Project Governance and Project Success
The relationship between project governance and project success
This article will focus over the relationship between project success and project governance with the perceptive of agency and stewardship theory. According to the research, various success factors have been evaluated in relevance with judging project success. Project success refers to the attainment of desired goals and objectives with the help of effective success criteria. Amongst the all success factors, project governance is one of the essential elements for successful project execution. Under this article, it has been identified that for a successful project execution, structural characteristics plays vital role.
Project governance is the activity which ensures the controlling and allocation of resources and optimum utilisation of the available systems so that the project could be accomplished with the motive of extracting positive outcomes. Project governance is conceptual and there is a strong relationship between project success and project governance. Apart from this, this article also focused over the link between corporate governance shareholder value and management performance. In this article, agency theory has been applied to understand the relationship between project governance and project success. Agency theory is implemented to explain the behaviour of shareholders and oriented governance structures under which process control measures and contrasts are utilised to analyse the behaviour of managers so that the shareholder wealth could be maximised. In relation with explaining the behaviour of manages, stewardship theory has been utilised. This theory describes the procedure of attainment of goals and objectives by controlling the results and by balancing the need of diverse stakeholders.
Success factors have been diversified from last certain years. According to researchers, without grouping, structure, etc. in success factors are not relevant. In relevance with identifying the relationship between project governance and project success, governance paradigms have been used i.e. continuum of the extent of shareholder versus stakeholder orientation and a continuum on the level of behaviour versus outcome control. This study is quite effective for the practitioners in order to build success related governance structures. This model has offered balance between soft and hard factors along with 25 success variables and all these are organised in five dimensions. The model governance as a success factor for projects also contains three criteria which are termed as iron triangle, following are those dimensions:
- Project efficiency,
- Organizational benefits,
- Project impact,
- Stakeholder satisfaction, and
- Future potential.
Iron triangle is the major concept in relation with the criteria of project success. Along with these criteria, various other success criteria includes such as stakeholder satisfaction, quality, and the knowledge management. Measuring success requires variety of models so that the measures for project success could be developed and all are designed on the basis of underlying assumptions. Strong connection between organizational performance and organizational governance has been identified by economists and from this point; various researchers have applied management theories so that the impact of factors over organizational performance and corporate governance could be identified. Amongst those management theories some of the famous and effective theories are stewardship theory, agency theory stakeholder theory, resource dependency theory, and shareholder theory. Corporate governance is aligned with the project related governance and in relation with this, it is necessary for the management to determine all the success factors. This will help the organization to determine the impact of success factors over corporate governance and project related governance. Project governance is known as the overnight function and it encompasses method of controlling and project lifestyle. It is necessary to determine the effectiveness of management theories in relevance with the corporate governance world.
Link between Corporate Governance, Shareholder Value, and Management Performance
Apart from agency and stewardship theory, there is no such theory which is reliable and efficient. This is because, both the theories leads to develop appropriate factors which identifies the relationship between project level theories. The study of corporate governance and corporate performance shows that there is a strong relationship between organizational success and governance. Along with this, weaker corporate factors will generate weak results as well as their impact over corporate performance will also weak. In past, there was not such study through which correlation between governance orientation and project success could be determined.
Ultimately, it has been identified that corporate governance incudes various actions, rights and plans through which functionalities needs to be executed. With the help of this, organization could be able to expect results. Corporate governance has a significant impact over organizational performance and every organization develops corporate governance so that they could reach out to the desired destination. Corporate governance does not lead to generate positive results along with generating higher returns. There are various other benefits such as enhancing efficiency of the organization and there are various other benefits which are as follows:
- Stock performance: Stock performance always depends upon the corporate’s performance and previous studies such as the research executed under this article defines that there are strong and direct relationship between organizational performance and organizational governance. But there was no clue obtained through which it could be said that there is relationship between stock prices and organizational performance. According business experts and economists, it has been identified that strong corporate governance is required which should include regulatory body and an effective supreme authority. Amongst them, the most crucial members are board of directors, managing director and talented and experienced business experts through which financial performance of the organization could be enhanced along with managing organizational governance in an effective manner.
- Environmental performance: Corporate governance is responsible for every action taken by organization whether it generate positive or negative results. Every organization is required to include appropriate decisions in its plans and policies so that the desired destination could be reached. Along with this, it is the responsibility of governance body to formulate effective strategies in relation with society and environment. Company’s owners, board members and managers are required to formulate policies and plans for the organization, thus, it is required for the organization to develop or amend its policies so that it could focus over environmental aspect. This will help the organization to develop an effective image in the competitive business environment along with attaining sustainable growth related objectives.
The Interrelationship of Governance, Trust, and Ethics in Temporary Organizations
This article will focus over determining the impact of ethical decisions of project managers over organizational governance and project governance structures. Ethical decision making process plays vital role in an organizational success and growth. Thus, it is necessary for the management to implement appropriate plans and policies through which interrelationship between ethics in temporary organizations and trust could be maintained. Inappropriate planning and adaptation of measures leads to generate unethical issues. These issues are the major cause for declined organizational performance as well as decision making process o the organizations also gets affected. Thus, corporate governance is treated as the major aspect for the project governance which also limits the governance of projects.
Primary medium of execution of corporate governance is governance structure. This includes processes, roles, policies, authorities, responsibilities and formal procedures. Apart from these factors, there are various other factors such as trust which is also an effective mechanism for governance. Trusts could only be examined when managers could be able to reduce the cost of production along with creating economic value. Along with this, trust also acts as an effective measure for developing ethical decisions made by project managers. Under this article, ethical issues raised in the temporary organizations will be discussed with regards to the trust and governance. Project mangers’ efficiency has also been determined in this research. A project manager could be found successful and ethical when his moral values are absolute. It has been evaluated that ethics should be included in the training and development programs of an organization so that the employees could be able to understand the significance of functionalities executed by the organization.
Management Theories in Relation to Organizational Performance and Corporate Governance
Trust is being treated as an effective tool from both perceptive i.e. governance structure and employees of the organization. Governance of the organization expects well behaving from the employees along with fulfilling the roles and responsibilities assigned to them. While from the employees’ end, trust could be determined on the basis of policies developed by the organization with regards to the execution of operations. There are three elements with regards to the conceptual framework which are: ethical dilemmas that project managers face, structure of governance and trust amongst the two factors. Primary objective regarding ethical dilemmas is spreading awareness amongst the project stakeholders which are addressed by temporary organizations. These have also influence over governance structures and mechanism along with trust. Trust is defined as the willingness of one party to perform actions and the same amount of actions expected from that party. For example: If Apple Inc. has appointed IT technicians so that they could the organization to develop effective software to resolve the bugs faced by their system. Thus, in this situation, organization has showed trust over the appointed candidates with regards to perform appropriate functions as per organizational requirements. In this article, authors have described that trust is trustworthiness of trustee. According to the article, trustworthiness is a combination of following attributes:
- Ability: These are skills and characteristics through which one party influences other on certain specific area.
- Benevolence: This is a type of belief which is based over prior experience and previous relationship.
- Integrity: Trustee and trustor, both are required to perform appropriate duties and functionalities so that the decision made could be effective and approachable.
Project governance comprises value systems processes, responsibilities and policies which allow organizations to attain objectives. Apart from this, project governance is the factor which implements considering the interest of all stakeholders whether it would be external or internal. It is a part of corporate governance and it helps the organization to perform its tasks in an effective manner as per the guidelines issues by the management. Organization will be able to manage its operations so that the goals and objectives could be attained in an effective manner along with maintaining the relationship between trust, ethics and governance in temporary organization.
In relation with the processes, management’s perceptive is to execute functionalities in fair and unreasonable manner in relevance with violating human rights. Apart from this, in relevance with the overall utility of stakeholders, management is responsible. Project governance research identifies different organizational structures and the number of employees in organization. Ethics and trust are treats as the common variables of various frameworks and models. Apart from this, certain ethical issues have been detected in the temporary organizations which could be explored through governance and trust. In relevance with this, it is necessary for the project managers to implement change management so that positive outcomes could be originated. For example, a business corporation is planning to expand its business in the national market and regarding with this, governance promoted an experienced employee for controlling the new centre. This shows that governance had showed trust over its employee and now it is the duty of an employee to fulfil the requirement of the organization so that the assigns duties could be fulfilled in ethical manner along with showing full integrity level. In relation with this, it is the duty for the employee so that the appropriate goals and duties could be attained along with the objective of maintaining an appropriate image for the organization.
In order to conclude the report, it can be clearly stated that Governance, trust and ethics have a higher interrelationship between them; if one of the three fails the entire business machinery can come to a standstill. Plethora of companies in the past has faltered to understand the importance of this, thus falling flat on the Ground. Enron was a highly successful firm which was doing great for its stakeholders and shareholders, it was one of the incidents when the top executives of the company decided to do ethically wrong with its shareholders. They inflated the financial figures and surged profits to bring higher shares value, they purchased the shares at high price, before the regulators could point out the irregularities and declare the company bankrupt. They did ethically wrong not only to the trust, but to its entire shareholders, which ultimately resulted in tarnished image of the company. Hence, it is advisable that companies understand the importance of ethics in the business environment and its relation with the governance and its trust.
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