02 Mar Governance and Risk in Major Projects
Recently, the ‘Special Inquiry into Government Programs and Projects Final Report’ was released to the public. The inquiry examined 31 West Australian government programs and projects with the purpose of “providing a clear and concise explanation of the key drivers or failures in decision making that led to the State’s operating deficits and unsustainable debt position”.
One of the most important systemic issues that was identified through the work of the inquiry was the issue of poor quality governance. The report states that “Good governance is a key ingredient for successful projects and government undertakings. Governance arrangements form the basis for decision-making and accountability. Governance over major projects is a foundation for better project planning and management, procurement and contract management, and a higher level of transparency”.
As part of the governance considerations, the report raises the question of whether project steering committees have an adequate grasp of the range of significant risks facing the project, across all dimensions, and compares the governance role of a steering committee with a corporate Board. In making such a comparison, the report highlights “the need to assess and monitor financial and legal risk as an essential requirement of modern governance practice. All private sector companies would include a risk analysis and assessment on their Board agendas”.
In practice, many projects fail to consider the “strategic” or “whole of project” risks associated with successful delivery. This leaves steering committees in a position of having insufficient visibility over the key risks to a project and how they are being addressed. As such, there is a clear and specific recommendation in the report which states that “There must be a risk register established for all projects, both strategic and operational”. In addition, the report highlights the lack of a ‘one team’ approach in major projects. This notion of ‘one team’ is well recognised as a critical component of project success. To maximise the effectiveness of this approach, it needs to be implemented across all levels of project governance, management and execution, starting with a single steering committee, implementing a fully integrated governance model, using a standard set of monitoring and reporting methodologies and tools across all teams involved, and co-location of all members of the project team(s).
On a final note, in order to ensure steering committees fully understand and act in accordance with their governance role, governance training of future steering committee members is essential. One of the key recommendations in the report includes “introducing training opportunities for members of Parliament and public servants in key areas of governance, business case analysis, risk management, procurement, project and contract management, negotiation and commercial and financial management”. The full report can be downloaded from the Public Sector Commission website www.publicsector.wa.gov.au
Riskwest provides public and customised courses in project management, governance and risk, which cover many of the topics highlighted in the report. Should you be interested in finding out more, please contact us, download our latest training brochure or talk to your regular Riskwest contact. The next public course in ‘Project Risk Management’ has limited spaces remaining.