Project Governance In An Agile World – Part 1

by | Feb 5, 2021

There are multiple books published that discuss project governance. As more and more organizations want to move towards agile delivery, one of the key things that cause strife within organizations is wanting a semblance of project governance used previously in “Waterfall” delivery. Even organizations delivering services try to keep old governance models when doing agile methodologies.

This will be a blog series looking at the book Project Governance by Ralf Muller (2009) that goes through fundamental project management governance. For the next seven weeks, we will go through a chapter week and see if viable components will fit with being agile or what changes can be made to make it work.

Chapter one – Introduction

What is Governance, and Why do we need it?

Muller starts by discussing the growing need for governance since introducing compliance items like SOX and Higgs, for example. There are plenty of other governing bodies that organizations need to adhere to, so the importance is high since an identified non-compliance can have reputational and financial implications.

An interesting view in this chapter is the view of contemporary governance based on Neo-Liberalism (Faucault’s Philosophy), which would fall with agile and self-managed teams, where he views the behaviours that shape the frameworks, which is very close to the view of a past webinar where this topic is discussed using Simon Sinek’s Golden Circle. In the first few pages, we can see that there is an agile view of governance with how it can be approached.

Governance Theories

Shareholder Theory

This theory is focused on achieving the best Return on investment for the organization’s shareholders. It is focused on the relationship between the organization and shareholders. From an agile view, it is the same between Product Owner and customer. Instead of buying shares, customers buy the product, and there must be the value (ROI) that the Product Owner provides.

There is further discussion on companies that are conducting projects in an optimized way run into problems. Some of the reasoning for this is discussed in the mentioned webinar.

Stakeholder Theory

As the Shareholder theory is an internal-external relationship, the Stakeholder Theory is strictly internal. It’s discussed that the main idea behind the theory is that “this approach allows for coordination of corporate knowledge and activities across the boundaries of individual companies to achieve concerted productivity gains.” It also falls in-line with agile views where transparency, knowledge and communication improve productivity. So far, there are some parallels from a theory perspective.

Muller discusses additional theories Transaction Costs Economics and Agency Theory. Really quick TCS is a build vs buy theory, and Agency Theory is the relationship between principal and agent. Think of the Agency Theory as the activities of a Servant Leader.’s relationship has with teams.

There are some additional components as it relates to investors and contracts. From the point of view of this series, we are focusing more on organization and project levels.

Governance of projects and project management as a subset of corporate governance

Here Muller starts to dig a little deeper with the governance of projects and tieing it in with corporate governance. The previous sections started that tie in, and now we see the path. As we start going down, we can see the differences the project governance detailed in the book is compared to being agile.

Starters talks about the board of governors give out the goals, means to achieve them, controlling progress and taking corrective actions. In an agile mindset, we know that it is not a “Command and Control” way of getting the described work done.

Towards the end of the chapter Muller provides Four governance paradigms within a quadrant. Across the top is Shareholder and Stakeholder Orientation, while along the side is Outcome control focus and Behaviour control focus.:

Flexible Economist Paradigm (Shareholder Orientation and Outcome Control focus)

Ensuring the highest ROI possible for projects in a tactical fashion on the methods and tools used.

Versatile Artist Paradigm: (Stakeholder Orientation and Behaviour Control focus)

Unlike the Flexible Economist Paradigm, this paradigm includes a qualitative nature to a project along with a quantitative. There is a bit of a dance with costs and value. It works based on tailoring how the project is done—a strategic approach.

Conformist Paradigm (Shareholder orientation and Behaviour control focus)

No tailoring and follow the existing methods and tools to complete the work to achieve the best ROI.

Agile Pragmatist Paradigm (Stakeholder Orientation and Behaviour control focus)

To quote Muller, “Balances the diverse requirements of a variety of stakeholders by maximizing their collective benefits through the timely development of functionality or value. Project management methods maximize the value of a series of project outcomes over time, based on the strict prioritization of user needs”.

Here is the first discussion of agile, and when looking at the definition, there are some agile meanings yet misses the mark. The wording seems still very command and control and focuses more on delivery and not failing fast, adapting, and improving.

As this chapter started with the promise that agile mindsets can be linked-to adapted versions of governance theories, it ends in a fashion that leads to common misconceptions of agile delivery where they are focused on doing agile instead of being agile.

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