Help Guide: The Importance of Good Project Governance and Decision Support Processes
Good project governance and decision support processes play an integral role in determining the success or failure of a project, whether it’s a system replacement or a business transformation. In essence, they form the backbone of the change, providing clarity, direction, and the mechanisms to assess and adjust as necessary.
The Consequences of Inefficient Decision Control Processes
Denver International Airport’s Baggage System Project
Background: The plan for DIA was to create the most efficient and advanced airport in the world. Central to this vision was an integrated, automated baggage handling system. This system was to connect all airlines and terminals, transporting bags between ticket counters, planes, and baggage claims seamlessly.
Failures in Governance Processes:
Lack of Stakeholder Consultation: Key stakeholders, especially the airlines that would use the system, were not adequately consulted. Had their input been solicited, they might have identified flaws in the proposed system or advised a more gradual implementation.
Rapid Changes without Adequate Review: After initial plans, DIA officials and the main contractor decided to expand the system’s complexity. The new plan involved automating the entire baggage handling, as opposed to just the outbound system. This decision was made without fully considering the risks and challenges.
Poor Risk Management: The inherent risks of creating a revolutionary system using untested technology were severely underestimated. A more thorough risk assessment could have highlighted potential pitfalls and set more realistic timelines and budgets.
Inadequate Testing: The system was so behind schedule that comprehensive testing was delayed. When the testing finally commenced, numerous issues emerged, including bags being misrouted, damaged, or simply lost. These problems should have been detected and rectified in the testing phase well before the proposed launch.
Unrealistic Deadlines: The project’s timeline was ambitious from the start. The push to adhere to strict deadlines, even in the face of clear issues and setbacks, only exacerbated the problems.
Outcome: Due to these governance failures, the baggage handling system never functioned as intended. The airport’s opening was delayed by 16 months, leading to immense costs, both financially and in terms of the airport’s reputation. The project went massively over budget, with the baggage system itself costing over $600 million. In the end, most of the automated system was abandoned in favour of traditional, manually-operated baggage systems.
The Denver International Airport debacle underscores the importance of sound governance, clear communication, stakeholder engagement, and the willingness to re-evaluate and adjust project objectives and timelines based on emerging realities.
Background: HealthCare.gov was a cornerstone of the U.S. Affordable Care Act (ACA). Launched in October 2013, the website was designed to be an online marketplace where U.S. citizens could compare and purchase health insurance. Given its central role in ACA’s implementation, the site’s successful operation was crucial.
Failures in Governance Processes:
Scope Complexity: The scale and complexity of integrating multiple federal databases, including those from the IRS, DHS, and SSA, into one seamless system was perhaps underestimated. An inadequate understanding of this complexity led to poor architectural decisions and challenges in execution.
Inadequate Stakeholder Communication: Multiple contractors and federal agencies were involved in the creation of HealthCare.gov. However, there was no single entity or group responsible for end-to-end system testing. This lack of coordination led to integration issues and miscommunication about responsibilities and deliverables.
Rapid Changes & Last-Minute Decisions: As the launch date approached, significant design changes were still being made. For instance, the decision to require users to create an account before browsing insurance plans led to system overloads.
Insufficient Testing: While individual modules were tested by the respective contractors, end-to-end testing of the entire system only commenced a couple of weeks before the launch. Such a short window was inadequate for a project of this magnitude.
Unrealistic Timelines & Political Pressures: The political significance of ACA meant that delays in launching HealthCare.gov could have broader implications. This pressure possibly resulted in the push to launch even when clear indicators suggested the system wasn’t ready.
Outcome: When HealthCare.gov was launched, users experienced slow response times, error messages, and crashes. Only a fraction of the expected users could register in the initial days. The technical issues became fodder for political debate, casting shadows on the ACA’s broader goals. While the website’s issues were eventually addressed, the botched launch not only led to approximately $700 million in total costs (well over initial budgets) but also undermined public trust in the ACA’s implementation.
The HealthCare.gov example underscores the need for clear project governance, especially in large, politically charged projects. It also emphasises the importance of comprehensive system testing, stakeholder coordination, and the flexibility to adjust launch timelines based on system readiness.
The Power of Efficient and Effective Project Governance
Apollo Moon Landing Program
Background: Initiated by President John F. Kennedy’s challenge in 1961, NASA’s Apollo program aimed to land an American astronaut on the Moon and return them safely to Earth before the end of the 1960s. Given the enormity and novelty of the mission, excellent governance was pivotal.
Excellence in Governance Processes:
Clear Vision & Objectives: JFK’s proclamation provided a clear, unequivocal objective for the Apollo program: “landing a man on the Moon and returning him safely to the Earth.” This clarity aligned every subsequent decision and effort towards that singular goal.
Strong Leadership & Accountability: James Webb, the NASA administrator during the critical years of the Apollo program, exhibited strong leadership. Moreover, clear lines of accountability were established. Program managers had well-defined responsibilities and the autonomy to make decisions within their domains.
Iterative Approach: Apollo missions were structured in a series of incremental steps, each building upon the lessons from the previous. This allowed NASA to test various components and processes in stages (like the lunar module, space suits, and docking procedures), ensuring risks were managed and mitigated throughout.
Cross-disciplinary Collaboration: The Apollo program necessitated close collaboration between scientists, engineers, astronauts, and many other professionals. Through centralized governance and clear communication protocols, NASA facilitated interdisciplinary cooperation, ensuring that complex problems were approached holistically.
Robust Risk Management: Despite the tragic Apollo 1 accident, which was a severe setback, NASA implemented rigorous risk assessment and management practices. Reviews and feedback loops were institutionalized to learn from mistakes and continuously improve.
Stakeholder Engagement: NASA maintained transparency with the American public, keeping them informed and engaged through broadcasts, press conferences, and publications. This maintained support and enthusiasm for the mission, even amidst setbacks and immense costs.
Flexibility & Adaptability: The Apollo program was receptive to change based on new information. For example, after the near-disaster of Apollo 13, modifications were made to the design and emergency protocols to ensure the safety of subsequent missions.
Outcome: The Apollo program, culminating with the historic Apollo 11 moon landing in 1969, successfully met its objectives. Beyond the sheer technological marvel, the effective governance and project management practices adopted by NASA played a crucial role in this achievement. The program set new standards for how large-scale, complex projects could be managed and executed, emphasizing the importance of vision, leadership, collaboration, and adaptability.
The Shard Development
Background: Located in Southwark, London, The Shard was envisioned as a “vertical city,” incorporating offices, apartments, a hotel, and public viewing platforms. Given its height and the complex urban setting, the development posed significant challenges, requiring impeccable governance to navigate.
Excellence in Governance Processes:
Clear Vision & Objective: The developer, Irvine Sellar, and the architect, Renzo Piano, had a clear and shared vision of creating an iconic, mixed-use tower that would redefine London’s skyline. This clear objective provided a guiding star for the entire project.
Stakeholder Engagement: Being in the heart of London, the project had numerous stakeholders: local residents, businesses, historic preservation groups, and city officials, to name a few. The development team maintained active engagement, ensuring concerns were addressed, and getting buy-in at various stages.
Risk Management: Given the building’s height and location, there were immense risks related to ground stability, wind dynamics, and even potential terror threats. The governance structure established robust risk assessment and mitigation processes, ensuring each risk was actively managed.
Integrated Teams: Recognizing the complex nature of the project, the governance model fostered close collaboration between various teams, from architects to engineers to construction contractors. This ensured that design decisions were feasible from a construction perspective and that construction challenges were addressed with design inputs.
Financial Prudence: The project faced potential financial setbacks due to the 2008 economic downturn. Effective governance included proactive financial management, securing funding from diverse sources, and maintaining cost controls without compromising on quality or vision.
Regulatory Compliance: The Shard’s construction required compliance with a myriad of regulations, from airspace restrictions due to its height to preserving the sightlines of historic landmarks. The governance structure emphasized adherence to these regulations, preventing potential legal setbacks.
Continuous Monitoring & Feedback: Regular reviews, monitoring, and feedback mechanisms were institutionalized. This ensured that any deviations from the plan were promptly identified and corrected. It also allowed for adaptive changes based on real-time challenges and insights.
Outcome: The Shard was successfully completed in 2012 and quickly became an emblematic part of London’s skyline. The governance mechanisms in place ensured that despite the project’s complexities and potential pitfalls, the vision was realized efficiently, safely, and in line with regulatory and stakeholder expectations. The Shard stands not just as an architectural marvel but also as a testament to effective project governance in large-scale urban developments.
Striking the Right Balance
Finding the equilibrium between establishing controls and giving individuals the freedom to innovate can be challenging. Too much control can stifle creativity and slow the pace, while too little can lead to chaos.
Leading companies, such as Apple, Google and Netflix, strike this balance by having a clear framework that sets boundaries but encourages innovation. For instance, Google’s famous “20% time” policy allowed employees to spend one day a week on projects that weren’t necessarily in their job descriptions, leading to innovations like Gmail and Google Maps.
Strategies for Effective and Efficient Governance
1. Clear Objectives: We wouldn’t normally start journey without knowing the precise destination, whether we’re relying on a map or using a GPS and yet this is often what happens with projects. The destination isn’t clear enough or is open to interpretation, so it wanders off track consuming resources and time without reaching a meaningful endpoint. In some cases the end point even becomes a source of disagreement.
The objectives should be a specific, tangible and timebound reflection of the vision and the why so start from imagining you are already there (what will you hear, see and feel once you are there). Then consider what needs to happen at various points between today and that point in the future to make it happen. Consider what resources you already have and what you will need then how you are going to get them. Most importantly what are you going to do next (the first step).
2. Empowered Teams: In a jazz band, whilst each musician knows the piece’s basic structure, they are given the freedom to improvise. The band leader trusts each member to contribute uniquely to the overall performance. Empowered teams operate in a similar way, bringing their own unique creativity within an overall framework.
Netflix, since its transition from a DVD-rental service to a streaming giant, has consistently been at the forefront of creative content. A significant contributor to its success in content creation and innovation is its unique approach to team empowerment. It operates under a cultural philosophy that emphasises a balance between freedom and responsibility. Rather than micromanaging details, the company hires and retains great people then provides its teams significant autonomy in decision-making. This approach is predicated on the belief that responsible and talented professionals, when given freedom, will often make better decisions than what a centralised management might dictate. Steve Jobs is quoted as saying: “It doesn’t make sense to hire smart people and tell them what to do; we hire smart people so they can tell us what to do.”
3. Stakeholder Involvement: Imagine a famous author attempting to write a sequel to a popular book series, but deciding to take the plot in a completely different direction without understanding the emotional attachment readers have to the characters and the storyline. Despite the author’s good intentions and creativity, this lack of insight into the readers’ expectations may lead to disappointment and poor reception of the new book.
This scenario mirrors Microsoft’s launch of Windows 8. The company, eager to revolutionise their operating system’s interface for a new era, did not fully consider the entrenched preferences and expectations of their extensive user base. They introduced a significantly different user interface without sufficient transition or choice, leading to widespread confusion, frustration, and dissatisfaction. The backlash echoed the crucial importance of understanding and incorporating stakeholder needs and perspectives in any project or product development.
4. Regular Reviews: The 1 in 60 rule, used by pilots, states that for every 1° of heading error, a flight will be off course by 1 nautical mile for every 60 nautical miles flown. For a 600 mile journey this means 10 nautical miles off course, missing an airport completely. The equivalent can easily happen in projects and programmes too, for example with scope, resources or direction, leading to huge budget and schedule overruns. According to McKinsey 17% of large IT projects veer so wildly off track that they threaten the existence of the entire organisation.
Regular reviews ensure that projects are course-corrected in real-time before dap is too big to recover. Just as pilots use instruments and checks to ensure they’re on the right trajectory, regular reviews should help to ensure that project remains aligned with its goals. Even if deviations seem minor in the early stages, the cumulative effect over time can be substantial. Critical to these reviews is measuring what’s important, which is essentially progress towards the ultimate goal and the associated benefits.
5. Train and Educate: In a sports team, regardless of the players’ innate talent, regular training is absolutely critical to ensuring continually hone their skills, play well together, and stay updated on game tactics.
If you stay ready you don’t have to get ready! This is especially critical in a world of ever changing technology where those who continually invest in learning and improving their skills can make huge gains over the competition is a relatively short time. Toyota demonstrated that with their emphasis on continuous improvement and employee education, putting them way ahead of the competition for many years.
Leading the Way: World-class Company Approaches
Companies like Amazon have emphasized a “two-pizza team” concept, where teams are small enough to be fed with two pizzas. This approach ensures agility, clear communication, and quicker decision-making.
Tesla, on the other hand, follows a flat hierarchical structure, which facilitates faster decision-making and encourages innovation.
Effective and efficient project governance is not about bureaucracy but about facilitating clear communication, decision-making, and direction. By striking the right balance between control and freedom, organizations can empower teams to innovate and ensure the successful completion of projects.