPM and PMI-SP)
  • Updates to our CAPM, PMP and PMI-SP courses are planned and under development – our new Mentored Email™ courses will start in late April.
  • Our last classroom course based on the 4th Edition will be at the end of May 
  • The PMI examination date changes are:
    – CAPM 1st July
    – PMP 1st August
    – PMI-SP 1st September
  • The initial rush of people interested in buying the 5th Edition has subsided and we are effectively out of stock of the 4th Edition. 

Overall as we become more familiar with the 5th Edition we are finding it to be a significant improvement. There are certainly a few issues and problems highlighted in earlier posts in this series (view the full series) but the enhancements significantly outweigh the odd regression.

One of the minor but important improvements is he ranges for cost estimates are back to the industry standards of -25% to +75% for ROM and -5% to +10% for detailed estimates. This pessimistic shift in the ranges more accurately reflects reality.

The rearrangement of the first three chapters is also significant and is aligned with the standards for Program and Portfolio management:

  • Chapter 1 sets the scene with:
    – definitions of a project and project management,
    – discussion of the relationships between project, program and portfolio management, in the context of organizational project management,– Discussions of the relationship between project management, operations management, strategy and business value
    – the role of the project manager.
  • Chapter 2 focuses on organisational influences including the influence of project stakeholders and governance on the project team and the overall project lifecycle.
  • Chapter 3 looks at project management processes and the structure of the rest of the PMBOK.

The reorganisation of this front section, facilitated in part by the move of the ANSI standard to Annex A1 is probably the quiet achievement in the standard. The section flows far more sensibly and logically than in previous editions.

In conclusion – the quality of the PMBOK® Guide 5th Edition has been enhanced by hundreds of small changes that make the work of transitioning our course materials hard work and will certainly require some hard work from anyone who has to update their exam preparation.

So a word of warning: If you are trained for the current exam make sure you sit before the change over dates – PMI do not have any flexibility in the timing of the system changes!! This includes re-sits. After the change over date, all new exams are based on the new standards.

But once through these changes we certainly have a better book for the next 4 years and the development team deserve congratulations for a job well done.