When Governance Goes Wrong: Consequence of Poor Project Governance

Project governance is one of the most critical elements to project success. It helps give project managers direction, clarity and confidence to make decisions that contribute to project success and produce value for the organisation. 

We always like to talk about the benefits of good project governance, but what happens when it is not done right? Like anything, halfhearted project governance can be detrimental to both teams and projects. That’s why we are here to warn you of the five consequences of poor project governance.

What is Project Governance and what are its benefits?

Project governance is the systems and processes that define responsibility, accountability and decision-making mechanisms over a project. It is a critical component for project success that enables teams to have the clarity and confidence to make the right decisions.

Historically, project governance literature and discourse has been dominated by traditional linear project frameworks. As a result, project governance has often become synonymous with bureaucratic rules and stage-gate processes, confining project governance to its outcomes and techniques rather than its intended purpose.

While procedures and structures help achieve their purpose, project governance is more focused on providing frameworks that enable organisations to make ethical, effective, and strategically aligned decisions that consider all relevant stakeholders and ensure project objectives can be achieved.

The benefits of good project governance include its ability to:

• Provide clarity and accountability over projects
• Improve project scope management
• Enable proper project risk and issue management
• Streamline project processes, communication and decision-making

Read more about project governance benefits here.

Consequences of Poor Governance

So now that we have a better image of project governance and the benefits of good project governance, what are some of the consequences when it is not done well?

Untimely and uninformed decision-making

“There are two key elements of good governance. The quality of the decision made, and the quality of the team making those decisions. The two work hand in hand.”, says Ken Lowe, the Managing Director of Systemix.

It can be argued that project governance is all about facilitating decision-making. But that does not come as a given. Without a proper project governance framework, project managers can either take too long to make decisions or make decisions too quickly. 

Often, project governance frameworks are arbitrarily drafted onto an organisation’s processes without much consideration of their pre-existing context, needs and cultures. This often results in overly complex and unnecessary steps that not only frustrate project teams but also do not help in delivering value and making better decisions. 

On the other hand, project governance frameworks can also be incomplete and fail to consider the broader influencing elements, particularly external factors such as stakeholders and market forces. This leads to frameworks that do not give managers enough accurate information to make informed decisions. 

In a time where agility and accuracy are of the essence, a half-baked project governance framework can lead to costly mistakes and missed opportunities. The point of good governance is not to just make rules but to give managers the confidence to make better decisions faster.

Project delays and overruns

Linked to the prior mentioned consequence, the impact on decision-making often leads to project delays and cost overruns. When project governance is overly complex, project governance can easily devolve into a matter of checking boxes, passing stage gates and getting approvals that eat into team agility and responsiveness to ongoing changes.

Similarly, when project governance is overly simplified, unexpected and unaccounted for issues can arise that can further contribute to project delays, cost overruns and even impact the scope of the project. 

One of the key contributors to this problem is often ambiguity in project objectives. Though projects always have a certain degree of uncertainty, there should never be any ambiguity in what it is trying to achieve. Ambiguity in projects means that teams do not know what they are trying to achieve or have different interpretations of what should be achieved. 

Unresolved ambiguity is one big contributor to project failure. Why waste precious resources on projects that are not clearly defined? Good project governance removes that ambiguity by making sure projects are not only done the right way but the right projects are selected to achieve the right objectives.

Breakdown in communications and collaboration

A big factor contributing to project success is how well an organisation or team can manage people. Projects always involve a certain degree of relational complexity, with different agendas and perspectives all colliding in the project space.

Without a proper governance structure over project objectives, role distributions, responsibilities, communication and collaboration, projects can quickly unravel into unpretty turf wars. Organisations and teams may even get pushed into their independent siloes and politics start to meddle with decision-making, making teams lose sight of the real project objectives.

Good project governance creates the proper cultures and environments that encourage people to share and discuss their opinions openly, but once a decision has been made in line with strategic objectives and priorities, ensures teams can commit, respect and follow those decisions. Good project governance does not merely focus on who is making the decisions, but on why and how those decisions are being made to minimize conflict.

Additional reading: Top 5 Signs of Poor Project Governance

Increased exposure to risks

With increasing expectations for accountability and transparency in organisations, making sure all project processes and outcomes are in line with legal, social and environmental compliances is critical. But consumers want more than mere compliance. In fact, research shows that over 90% of consumers are more likely to be loyal to brands if they have complete supply chain transparency.

As mentioned prior, good governance is about helping an organisation make ethical, effective, and strategically aligned decisions that consider all relevant stakeholders. It takes into account the economic, environmental and social impacts of project activities and outcomes. If your frameworks are too limited and short-sighted, an organisation can expose itself to unnecessary financial and reputational risks. 

Additional reading: Sustainable project management explained

Stakeholder engagement and trust falls apart

Improper governance frameworks that do not properly consider stakeholder management can lead to sporadic engagement with stakeholders that can impact the overall project success. If teams do not know what is expected, how will they deliver the intended value of the project?

Successful project governance frameworks make sure that all the right stakeholders are engaged to make sure their requirements are met, expectations are set and trust is maintained. When managers and teams are confident in what is expected of them, they can confidently make decisions to achieve said expectations. Projects will also be less likely to miss the mark at completion and waste valuable time and resources in the process.

Good governance does not only maximize activities and resources, it optimizes them to make sure teams are making the most out of what they have.

Achieve project governance excellence with pmo365

Our team at pmo365 know just how important good project governance is but we are also aware that achieving it may not be simple, especially if you do not have the right PPM solution on your side. Check out how our PPM solution can automate, analyse, optimise and visualize your project governance activities so your teams can focus on making better decisions.
If you want to know more about project governance in different methodological contexts, make sure to check out our post on Project Governance in Agile.