Defining Governance – What the Words Mean

Origins

Governance is the act of governing. Originally the province of ‘rulers’ over the last century or so, as power and authority has devolved to various types of organisation, and the influence of organisations within society has grown, the concept of governance has become increasingly important to the people entrusted with leading these organisations and to the stakeholders who own or intact with the organisation, corporation or department.

At the most basic level:

• To govern is to rule with authority…; to direct and control the actions and affairs of others… and
• Governance is the controlling, directing or regulating influence.

Therefore organisational governance can be defined as the system by which organisations are directed and controlled. It involves a set of relationships between an organisation’s management, its board, its shareholders and other stakeholders and provides the structure through which the objectives of the organisation are set, and the means of attaining those objectives and monitoring performance.

Project, program and portfolio (PPP) governance
PPP Governance is a sub-set of and integral to organisational governance. Using the two most common definitions of ‘corporate governance’ (corporations being one form of organisation) it is possible to drill down to a meaningful definition of PPP governance as follows:

The original definitions

1. Sir Adrian Cadbury (1992):
Corporate governance is the system by which companies are directed and controlled. Boards of directors are responsible for the governance of their companies. The shareholders’ role in governance is to appoint the directors and the auditors and to satisfy themselves that an appropriate governance structure is in place. The responsibilities of the board include setting the company’s strategic aims, providing the leadership to put them into effect, supervising the management of the business and reporting to shareholders on their stewardship.

2. OECD (2004 p.11):
Corporate governance involves a set of relationships between a company’s management, its board, its shareholders and other stakeholders. Corporate governance also provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined. Good corporate governance should provide proper incentives for the board and management to pursue objectives that are in the interests of the company and its shareholders and should facilitate effective monitoring.

Converting the definitions to PPP governance:

3. Cadbury adapted to PPP governance:
PPP governance is the system by which an organisation directs and controls those aspects of its work that will be accomplished through the performance of projects or programs. Boards of directors (or their equivalent) are responsible for the governance of their organisation and for satisfying themselves that an appropriate PPP governance structure is in place. This includes understanding the organization’s strategic aims, providing the leadership to put them into effect, supervising the management of PPP and overseeing the stewardship of the resources used in PPP.

4. OECD adapted to PPP governance:
PPP governance involves a set of relationships between an organization’s board (or its equivalent), its executive management, its PPP management and other stakeholders. PPP governance also provides the structure through which the objectives of the organisation are refined, and the means of attaining those objectives and monitoring performance. Good PPP governance should provide proper incentives for management to pursue objectives that are in the interests of the organisation and its owners and should facilitate effective monitoring.

Distilling the essence of the definitions:

5. Combined elements of the adapted definitions:

1. PPP governance is the system by which an organisation directs and controls those aspects of its work that will be accomplished through the performance of projects or programs. It involves a set of relationships between the organization’s board (or its equivalent), its executive management, its PPP management and other stakeholders.
2. The board of directors (or their equivalent) are responsible for the governance of the organisation and for satisfying themselves that an appropriate PPP governance structure is in place.
3. PPP governance provides the structure through which the strategic objectives of the organisation are refined and the means of attaining those objectives are implemented.
4. PPP governance also includes understanding the organization’s strategic aims, providing the leadership to put them into effect, supervising the management of PPP, overseeing the stewardship of the resources used in PPP and monitoring performance.
5. Good PPP governance should provide proper incentives for management to pursue objectives that are in the interests of the organisation and its owners and should facilitate effective monitoring.

6. Key components of the definitions:

1. Creating the PPP management system including Portfolios / program / project management systems.
2. Surveillance (PMOs etc., + accountability).
3. Organisational support (HR, Finance, etc).
4. Alignment with strategy to create value (primarily portfolio responsibility).
5. Stewardship = the assignment and acceptance of responsibility for overseeing and protecting something considered worth caring for and preserving by shepherding and safeguarding the valuables of others (ie, the resources assigned by the organisation for use in PPP).
6. Stakeholders and sustainability.

7. To derive a working PPP definition:

PPP Governance is the creation and implementation of the framework and principles by which the organization’s PPP activities are directed, supported, monitored and controlled.

Where:

1. Framework = P + P + P management structures (see more on PDC).
2. Principles = stewardship, sustainability, stakeholders, etc.
3. Direction = alignment with strategic objectives, etc.
4. Support = organisational systems, HR, finance, etc.
5. Monitoring = surveillance, PMOs, etc (see more on surveillance).
6. Control = tie back to organisational objectives.

Based on these definitions, in my next post the role of PPP Governance as a core component o organisational governance will be discussed.

For other posts on governance see: https://mosaicprojects.wordpress.com/category/governance/

For more Governance Papers see: http://www.mosaicprojects.com.au/PM-Knowledge_Index.html#OrgGov