Portfolio Governance—Ensuring Alignment to Strategy (Part 1)

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By Jen Skrabak, PMP, PfMP, MBA

Governance is an extremely broad and often times misunderstood area. It can span functions, domains and types, depending on the context of an organization and other factors. Even across the various standards and current body of knowledge and research, there’s no consistent definition of governance or approach to its implementation.

Yet as portfolio managers, we all recognize that governance is perhaps the single most important enabler of good portfolio, program and project management. It helps to guide the appropriate oversight and decision-making that ensures successful execution of strategic initiatives.

That’s why I’m so proud of PMI’s recently released Governance of Portfolios, Programs, and Projects: A Practice Guide. I was fortunate to chair a committee of leading experts around the world that developed the guide, which fills a critical gap in the profession today.

An important accomplishment of the committee was to formulate a definition of governance that can be applied to the portfolio, program and project context. Governance may exist at various levels of the organization. It’s important to distinguish among those levels:

Organizational (or corporate) governance. This is typically a board of directors’ level and defines principles, policies and procedures around how the organization as a whole is controlled and directed. It typically includes areas of oversight such as regulatory, compliance, cultural, ethical, environmental, social responsibility and community.

Portfolio (or program, or project) management governance. This typically may be how an enterprise portfolio (or program, or project) management office (EPMO) determines common policies and procedures. This may define the hierarchy and relationships of governing bodies—for example, whether programs and projects report to a portfolio governing body and the specific criteria.

In some organizations, the EPMO may define guidelines for a phase gate approach to programs and projects. It also may define methodology for technology projects, such as adhering to standard processes (ITIL, RUP, Scrum, agile, SDLC, etc.).

Portfolio (or program, or project) governance. This is the oversight and leadership on an individual portfolio. In many organizations, there may be a capital investment committee made up of the senior executives of the business and technology areas that oversee all capital expenditures over a certain amount (typically US$1 million or more).

On an individual program or project level, it’s important to define the relationships of the various governing bodies and ensure that it’s aligned to a functional or portfolio level. A project may be required to report to functional governing bodies (IT and/or the business area), as well as the portfolio manager. It’s important to ensure that the thresholds and authority of decision-making are defined at the right levels.

In my next blog post, I’ll define terms related to using portfolio governance to ensure alignment to strategy.

Posted by Jen Skrabak on: April 02, 2016 11:45 PM | Permalink

Comments (7)

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@Jen: Thanks for the post. You are right in saying that Governance is often misunderstood. In some case, governance is seen as a top down control mechanism and even as an unnecessary overhead. One reason perhaps is the lack understanding of the 'value' that a structured governance brings, the 'wastes' it helps to avoid and the alignment it ensures among organization strategy, portfolios and programs/projects.

Thanks so much Prabhaker. I agree more should be done to advocate the value of governance.

Nice info

Great! Here is an important information on Project Governance. Working for an internationam IT company I used to be in charge of the Project Governance setup for Outsourcing Programs and Portfolios. It is key here to distinguish internal governance from external governance with the Customer (the one that enable the management of the common expectations).
I fully agree with you when you say Governance is misunderstood. As PMO Manager and responsible for the Program Governance implementation I have had to "sell" it to all levels of the Customer organization.
So your article is and will be more than important for all PMs especially for the program/project alignment with the business strategy.
This is a domain I teach to my Master students in System Integration & Project Management as a key success factor for project achievement.

Thank you for sharing your thoughts, Hemant and Phillippe. Good add on adding that it's important to sell the importance of governance, the right oversight and decision making is critical to the success of portfolios, programs, and projects.

Thanks,

Much more should be communicate about Governance

Thanks for sharing!

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