By Victor S Mutonga
Worldwide, organizations often struggle with wasted resources, misaligned priorities, and projects that fail to deliver real value.
Many leaders believe the solution lies in project governance while overlooking the critical factor that establishes the project governance, being your portfolio governance.
Before organizations can hold project governance accountable and responsible for project success, we must establish a strong project portfolio governance to provide the much-needed strategic direction, resource optimization and transparent decision making on the program and project level.
In my previous article, i discussed how organizations fall into the sunk cost fallacy – continuing failing projects simply because they already invested too much. Solution? Making smarter, data driven decisions and focusing on future value rather than past investments.
However smart decision-making doesn’t happen in isolation, it requires a structured Project Portfolio Governance framework that ensures organizations invest in the right initiatives from the start, and this is where Portfolio Governance plays vital role
The big question is, What is Project Portfolio Governance? Project Portfolio Governance is a structured framework of decision-making, oversight, and accountability that ensures projects and programs within a portfolio are aligned with organizational’s strategic objectives. It establishes policies, processes, defines roles to guide project and program selection, prioritization, funding decisions, risk management, performance management etc.
The Project Portfolio Governance determines, which projects and programs receives funding, how resources are allocated across a portfolio of projects and programs, how success looks like through performance metrics and KPIs, how risks are identified and mitigated before escalation takes place.
In essence the project portfolio governance ensures that organizations choose the right battles before investing resource. Meaning without it, projects and programs operate in silos, high chances of resources wastage, and strategic objectives gets lost in execution inefficiencies.
So, lets dive into how project portfolio governance drives accountability at all three levels
A strong project portfolio governance structure ensure accountability flows from top down – portfolio oversight to program and project execution & vice versa. Without Project Portfolio Governance, resources will be wasted in low value initiatives that do not fully align with organization’s long-term plans. However, when Project Portfolio Governance Board is in place, on a quarterly or when necessary, a review and reprioritization projects and programs based on strategic impact, risk exposure, ROI, urgency, and resource availability etc happens. The question what, when, and how is answered
At most, project managers are blamed for projects failures, whilst the problem could lie on the portfolio level as that sets the tone. Establishing clear accountability structures such as Portfolio Governance Boards and Project/Program Steering Committees (PSC), ensures that decisions are made at the right level and on time. A lack of project portfolio governance will result in departments or projects competing for limited resources, be it physical, human or financial in a sporadic manner, causing chaos, conflicts and inefficiencies. When a Project Portfolio Governance is in place, fair, data driven resource allocation is done in a structured manner to the most critical initiatives, and here you should remember your project prioritization framework, and how your projects are scoring, as this process is iterative.
Organizations oftenly detect project time and cost overruns, operational risks too late, leading to financial losses. Again, since project portfolio governance establishes the rules of engagement way early before projects hits the ground, proactive risk identification, monitoring and mitigation allows for early intervention, reducing costly project failures. Often at times, great initiatives fail before they even reach the ground level execution, due to how they are conceived which is directly linked to the Portfolio Governance in place.
So lets paint the picture on how everything fits together.
If you did not know, Projects do not exist in isolation. They are the building blocks that enable an organization to achieve its strategic objectives. So, for Project Governance to be effective organizations will need a tiered structure
Portfolio Governance
Focus: strategic oversight, funding decisions, value realization. The key players will be the Portfolio Manager, Portfolio Governance Board (PGB) – mostly formed by EXCO, the Portfolio Management Office (PfMO) if you have any. Decisions: Approves/Rejects projects and programs, allocates funding, aligns project and programs with organizational strategy. This is where your Strategy Execution is governed and measured
Program Governance
Focus: Coordination of multi-related projects for broader benefits, Key players are Program Managers, Program Management Office (PgMO) Program sponsors, Program Steering Committees (PSC) and Business Unit Heads. Decisions: managing interdependencies between these related projects within the program, ensuring benefit realization, risk management done at their program level. Program governance ensures that your initiatives with a shared strategic outcome are cohesively managed to maximize efficiency, reduce redundancy, final improving benefit realization
Project Governance
Focus: On the ground-level execution governance of individual projects. Key players are Project Managers, Project Management Office (PMO) Project Sponsors, Project Steering Committee (PSC) and Team Leads. Decisions: Managing Scope, budget, time, risk, quality, stakeholder expectations etc. Disciplined execution lives here
In finishing off, this three-layered ecosystem is not meant to operate in silos, but rather to form an integrated ecosystem. Decisions at the Portfolio Level define the strategic intent, the Program Level ensures that the intent is coordinated and optimized for maximum return, and the Project Level delivers the actual outcomes that contributes to the strategic success.
Try and embed this in your organization and watch for results
The shift from sunk costs to smart decisions requires organizations to move from reactive project governance to proactive project portfolio oversight, creating a project portfolio governance ecosystem that balances strategic priorities, financial prudence and operational efficiency.
Today, i will leave you with few questions below:
Is your Project Portfolio Governance Strong enough?
Are the Governance Decisions based on strategy and project portfolio management processes or internal politics?
In June, let’s talk about Project, Program and Portfolio Management Offices (PMOs), PgMOs and PfMOs
*Victor S Mutonga is Certified PfMP, PgMP, PMP, PMO – CP and PMI-SP Professional and a recognized expert in Project Portfolio Management and Strategic Execution. He is currently in the employment of Debmarine Namibia. The views expressed herein are his own!
