Project Governance in Practice: A Realistic Scenario

Project governance defines the decision-making framework for a project: who has the authority to make what decisions, at what level, and through what process. Good governance prevents decision-making gridlock, ensures accountability, and provides a clear escalation path when issues exceed the project team's authority. Here is a realistic scenario illustrating what effective and ineffective project governance looks like in practice.

The Scenario: A Major Capital Project

Imagine a public-sector organisation undertaking a $40 million capital construction project -- a new community services facility. The project has been authorised by the Board of Directors, the project sponsor is the Chief Operating Officer, and day-to-day management has been delegated to a project manager.

Scenario A: Ineffective Governance

Three months into the project, the design team identifies that the mechanical system specified in the tender documents is no longer available from the manufacturer. A substitute system is available from a different manufacturer, but it costs $380,000 more than the budgeted amount. The project manager is not sure who has the authority to approve this change. She emails the COO, who is in a board retreat for the week and doesn't respond. She emails the design team lead to continue with the substitution 'for now' to avoid a schedule delay, intending to get approval later. Six months later, at the project quarterly review, the COO sees the change for the first time. By this time, the new mechanical system has been installed. The COO is frustrated -- not just about the cost, but about finding out six months after the fact.

This scenario illustrates: unclear authority thresholds (who can approve what dollar value of change?), no escalation process (what happens when the sponsor is unavailable?), and no change control process (how are scope and cost changes formally tracked and approved?).

Scenario B: Effective Governance

In a well-governed version of the same project, the project charter establishes a governance framework before work begins:

• Delegated authority: The project manager has authority to approve changes up to $25,000 per change and $100,000 cumulative. Changes above these thresholds require COO approval. Changes above $500,000 or affecting project scope require Board approval.

• Change control process: All changes above $10,000 must be submitted as a Change Request, reviewed by the project manager within 48 hours, and escalated to the appropriate authority level based on the delegated authority matrix.

• Steering committee: A Project Steering Committee meets monthly. It includes the COO, the heads of the departments that will use the facility, and a financial representative. The steering committee receives a monthly status report and is the escalation body for issues that exceed the project manager's authority.

• Decision log: All decisions above $10,000 are logged in the project decision register with the date, the decision, the approving authority, and the basis for the decision.

When the mechanical system issue arises, the project manager submits a Change Request within 24 hours, noting that the COO's approval is required. Because the COO is in a board retreat, the change request is flagged to the COO's assistant, who gets the COO's approval via email within two business days. The schedule impact is minimal. The COO is informed, has approved the change, and the project record reflects it.

XNM provides project governance advisory to public-sector and capital-project clients. Reach out to XNM's program & project delivery advisory team to discuss project governance frameworks for your project.