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About this lesson

An organization and project team can take several approaches for ensuring compliance. Regardless of the approach there are significant impacts of both compliance and non-compliance.

Quick reference

Governance Impact

Good project governance leads to clear expectations and the application of best practices, while the opposite is true when there is poor governance impact.

When to use

Project Governance starts at the time of project initiation and continues throughout the life of the project. Governance is particularly important during stakeholder interactions.

Instructions

Governance is the process of ensuring the project is being planned and executed in accordance with the applicable standard and procedures.  The impact of good governance is a clear set of expectations for the project activities and the role of the project team members.  Governance ensures the project is following the applicable project management methodology and is in compliance with appropriate standards.

Impact of Compliance

The most notable aspect of a project in compliance is the clarity of expectations for both stakeholders and team members. For the stakeholders, they can have confidence that the project is following the approved methodology and the team will have confidence that best practices are being used in project management.  Further, compliance implies that stakeholders are not able to change the requirements whenever they desire, but most go through a change management process.  Project teams will sometimes complain that compliance creates non-value-added work.  And that is true from the perspective of the definition of the project deliverable.  However, if considering the full triangle of project management, good governance is a benefit.

Impact of Non-compliance

The primary challenge with non-compliance is the confusion that can reign within the project team, among the stakeholders, and across the organization.  Every project is managed in a unique manner, so there is little opportunity for learning from one project to the next.  There is ambiguity and confusion which leads to delays and overruns.  What is worse, depending upon the aspect of non-compliance with industry and government standards, the business can face fines, legal penalties, and ultimately a business shutdown.   When this occurs, the project manager may be fired, but it is normally the senior stakeholders who will bear personal liability for not providing adequate supervision.

Hints & tips

  • Compliance does not mean that there are not risks and uncertainties. All projects have those. Compliance though reduces those by providing a framework for identification and management of risks and uncertainties.
  • A good governance program also includes a regular review of the procedures, standards, and methodology to ensure it embodies business and industry best practices.
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  • 00:04 Hi, this is Ray Sheen.
  • 00:06 Well, we've discussed the categories of compliance that a project manager needs to
  • 00:10 be concerned about.
  • 00:11 Let's now look at how compliance or non-compliance can impact your project.
  • 00:17 First, we'll look at how compliance affects expectations.
  • 00:21 One way is by minimizing confusion about how the project is being managed.
  • 00:25 This means confusion within the project team, confusion among the stakeholders and
  • 00:30 confusion by the functional organizations that are providing resources or
  • 00:34 performing project work.
  • 00:35 When a project is in compliance, the expectations are usually well defined and
  • 00:40 everyone can read them and understand what is to happen, when it is to happen, and
  • 00:45 who should be doing it.
  • 00:46 A compliant project will be conducted in accordance with the approved or
  • 00:50 designated project management methodology.
  • 00:53 Again, this provides clear expectations of how the project is being managed.
  • 00:58 Keep in mind, every project is unique.
  • 01:00 That is one of the characteristics of a project.
  • 01:04 Compliant projects will identify the uniqueness and apply the appropriate
  • 01:09 industry standards and requirements to accommodate that uniqueness.
  • 01:13 Another aspect of meeting expectations by compliant projects
  • 01:17 is that they stay inline with ongoing business wide standards and regulations.
  • 01:22 These could be functionally focused such as employment practices and
  • 01:26 purchasing policies.
  • 01:27 Or more broadly defined industry focused practices,
  • 01:30 such as buildings that are built to passive house standards or developing
  • 01:35 software by applying the software development life cycle best practices.
  • 01:39 I've been emphasizing the need for compliance.
  • 01:42 Let's consider the impact of compliance on the day to day project activities.
  • 01:46 A major benefit is the ability to maintain the support of senior management and
  • 01:51 project stakeholders.
  • 01:53 When they know a project is being managed in a manner that is compliant with
  • 01:57 the appropriate standards, the confidence in the project execution goes up.
  • 02:01 That confidence leads to greater support and buy-in.
  • 02:04 Also, they know what to expect in terms of meetings and reports.
  • 02:08 This actually can serve as a constraint on micromanagement interference by
  • 02:13 the stakeholders.
  • 02:14 By being compliant, it's easier for project managers to point to the place in
  • 02:19 the methodology where the stakeholder input is needed, showing them when and
  • 02:23 how they contribute.
  • 02:25 Compliance also provides clarity for project team members.
  • 02:28 This can reduce the number of team meetings and incomplete task activities.
  • 02:32 Compliance leads to full completion of each task with a clear acceptance of
  • 02:37 the results of that task.
  • 02:38 This removes much of the ambiguity that can occur in a concurrent or
  • 02:42 adaptive project.
  • 02:44 Also, since the compliance standards will often include best practices for
  • 02:48 the project work, compliance provides guidance to the team members on how best
  • 02:53 to do the work of the project.
  • 02:55 But let me caution you.
  • 02:56 To maintain compliance you need to do audits and checks on the project.
  • 03:00 This can feel like unnecessary bureaucracy.
  • 03:03 This activity in and of itself does not advance the project towards its goal.
  • 03:08 Although, if the project is off target, it could help to correct the aim.
  • 03:12 Finally, let's not overlook the impact from an organizational perspective of
  • 03:17 compliance, especially with government laws and regulations.
  • 03:20 Compliance means the regulators and auditors will leave us alone and
  • 03:25 let us stay in business for at least one more cycle of compliance review.
  • 03:29 Let me contrast what we've just talked about with the impact of non-compliance.
  • 03:34 For senior managers and stakeholders,
  • 03:36 a non-compliant project has them worried about what is happening on the project.
  • 03:41 So to address their worries, they increase the number of reviews, reports, and
  • 03:45 other oversight activities.
  • 03:47 Soon the team can find itself spending all its time doing status meetings for
  • 03:52 management and none of its time doing the work of the project.
  • 03:55 Further from a stakeholder perspective, a non-compliant project can create
  • 04:00 personal liability for the management team.
  • 04:03 I'm aware of one facility where a facility modification project was underway.
  • 04:07 The project team was making changes that would cause the facility to be
  • 04:11 out of compliance with their environmental waste permits.
  • 04:13 The team had applied for new permits, but these have not yet been issued.
  • 04:17 The team went ahead with the project even without the new permits in place.
  • 04:21 Those permits arrived a month later and granted the new requested levels.
  • 04:26 But because facility operated for a month in a manner that exceeded the old permits,
  • 04:31 the executive responsible for the facility, not the project manager,
  • 04:35 was convicted of a felony offense and fired.
  • 04:38 One last concern for managers and stakeholders is that,
  • 04:41 it's difficult to rescope and redirect a non compliant project because
  • 04:46 there's no clear understanding of what has been done or what is to be done next.
  • 04:51 There are also problems for the project team when a project is non-compliant.
  • 04:55 Just like the stakeholders are uncertain what's being done,
  • 04:59 the project team is uncertain as to what is expected of them.
  • 05:02 They aren't following the standards and requirements so
  • 05:06 they're unaware of how good is good enough.
  • 05:08 They don't know the best way to get the work done.
  • 05:11 And without the benefit of a compliant project management methodology,
  • 05:15 there's uncertainty concerning how to identify, analyze, and resolve risks.
  • 05:20 This uncertainty causes delays and overruns as they wait for
  • 05:24 questions to be answered.
  • 05:25 We've already alluded to some of the organizational impacts.
  • 05:28 There can be fines, shutdowns, penalties, and
  • 05:31 audit findings that require effort to correct.
  • 05:34 Not to mention the damage that can be done to an organization's reputation, and
  • 05:38 in extreme cases, they can cause an organization or
  • 05:41 facility to be permanently shut down.
  • 05:43 On the one hand you could say that compliance is optional.
  • 05:46 You can complete all your project activities without addressing compliance,
  • 05:51 but in the world we live in today that's not enough.
  • 05:55 We must do the right things in the right way to be accepted by organizations,
  • 06:01 stakeholders, marketplace, and regulators.

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