Purpose, Principles and Positioning
While all governance boards have important roles and responsibilities, the design, composition and operation should be fit-for-purpose – customised to the organisation’s context, strategy and risk profile. Good governance is both an art and a science—and cannot be prescriptive or one-size-fits-all solutions. For this reason, we explain the purpose and design principles that are important when designing digital project boards, and how these boards are necessarily different from other governance forums.
Purpose
What are Digital Project Governance Boards and why are they important?
Digital projects are strategically significant in meeting government service delivery objectives. However, the higher relative risk of digital transformation projects4 has contributed to lower levels of trust across government in the ability of digital projects to deliver on intended outcomes and benefits. An engaged project board has been found to be one of the top drivers for successful project delivery (5,6), but there remains considerable confusion about the role of digital project governance boards across government, industry and academia(7,8). Ineffective project sponsorship is often due to a lack of understanding of the project board’s role in supporting project governance(5).
This report seeks to provide clarity and guidance on the role of project boards, but it is important to acknowledge that this is only part of the story. Projects inherently encounter many tensions that aren’t easily resolved. A key role of the project board is recognising these tensions and navigating them, recognising when something isn’t working and adapting course to something more beneficial. For instance, in digital transformation, there is a need to both exploit capability (doing what we know), as well as explore new capability (doing something new – at least to the organisation). Each requires different governance approaches. Similarly, whilst accountability is important, so is facilitating and incentivising innovation.
Another vital role of the project board is to be the interpreter between the organisation (with its cyclical rhythms, services and processes), and the project (with a lifecycle defined by a start and end). This has implications for supporting the project in navigating processes like resourcing and procurement, and for interpreting how project outputs can be translated into organisation outcomes. Benefits tracking should extend well beyond the project lifecycle into operation. This is crucial to see what benefits are being delivered, take advantage of emergent benefit opportunities, and to link back to how the business case evolved.
The project board also needs to ensure it engages not only the appropriate external expertise but also incorporates external referencing and benchmarking. This is important for facilitating conversations for the leadership outside of their immediate areas, and to ensure leaders’ thinking is not biased or insular.
Finally, the organisation also has a role to play in ensuring project boards are effective. Digital project boards need to be appropriately positioned and scaled relative to the decisions that need to be made and the risk profile. SROs need to be given enough capacity to do the role well. Core capabilities need to be developed and incentivised to enable strong project board performance.
Definitions
Governance
The framework of authority and accountability that defines and controls the outputs, outcomes and benefits from projects, programmes and portfolios. The mechanism whereby the investing organisation exerts financial and technical control over the deployment of the work and the realisation of value.
Project Board
A strategic group that ensures the progress of a project according to the business case and project plan. The board is responsible for ensuring the project delivers planned business value, by providing approvals, endorsements and guidance through the application of governance on matters outside the authority of the project team. The project board can also be called a Steering Committee.
Projects, Programs and Portfolios
Projects and programs are time-bound, coordinated endeavours, designed to deliver defined outcomes and benefits within predetermined resource constraints(6,14).
Projects and programs may sit within a broader organisational portfolio governance system. For ease of reading, and to avoid confusion with the broader use of the term program in government, we use the term project to refer to both digital projects and digital programs.
Senior Responsible Official (SRO)
The official with ultimate accountability for a project meeting its objectives, delivering the projected outcomes and realising the required benefits within the policies set by ministers. The SRO is the owner of the business case and accountable for all aspects of governance(15). The SRO is also known as Project Sponsor, Senior Accountable Officer and Senior Responsible Officer/Owner.
Positioning
To better understand the reasoning behind digital project boards, it is helpful to consider differences to other governance forums.
Digital project boards operate in unique environments and face distinct challenges compared to other governance structures. This section outlines how their attributes differ from corporate governance boards, non-digital project boards, and boards in non-government entities.
Comparison to Corporate Governance Boards
Project boards have similarities to corporate governance boards but have several material differences. In contrast to corporate governance boards, project governance boards are:
- Bounded by time: a project board is part of the temporary organisational structure established to deliver a project and is dissolved on project closure. The board will need to reflect on its structure and capability as a project moves through different aspects of its lifecycle.
- Bounded by scope: a project has a remit to deliver a particular outcome or result. The
actions of the board are limited by reference to the scope approved in the project business case and change procedures. - Bespoke: the board composition needs to be designed for the purpose of the project. The board capabilities will need to reflect applied technologies and stakeholder groups. There can be challenges when the organisational capability and structure the project needs are not yet in place, for example in cross-agency management forums.
- Dual accountability: board members will often have both organisational accountability and project accountability. Their organisational role may be accountable for mitigating risks, resolving tensions and removing roadblocks that impact project delivery. This can also lead to “conflicts of duty” which need to be recognised and managed, where an individual can be both the supplier and recipient for a project.
“The effectiveness of State Penalties Enforcement Registry's (SPER) oversight of the SPER Reform Program’s procurement process was adversely impacted by weaknesses in the design of the steering committee. The chair of the steering committee also chaired the tender evaluation panel, which had the potential to compromise the independence and objectivity of the steering committee to challenge the process”(3)
Comparison to non-digital projects
Digital project boards need to cater for the ways that digital projects are different to non-digital projects. In contrast to non-digital projects, digital project governance boards typically feature:
- High connectivity – Many digital projects involve rich interdependencies, including from people to systems, system to system, data to system, development to operations, vendors to the organisation. Project governance needs to consider how interdependencies affect the
critical path. There needs to be a high emphasis on stakeholder engagement and the importance of relationship with vendors. - Intangible outputs and outcomes – The intangibility of many digital deliverables and outcomes can make it harder for non-specialist board members or stakeholders to understand and articulate the underlying business logic, the intended benefits or the implications of change, and the required outputs resulting in increasing chance of goal ambiguity and misunderstanding.
Comparison to non-government entities
Government digital project governance boards have different considerations to non-government boards. These include the:
- Authorising environment – There is a high level of obligation to administrative law, including decision-making accountability, with implications for attention to delegations of decision-making authority and the need for transparency in record keeping.
- Relationship between the government and public sector – Policy directives, policy changes, the machinery of government changes, political risk need to be considered in decision-making.
- Public value and impact – Government boards need to consider the implications for public value, acting as stewards of public funding, instead of an exclusive focus on revenue and costs.
Principles
Principles to guide effective digital project boards
While all governance boards have important roles and responsibilities, their design and operation should fit the organisation’s unique context and strategy(16). Good governance is both an art and a science—combining evidence with practical judgement(17). Because every situation is different, this guidance focuses on key principles rather than one-size-fits-all solutions.
Project governance principles
- Active decision-making: Boards are active decision-making bodies optimising value of the investment for the public and agencies involved.
Implications:- use of the term Project Board rather than Steering Committee.
- active verbs in Board Terms of Reference (ToR), for example, decide, sanction, own.
- Integrates with corporate governance: Project governance should be integrated with the agency's authorising environment, as well as its corporate governance and enterprise risk systems, and its policies, standards and architecture.
Implications:- The ToR should articulate this positioning, and how reporting between governance structures will be conducted and discuss relevant delegations.
- Can vary over lifecycle: SROs and boards need to regularly reflect on whether board composition is still relevant and effective, and adapt if necessary.
- Distinct from stakeholder management: Separate committees or groups may need to be established to communicate and engage with stakeholders, for example, reference groups, working groups.
- Commensurate with risk and delegations: Project boards need to be at a level sufficient for making decisions and spanning the functional boundaries impacted by the change. Board composition and assurance activity needs to be commensurate with the project's risk profile and enterprise risk appetite.
- Optimise value, minimise negative impact: Emphasis is placed on achieving optimal value of the investment through effective project outcomes. Approval decisions are driven by alignment with project and strategic objectives. Quick wins and early value delivery is encouraged (e.g. not waiting until the end of the project to realise benefits) (25).
Board members need to "Ask the hard questions and make the hard decisions"
Interviewed Assurance Provider
- Members suspend self-interest: Board members may be chosen for their experience in a particular area of the business, but should suspend self-interest for the project to achieve its outcomes.
- Navigate tensions: Digital projects are rife with tensions and project boards are the interface between the permanent organisation and temporary project. As such, the board needs to align diverse stakeholders and navigate opposing forces and tensions (20).
- Constructive culture: Digital project boards need to set a culture of transparency, humility and courage so that risks and issues can be effectively mitigated, value optimised and impact minimised (20).