North West branch Annual General Meeting & "Lessons on Governance"

North West branch Annual General Meeting & "Lessons on Governance"
11th May 2016
APM North West Branch
Preston

1. Programme governance Mike Ward – Consulting Director

2. Contents Programmes Context P rogramme governance 6 e lements of governance Three examples of applying the model to programme governance Concluding remarks References

3. Programmes Programmes exist within an organisation’s environment alongside other (non-project and programme) activities. It is a crucial requirement of good governance to differentiate between activities that are geared to ‘running the business’ i.e. operations, from those activities that are designed to ‘change the business’ – namely the projects and programmes. Programmes are temporary management structures designed to help organisations achieve specific objectives [APM]. Programmes deal with outcomes; projects deal with outputs [MSP © ]. MSP © is a Registered Trademark of AXELOS Limited

4. Context – the challenge Do we really need another layer of governance? The project delivers products to time, cost, scope, risk, quality, benefit The portfolio ensures that the prioritised investments (projects and programmes) will deliver the business strategy The programme creates the environment (or capability ) in which to deliver agreed benefits as defined by the Blueprint

5. Programme Governance ISO 21500 Governance is the framework by which an organisation is directed and controlled. Project/Programme governance includes but is not limited to those areas of organisational governance that are specifically related to project/programme activities APM The governance of project/programme management concerns those areas of corporate governance that are specifically related to project/programme activities. Effective governance of programme management ensures that an organisation’s portfolio is aligned to the organisation’s objectives, is delivered efficiently, and is sustainable. Governance of programme management also supports the means by which the board and other major stakeholders exchange timely, relevant and reliable information Research has shown that a governance process is at its most effective when all interested parties are actively involved and can communicate constructively in an open manner Institute of Civil Engineers: Client Best Practice Guide “Programme Governance is the framework or system through which programmes are conceived, authorised , controlled and seen to deliver their change outcomes and benefits”

6. 6 elements of governance Behaviour and Relationships : enabling clarity of roles and with it accountability and incentives to perform; being clear on stakeholders to be engaged; engendering collaboration and living the core values and behaviour. Behaviours and relationships Is there a shared understanding within the Sponsoring Group of what the objectives of the programme are? Is the Sponsoring Group fully supportive of the SRO? Has the Sponsoring Group demonstrated committed to the programme? Is the programme aligned with the strategic objectives ?

7. Key points on other 5 elements of governance

8. Example 1: a greeing the programme lifecycle Show interfaces to project lifecycle

9. Example 2: defining the steps

10. Example 3: defining the programme IAAP

11. Concluding remarks Thee word assurance is used a lot in everyday language and can mean different things to different people. It is important that everyone involved is clear on what is meant by assurance for their own organisation, and where assurances come from. Do we really know what we think we know? Governance provides the framework to find out. Assurance Provides Confidence/evidence /Certainty To Management That What needs to be happening is actually happening

12. References Managing Successful Programmes (MSP) – AXELOS Limited Management of Risk ( MoR ) - AXELOS Limited Managing Successful Projects with PRINCE2 - AXELOS Limited Directing Successful Projects with PRINCE2 - AXELOS Limited Management of Portfolios ( M_o_P ) - AXELOS Limited A Guide to Integrated Assurance – APM Directing Change – APM Project Management Body of Knowledge 6 th Edition - APM Factors in Project Success – APM UK Corporate Governance Code – Financial Reporting Council A Guide to the Project Management Body of Knowledge (PMBOK Guide) 5 th Edition – Project Management Institute Guidance on Project Management (ISO21500) – ISO Improving Infrastructure Delivery – HM Treasury Common Causes of Project Failure 2012 – Cabinet Office Major Projects Approvals and Assurance G uidance – Infrastructure and Projects Authority OGC Gateway Review for Programmes & Projects – Office of Government Commerce Assurance for High Risk Projects 2010 – National Audit Office Initiating Successful projects 2011 – National Audit Office Assurance for Major Projects 2012 - National Audit Office Major Projects Authority: assurance toolkit

13. Governance of Project Management Roger Garrini 16 APM Governance SIG

14. APM Governance SIG 17

15. Governance SIG Objectives Be the UK focus Advance understanding Contribute to good practice Influence national and international standard making authorities Influence those operationally responsible Develop ambassadors and exemplars of excellence 18 ….in the governance of project management (change) Activities Engagement – CxO level as well as APM members Conferences and Seminars Publications Influence of, and contribution to, standards

16. Directing Change 2 nd edition 2011 19 Co-Directing Change 2007 (being updated) Sponsoring Change 2009 Free to APM members at www.apm.org.uk/memberdownloads GovSIG Publications New Agile Directing Agile Change (being developed)

17. What is Governance of Project Management / Change? 20

18. Definitions ‘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 ’ Organisation for Economic Co-operation and Development OECD Principles of Corporate Governance 2004 www.oecd.org 21 “Governance of project management refers to the set of policies, functions, processes, procedures and responsibilities that define the establishment, management and control of projects, programmes and portfolios” APM BoK 6 th Edition Linked but separate from Project Governance! ( management framework within which project decisions are made and accounted for)

19. Overall Context 22 22 Portfolio Mgmt – Definition & Monitoring Operational Planning & Mgmt Programme and Project Mgmt of authorised P&Ps Operational Mgmt o f on-going operations (BAU) Organisational and External Resources delivering tasks Vision Operations Governance Programme / Project Governance 22 Governance of Project Management Corporate Governance

20. 23 “No such thing as failed projects, only failed governance” Andrew Bragg – Former CEO APM Main reasons for project failure are the same as 30 years ago

21. 24 “poor performance results in organisations wasting $109m in every $1bn invested in projects”   “high performing organisations successfully complete 89% of their projects, while low performers complete only 36% successfully” “Fit-for-purpose governance strongly influences project and programme success”   “higher performance is correlated with higher maturity ”. “there is a highly visible disconnect between Executive Teams and Project Managers ” “C-Suite are often missing in action ”. Misalignment of ‘Run the business’ and ‘Change the business’ results in ‘wastage’ of resources “only 62% of programmes have an established or mature link between programme objectives and organisational strategy and only 50% of the respondents felt that the boundaries of their organisations portfolio were clearly defined and decision making well supported ” “Just 42% of companies reported having high alignment of projects and organisational strategy”   “Companies with high degrees of alignment have more successful projects (69%) compares with companies with low alignment (45%)”   “80% of the projects with active sponsors reported a success rate of 75%, which is much higher than the average”   “actively engaged sponsors is the top driver of project success”   Sources: 2014 PMI Pulse Survey PwC 2104 Global Survey PwC 2012 Global Survey APM Factors for Project Success 2014 GovSIG Benchmarking “only 38% of programmes had established processes to identify benefits at the outset”   “only 20% had robust benefits measurement processes in place during implementation” “lower value projects are more successful than large more complicated projects” “of the success factors, ‘delivery to time’ showed the least success” “62 % of portfolios do not have benefits in the sponsor’s personal performance targets” “Only 57% of sponsors had received sponsor training”

22. Why is Good Governance important? Key success factor for project outcomes (from APM Study) C ompetitive advantage for businesses Provides for internal controls E xternally , it reassures stakeholders that their money is being invested well Good governance is increasingly demanded by shareholders, government and regulators To comply with external regulations and legislation (e.g. the UK Corporate Governance Code and Sarbanes-Oxley in the USA). 25

23. Governance of project management p rinciples 26

24. Directing Change from APM Portfolio direction S ponsorship PM Capability Disclosure and reporting 27

25. Directing Change Principles - 1 28

26. Directing Change Principles - 2 29

27. Requires competent people in every role 30 Even if we have “good people” are they fully competent in the project role and “game” that we expect them to “play ”?

28. Sponsoring Change

29. 32 Sponsoring Change: A Guide to the Governance Aspects of Project Sponsorship, APM 2009 What would you expect from the project sponsor?

30. Why does every project need a sponsor? Separation of Decision Making Objectives, appointment of the PM, Start/ stop Oversight of the PM function Challenge Accountability for benefits After the project has delivered Stakeholder Management Senior level

31. Attributes of Successful Project Sponsorship 34 Project Sponsor effectiveness = best single predicator of project success or failure Appoint a named Sponsor early in the project lifecycle Critical success attributes: Support Continuity Alignment Personal Attributes: Understanding Competence Credibility Commitment Engagement

32. Co-Directing Change

33. Co-owned Projects Guidance on Context Benefits/pitfalls Principles Key Questions

34. Summary - Effective Governance Ensure that an organisation’s project/change portfolio is aligned to the organisation’s objectives and is delivered efficiently (maximising value ) E nsure that the organisation is aware of risks, minimises project failures and maximises the beneficial outcomes (value) from their overall portfolio of projects in a sustainable and transparent manner It also supports the means by which the corporate board and other major project stakeholders are provided with timely, relevant and reliable information. GovSIG strapline : “Achieving Change Successfully with Confidence, Control and Transparency”

35. Corporate governance APM North West branch AGM MAY 2016

36. Corporate Governance What is corporate governance? Corporate governance is the system by which companies are directed and controlled. The purpose of corporate governance is to facilitate effective, entrepreneurial and prudent management that can deliver the long-term success of the company . Boards of directors are responsible for the governance of their companies . 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 . Source: UK Code of Governance, Financial Reporting Council, September 2014.

37. Corporate Governance – Main Principles Leadership Every company should be headed by an effective board which is collectively responsible for the long-term success of the company. There should be a clear division of responsibilities at the head of the company between the running of the board and the executive responsibility for the running of the company’s business . No one individual should have unfettered powers of decision. The chairman is responsible for leadership of the board and ensuring its effectiveness on all aspects of its role. As part of their role as members of a unitary board, non-executive directors should constructively challenge and help develop proposals on strategy . Source: UK Code of Governance, Financial Reporting Council, September 2014.

38. Corporate Governance – Main Principles Effectiveness The board and its committees should have the appropriate balance of skills, experience , independence and knowledge of the company to enable them to discharge their respective duties and responsibilities effectively. All directors should be able to allocate sufficient time to the company to discharge their responsibilities effectively. The board should be supplied in a timely manner with information in a form and of a quality appropriate to enable it to discharge its duties . Source: UK Code of Governance, Financial Reporting Council, September 2014.

39. Corporate Governance – Main Principles Accountable The board should present a fair, balanced and understandable assessment of the company’s position and prospects. The board is responsible for determining the nature and extent of the principal risks it is willing to take in achieving its strategic objectives. The board should maintain sound risk management and internal control systems. The board should establish formal and transparent arrangements for considering how they should apply the corporate reporting, risk management and internal control principles and for maintaining an appropriate relationship with the company’s auditors . Source: UK Code of Governance, Financial Reporting Council, September 2014.

40. Corporate Governance – Main Principles Remuneration and Shareholder Engagement R emuneration Executive directors’ remuneration should be designed to promote the long-term success of the company . There should be a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of individual directors. Shareholder Engagement There should be a dialogue with shareholders based on the mutual understanding of objectives . The board as a whole has responsibility for ensuring that a satisfactory dialogue with shareholders takes place. The board should use general meetings to communicate with investors and to encourage their participation . Source : UK Code of Governance, Financial Reporting Council, September 2014.

41. Board Tasks 4 key tasks of a Board Establish vision, mission and values Set strategy and structure Delegate to management Exercise accountability to shareholders and be responsible to relevant stakeholders (Source: Standards for the Board, Institute of Directors)

42. Board Tasks Set strategy and structure Review and evaluate present and future opportunities, threats and risks in the external environment; and current and future strengths, weaknesses and risks relating to the company. Determine strategic options, select those to be pursued, and decide the means to implement and support them. Determine the business strategies and plans that underpin the corporate strategy. Ensure that the company's organisational structure and capability are appropriate for implementing the chosen strategies. Determine the company's appetite for risk. Delegate to management Delegate authority to management, and monitor and evaluate the implementation of policies, strategies and business plans. Ensure that internal controls are effective. Communicate with senior management. (Source: Standards for the Board, Institute of Directors)

43. Board Tasks Set strategy and structure Review and evaluate present and future opportunities, threats and risks in the external environment; and current and future strengths, weaknesses and risks relating to the company. Determine strategic options, select those to be pursued, and decide the means to implement and support them. Determine the business strategies and plans that underpin the corporate strategy. Ensure that the company's organisational structure and capability are appropriate for implementing the chosen strategies. Determine the company's appetite for risk. Delegate to management Delegate authority to management, and monitor and evaluate the implementation of policies, strategies and business plans. Ensure that internal controls are effective. Communicate with senior management. (Source: Standards for the Board, Institute of Directors) Further Guidance in APM’s “Directing Change”

44. Board Meeting 2016 Business as usual meeting

45. Board Meeting 2017 Forward looking meeting

46. Strategic Planning – Board role Stocktake (including SWOT) Horizon scan (including PESTLE) Determine direction of travel Develop strategic plan and enabling strategies (including people/processes/structures) Monitor implementation Repeat Project/Programme Management

47. Strategy implementation Well governed and structured approach which supports delegation of responsibilities Task and finish groups as opposed to formal Board Committee enshrined in the Articles or Constitution Separates BAU and change activities – allows single focus and discrete resourcing at operational level and separation of agenda items at Board level Provides regular and formal oversight arrangements Use established risk based methodologies for effective filtering of key risks/issues Provide succinct RAG based reporting ( CRaB ) How Project/Programme Management can support Boards

48. QUESTIONS AND ANSWERS?

49. This presentation was delivered at an APM event To find out more about upcoming events please visit our website www.apm.org.uk/events