Project Portfolio Management Governance refers to the framework that guides portfolio management processes. This model defines the roles and responsibilities of individuals involved in the decision-making processes in project execution and management. It also outlines the systems, procedures, and mechanisms used to control and manage projects within the portfolio.
2. Structure of Governance Model
In setting up a governance model, there are several structures you might have to implement, including but not limited to: Steering Committees, Governance Boards, Project Management Office (PMO), and other relevant organs depending on the specific needs and layouts of your organization.
2.1 Steering Committee:
A steering committee is typically made up of individuals in management positions who make key strategic decisions for the organization. This committee is involved in the high-level overview of projects and has a responsibility to ensure they align with the organization’s objectives.
2.2 Governance Boards:
Governance boards specialize in making decisions at a tactical level to ensure an efficient and smooth implementation of strategies agreed by the steering committee.
2.3 Project Management Office:
PMO ensures consistency in the way projects are managed and delivered within the organization. They provide support, guidance, and best practices for project management across the organization.
3. Governance Policies
Governance policies are constituted to guide the behavior of individuals involved in the portfolio management processes. These policies should be adhered to strictly ensure the efficiency of portfolio management at all levels.
4. Defining Roles, Responsibilities, Rights, and Authorities
Clear articulation and understanding of the roles, responsibilities, rights, and authorities are crucial for efficient operation in any governance model. This involves clearly stating who has the authority to make specific kinds of decisions, who is responsible for executing which tasks and explains whose role is to provide the needed support.
Below is a basic example of assigning roles and responsibilities:
| Roles | Responsibilities |
|---|---|
| Board of Directors | Strategic direction, approval of large projects. |
| Steering Committee | Approval of project recommendations, strategic advice. |
| PMO | Day-to-day portfolio management, project support. |
5. Suporting Effective Decision-making and Achieving Strategic Goals
Explicitly defining the structure, policies and roles of your governance model helps clarify:
- Who makes decisions.
- What decisions they can make.
- How they make those decisions.
- When those decisions should be made.
- What information they need to make those decisions.
- How those decisions are communicated and implemented.
By following this framework, you can ensure that your organization’s strategic goals are front and center in all decision-making processes.
In conclusion, a well-formulated governance model can aid in creating a clear direction for management processes for projects, ensuring that the organization’s strategic goals are met. For Portfolio Management Professional (PfMP) exam takers, understanding the need for, and the structure of, a governance model, can significantly aid in scoring well on sections specific to governance.
Practice Test
True/False: A governance model in portfolio management includes elements like steering committees, governance boards, policies, and decision-making roles.
- Answer: True
Explanation: The structure of the governance model includes numerous elements, including steering committees, governance boards, policies, and decision making roles, which collectively aim to support effective decision making and achieve strategic goals.
The steering committee’s primary function in governance structure is:
- a) Marketing
- b) Sales
- c) Finance management
- d) Ensuring strategic alignment
Answer: d) Ensuring strategic alignment
Explanation: The steering committee ensures that the project or portfolio aligns with the organization’s strategic goals and objectives, making strategic alignment their primary function.
True/False: The rights and authorities in a governance model remain constant and do not change with strategic goals.
- Answer: False
Explanation: The rights and authorities in a governance model are dynamic and can change according to the strategic goals of the organization.
The aim of setting up a governance model is to:
- a) Promote decision making
- b) Sell products
- c) Increase employee morale
- d) Limit organizational growth
Answer: a) Promote decision making
Explanation: The purpose of a governance model is to support effective decision making and help achieve strategic goals, not to limit growth or enhance staff morale.
True/False: Steering committees in a governance model are responsible for tactical decision-making.
- Answer: True
Explanation: Steering committees play an important role in tactical decision-making, ensuring the alignment of projects with strategic objectives and overall business goals.
Setting up a governance board is optional in creating a governance model.
- a) True
- b) False
Answer: b) False
Explanation: A governance board is a crucial component of a governance model. It oversees the overall running of the organization, making crucial decisions and setting policies.
When establishing a governance model, one of the factors to consider is:
- a) Employee motivation
- b) Stock price
- c) Decision-making roles and responsibilities
- d) None of the above
Answer: c) Decision-making roles and responsibilities
Explanation: When establishing a governance model, the focus goes beyond finances and staff morale, emphasizing the roles, authorities, and decision-making responsibilities that drive organizational success.
True/False: In a portfolio structure, a governance board is synonymous with a steering committee.
- Answer: False
Explanation: In a portfolio structure, a governance board and a steering committee have distinct roles. A governance board oversees the entire organization, while a steering committee ensures alignment of projects with strategic objectives.
Decision making in a governance model:
- a) Is exclusively carried out by the management
- b) Is the responsibility of the entire organization
- c) Is solely based on experience
- d) Is usually outsourced to external consultants
Answer: b) Is the responsibility of the entire organization
Explanation: Decision making in a governance model is distributed across various roles and responsibilities, and is not strictly confined to the management.
True/False: Governance models recommend decision-making rights and authorities to people based on their job titles.
- Answer: False
Explanation: It’s not about job titles or hierarchy in the organization, but rather roles and responsibilities. The aim is to streamline decision making to effectively support the achievement of strategic goals.
Interview Questions
What is the importance of defining and establishing a governance model for portfolio management?
Establishing a governance model in portfolio management helps in ensuring that appropriate decision-making structures, processes, and controls are in place to guide the achievement of strategic goals and objectives.
What are the key components of a governance model in portfolio management?
The key components of a governance model in portfolio management include the structure (e.g., steering committees, governance boards), policies, decision-making roles, responsibilities, rights, and authorities.
What is the role of steering committees in a governance model for portfolio management?
Steering committees play a crucial role in providing strategic direction, oversight, and decision-making guidance for the portfolio management process.
What is the function of governance boards in a portfolio management governance model?
Governance boards are responsible for reviewing and approving key portfolio decisions, ensuring alignment with strategic objectives, and monitoring portfolio performance.
How do policies contribute to effective governance in portfolio management?
Policies help in setting clear guidelines, standards, and rules for portfolio management activities, ensuring consistency, compliance, and accountability.
What are the responsibilities of decision-making roles within a governance model for portfolio management?
Decision-making roles are responsible for making informed decisions, prioritizing portfolio initiatives, allocating resources effectively, and managing risks to achieve strategic goals.
How do rights and authorities impact decision-making in portfolio management governance?
Rights and authorities define the level of decision-making power, approval processes, and accountability within the portfolio management framework, enabling efficient and effective governance.
Why is it essential to align the governance model with organizational strategic goals in portfolio management?
Aligning the governance model with organizational strategic goals ensures that decision-making processes and structures support the achievement of desired outcomes and contribute to overall success.
How can effective governance support the realization of strategic goals in portfolio management?
Effective governance provides the necessary oversight, direction, and control mechanisms to ensure that portfolio initiatives are aligned with strategic objectives, risks are managed, and resources are optimized for success.
What role does the governance model play in enhancing stakeholder engagement and communication in portfolio management?
The governance model facilitates stakeholder engagement by defining communication channels, decision-making processes, and roles/responsibilities, ensuring transparent and inclusive participation in portfolio activities.
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