A survey of Australian chief executives and other senior managers lays the blame for failed major projects such as big-ticket infrastructure items on poor project governance.
New research by Sydney consultancy Caravel Group and Melbourne Business School has found major project governance teams are dysfunctional, lack the skills and experience to govern major projects, exhibit poor corporate behaviour, are conflict-ridden and rarely have their performance measured or reviewed.
Caravel Group director and chief executive Paul Myers says the survey of approximately 100 public and private sector board, CEO and senior management-level project participants, across a range of industries, had yielded some stark assessments.
“We found that project success rates in Australia are on average 40% to 50%. When coupled with the time and cost overruns, one can only wonder what the cost is to the GDP,” Mr Myers says.
Melbourne Business School associate professor Graeme Cocks says the survey challenged traditional explanations of where major projects came unstuck.
“Blame for failure has traditionally been laid at the door of the project management team. However, it appears that most of the fault actually lies with the project governance team.” he says.
Project management teams focus on creating the deliverables in accordance with the scope of work. They manage the people, money and resources and all other facets for delivery, and report to the project governance team.
Aside from monitoring progress and supporting the project management team, the project governance team should focus on the strategic intent of the project, and delivery of the value promised in the business case.
Project governance, therefore, encompasses authority, accountability, stewardship, leadership, direction and control.
“Too many governance teams are stacked with ‘stakeholders’ to secure buy-in, rather than people with proven ability to govern projects,” associate professor Cocks says. “These people are often heavily conflicted, and have no accountability for their project governance role.”
When measured against nine basic elements for successful project governance, the respondents deliver an average score of only 24%.
“The most glaring omission is lack of an approved governance plan — these were absent 87% of the time,” Mr Myers says.
Teams also performed badly in ensuring zero conflicts of interest, adequate delegated financial authority, and understanding the difference between consultants, and solution and project delivery SMEs.
“Our findings demonstrate that a major rethink and reform of project governance practices in Australia is required,” Mr Myers says.