PMI’s Practice Guide for the Governance of Portfolios, Programs, and Projects

governance-of-portfolios-programs-and-projectsPMI’s newly released Practice Guide for the Governance of  Portfolios, Programs, and Projects, provides some useful guidance to organisations and practitioners on the implementation of the management of portfolios, programs, and projects, but very little on the governance of this important aspect of most organisations.

The understanding of project management, program management and portfolio management is well developed and easily accessible to all organisations, many of which have well developed capabilities in these areas, but most still see their projects and programs fail on a regular basis.  Our 2012 post Project or Management Failures? highlighted the issues.

The source of many of these failures lies in the organisation’s ability to manage the overall function of ‘doing projects’ – defined by Professor Peter Morris as ‘the management of projects’ to differentiate this area of middle and executive management from traditional ‘project and program management’. The overall domain covered by the ‘the management of projects’ concept is outlined in our White Paper WP1079 The Strategic Management of Projects.

Despite confusing the governance function and the management function, this PMI Practice Guide is a valuable contribution to this area of management and to a lesser extent the governance of projects, programs and portfolios.  As previously mentioned, the major weakness in the PMI Practice Guide is its failure to differentiate and understand the different functions of governance and management.  Whilst this confusion is common in documents prepared by practitioners and academics focused on IT management and project management, it is rarely seen in any other area of management.

Governance is the exclusive responsibility of an organisation’s governing body; in corporations this is the ‘board of directors’, in other types of organisation, their equivalent.  The governing body is responsible for setting the objectives, culture, and ethical framework for the organisation, employing the organisation’s senior management, oversighting the organisation’s management functions and providing assurance to external stakeholders the organisation is operating effectively and conforming to its obligations (for more on this see: WP 1096 The Functions of Governance). Elements of some of these functions can be delegated to management, particularly in the areas of surveillance and assurance, but accountability remains with the governing body. Importantly in a well governed organisation, the governing body does not interfere in or directly undertake the management of the organisation – it is impossible to govern your own work!

The functions of management were defined 100 years ago by Henri Fayol in his book Administration Industrielle et Generale.  Management involves planning, forecasting, employing other managers and workers, and organising as in creating the organisation; then coordinating, controlling and directing the work of suppliers and subordinates to achieve the organisation’s objectives; whilst working within the ethical and cultural framework set by the governing body (for more on this see: WP 1094 The Functions of Management). A key function of every management role is ensuring subordinates and suppliers conform to the ‘rules’ set by the governing body.

In short, the role of governance is to set the objectives and rules; the role of management is to manage the resources of the organisation to achieve its objectives, working within the ‘rules’. This approach to governance is clearly defined in ISO 38500 the international standard for the corporate governance of information technology, and ISO 21505 the draft international standard for the governance of projects, programs and portfolios.  PMI has completely failed to understand this distinction and as a consequence invented a range of meaningless definitions in the Practice Guide along with a framework that defines basic management functions such as providing resources to undertake work as ‘governance’.

The simple fact of life is the governing body employs managers to undertake management functions and this involves allocating resources, deciding on priorities and making decisions within the strategic framework approved by the governing body. The basic functions of management were clearly defined by Henri Fayol in 1916 had have stood the test of time and the rigours of academic scrutiny.

The tragedy of the decision by PMI to ignore legislation, international standards and a range of governance authorities ranging from the OECD to Cadbury and try to invent its own definition of governance, is that in the PMI model, virtually every management role above that of the project manager is turned into a ‘governance role’.

The proposition made by PMI that every manager responsible for organising and coordinating the work of subordinate managers is engaged in governance is simply untenable – good effective prudent management is simply good effective prudent management!

The role of governance is to create the environment that allows good effective prudent management to occur; ensure the organisation employs people capable of implementing good effective prudent management and to oversee the working of management so the governors can provide assurance to the organisation’s stakeholders that their management team is in fact providing good effective prudent management. The actual work of providing good effective prudent management to achieve the objectives of the organisation is the role, responsibility and duty of managers

Strangely enough most people in real governance positions know what governance is and know what management is.  Alienating this group is a real pity because once you get past the problem of describing almost every management role as a ‘governance role’ the Guide contains a lot of very useful information focused on improving the abysmal performance of many organisations in the complex area of the ‘management of projects’.

  • Section 2 describes organisational project management and the tailoring management practices to meet organisational needs; the essential relationships and considerations; roles and responsibilities; and domains, functions, and processes. It describes how ‘the management of projects’ can be implemented as a program or project for integrated portfolio, program, and project management.
  • Section 3 describes portfolio management, its links to governance and its central role in the ‘management of projects’.
  • Section 4 describes program management and Section 5: management at the Project Level.

In summary PMI’s Practice Guide for the Governance of Portfolios, Programs, and Projects is a good attempt to focus attention on the vital executive and middle management roles that routinely fail to properly support the delivery of projects and programs; the Practice Guide is spoiled by the delusion that middle level managers and executives undertaking their normal management responsibilities are somehow ‘governing’ the organisation.  As a consequence, the governing bodies of organisations and corporations will tend to dismiss the Practice Guide as an irrelevance.

The key element missed by PMI is the understanding that good management practice is an outcome of good governance, and bad management practice is a symptom of governance failure. The role of governance is to ensure its organisation’s management structures and systems are ‘good’. The fact PMI have completely missed this important distinction in their Practice Guide and as a consequence significantly reduced its value to organisations is an opportunity lost! In most organisations both the governance of projects programs and portfolios needs improving and the overall management of projects programs and portfolios needs improving – these are both important, but require very different improvement processes!

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10 responses to “PMI’s Practice Guide for the Governance of Portfolios, Programs, and Projects

  1. Hmmmmmm……. Good topic for discussion Pat, but consistent with both Drucker (1976) and Henry Mintzberg (2009) I don’t totally agree that “governance” and “management” are two separate and distinct functions or that they should be discussed or treated as if they are separate. (As ISO and PMI seem to be doing)

    The best description linking strategy and management comes to us from WikiUniversity https://en.wikiversity.org/wiki/What_Is_Strategy%3F_Why_Study_Strategy%3F

    In this model it outlines both the governance structure (“chain of command” ) as well as the responsibilities of each level of management. The part that I think irritates PMI and the other professional organizations trying to make project management a profession is in this model, it puts project managers exactly where they are, at least in owner organizations- as nothing more than tactical as opposed to strategic decision makers.

    Until we are willing to recognize and accept that project managers in an owner organization are very different from project managers in contractor organizations, we are never going to be able to reconcile this quandary. (For more on this, see Chris Sauer’s research- Where Project Managers are Kings)

    This is why when writing the GPC-BoK http://www.planningplanet.com/guild/GPCBOK we took great pains to separate the owner and contractor perspectives as much as possible, and to my knowledge, the Guild is the only professional body to have clearly made this distinction.

    Bottom line on all this- IF ISO wants to be relevant, then they need to follow the advice of Drucker and Mintzberg have been providing for years and INTEGRATE ISO 21500, ISO 55000 with ISO 38500 and ISO 28505. If they fail to do that, they are going to get the same pushback they are getting on ISO 21500. Explained another way, in trying to craft a “one size fits all” set of standards, they are appealing to no one.

    BR,
    Dr. PDG, Guangzhou, China

    • The key question is: ‘Are management and governance different or is governance really just management under a different name?’. The linked White Papers take the view they are different. The PMI Guide takes the view governance is simply doing complex management functions correctly. We are starting work on a academic paper discussing this topic in depth.

      • My take is they are two separate functions or sets of responsibilities which, when COMBINED TOGETHER, become “Management”. Sort of like epoxy glue- only works when both components are mixed together….

        In your research be sure to include Druckers “Management: Tasks, Responsibilities and Pratices” (1976) and Mintzberg’s “Management”. (2006) Both are top names and both clearly support the concept of “integration”.

        Good luck and looking forward to seeing your paper…

        BR,
        PDG, Guangzhou, China

  2. Simple point. Much of Portfolio management is “killing” projects and reallocating resources. How many project managers can or will Kill their projects. That is a higher level job. Bob Youker

  3. Peter Westerhof

    I too do not fully agree with Pat.
    I’d like to refer to the parallel of Constitutional Law vs Administrative Law (for The Netherlands at least).

    Constitutional Law considers how governmental bodies are organized, while Administrative Law considers how governmental bodies function.
    Governance thus focusses on the organisation, on ‘checks-and-balances’. While management focusses on execution of processes in compliance with the defined governance structure.
    ‘Governance & Compliance’ are the full responsibility of the Board of Directors. Its execution may be delegated, but the final responsibilty can never be.

  4. Your point Peter is exactly mine – both types of law are needed but in most countries administrative and civil law is administered in one court, constitutional law in another (usually higher) court. Different laws, different lawyers, different courts but both need to work in harmony.

  5. Good article & discussion.
    In a nutshell, the Governing body sets the rules/boundaries of the game and then, ensures that the management abide these rules and play within the boundaries… Now, those rules/ boundaries could encompass any aspect, as such; cultural, ethical, technical (PPP) etc.
    Ideally, Governing body should be a separate body and should not involve in managing those aspects of the business. This is only to avoid conflict of interest and to focus on the big picture (Bird eye view can only be achieved when you are not on the ground).
    Please note that I mentioned “Ideally” because It’s hard to separate Governance & Management elements… Often people get involved in both, resulting compromised end result. Now, it could be either lack of resources or lack of understanding about the different elements & importance of Governance & Management.
    It’s only my opinion and you can disagree with it.

    • Coaches don’t play sport, they choose who gets to play! It’s the players selected by the coach who win or lose the game. The role of governors is to select the right managers to run the organisation and let the managers make the operational decision. If the right people have been selected for the management team they will have far better ‘playing skills’ than the governors. The skill set needed to govern effectively is based on fulfilling the functions of governance.

      The governing body needs to know when to lead, when to partner, and when to stay out of the way of the executive! It needs to lead in setting the objectives of the organisation, determining why the organisation exists, whom it serves, and the ethics, culture and policies it will live by. The governing body also leads in the appointment and retention of the CEO. The governing body partners with its executive in developing the organisations strategy, including capital allocation, goals, risk appetite, and resource management. It should stay out of the execution. The functions of governance are outlined at: http://www.mosaicprojects.com.au/WhitePapers/WP1096_Six_Functions_Governance.pdf

  6. Thanks Pat for the white paper and elaborating what I said in a nutshell.
    Yes, Governing body should know the key elements of Governance & their importance.
    Knowing these elements are important, but it’s critical to know when & how to utilise those, as each situation requires different set of competencies.

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