Introduction
In the past few decades, the importance of project governance in various sectors has gained prominence. This has mainly been due to the fact that project failures have been on the increase. As such, governance mechanisms have been developed to ensure that any proposed project completes its course with little to no complications.
Project governance often refers to the rules and regulations instituted by an organization to ensure that a project achieves its purpose. As Haas (2010) asserts, project governance utilizes various mechanisms implemented to ensure that all parties involved comply with the set standards.
As such, project governance is of great importance to business entities because it stipulates the processes that need to exist to ensure success in any given project.
This report sets out to evaluate the level of project governance competence exhibited by Sidney Waters. In this evaluation, the cultural attitude displayed by Sidney water’s employees shall be discussed and the reporting processes used by the Boards of Directors analyzed. In this regard, a final analysis explaining whether there was adequate disclosure and reporting during the project shall also be offered.
Cultural attitude within Sydney Water
To ensure success, organizations often develop cultures and expectations which must be adhered to by all members. Culture in this context can be defined as a set of beliefs and norms that dictate how employees behave in regard to performing their duties and working together towards the set goals.
As such, some organizations may adopt a competitive culture where each member is always trying to outdo his/her colleagues while other organizations may develop a cooperative culture in which members work together to achieve the organizational goals and objectives.
The culture adopted by any organization is therefore reflected in the shared values and beliefs that act as guidelines on how members of the organization should behave and think.
From the report, it is evident that Sidney Waters adopted a defensive culture. Evidence of this can be cited from the following scenarios. In this case, it should be noted that cultural attitude refers to the behaviors that seemed prominent throughout the project.
In any organization, the likelihood of encountering risks during a project’s progress is very high. As such, the members involved in the project ensure that they identify the threats and formulate measures on how to avoid the risks or mitigate their effects on the project. This is not the case with Sidney Waters.
According to the report, the culture adopted by the company indicated that the members believed in the assumption that outsourcing their projects to other institutions minimized the risks Sidney Water would incur during the project. This attitude towards risk aversion did not work as expected.
This is due to the fact that most of the costs were incurred by Sidney water and the termination of the project that resulted from poor risk management affected Sidney water more that it did to the contracted firm.
Similarly, the report indicates that Sydney Water utilized a competitive culture. There are various governance mechanisms that are implemented to ensure that a project succeeds. Among these mechanisms is the steering committee which is responsible for overseeing various aspects of the project.
It should be noted that project stakeholders have their responsibilities and that duties and tasks are divided among them to ensure accountability and a smooth flow of operations during each phase of the project. This was not the case at Sydney Water. The roles of each stakeholder were not clearly spelt out.
For example, a normal steering committee would be expected to monitor the project’s progress, report this progress to other stakeholders and highlight the budgetary requirements as well as expenditure to other stakeholders. This was not the case. In fact, the responsibilities of the steering committee were handled by the sponsors who thought that this would enable them to manage the project more effectively.
This issue also brought into light the fact that members of the project had total disregard to various policies including communication and conflict resolution policies and procedures (Auditor-General’s Report to Parliament, 2003). Throughout the report, it is evident that the project’s failure was mainly due to lack of transparency and effective communication channels.
This shows that members of Sydney Water did not have a well established communication channel. For example, the report indicates that the steering committee knew that there were a number of issues which were and could affect the progress of the project.
Some of the issues included but were not limited to: “The increasing volume of change requests, concern over CIBS’ long-term technical viability, technical readiness was in significant jeopardy and pressures impacting on User Acceptance Testing among others (Auditor-General’s Report to Parliament, 2003, p. 15).”
The steering committee had knowledge of these issues but never reported them to the Board until it was already too late. This, accompanied by other inconsistencies in reporting and resolving conflicting issues indicate that the members of Sydney Water had a negative attitude towards their superiors.
This is a clear indication that the company had not established a cooperative culture which would have in this case, avoided such issues.
In regard to transparency, the managing director seemed to deceive the audit committee regarding the inflated costs of the project and the delays experienced in implementing the project. In the meeting held in September 18th 2002, the managing director’s comment on this issues indicated that he believed that all big projects were supposed to experience such issues.
This assumption shows the cultural attitude held by most managers who believe that big projects must have cost over-runs and delays in delivering various phases of the project. These examples show various practices and behaviors that were exhibited by members of Sydney Water during the project. As such, by highlighting them, I was able to deduce the cultural attitude held by various members of the project team.
In conclusion, their actions or lack thereof indicates that Sydney Water did not have a well established organizational culture and this may have invariably contributed to the failure of the project.
The reporting process to the Sydney Water Board of Directors by the management and the involvement of the Board
As mentioned earlier, communication is the cornerstone on which successful relationships are built on. Reporting is among the communication tools that enable members of an organization to evaluate their progress.
Through various reports, management is able to get the project’s progress in regard to the strengths, weaknesses, opportunities and threats that are inherent to the project. In this case, the reporting processes showed high levels of inconsistencies. Evidence of this can be cited from the following scenarios.
Firstly, the “Management did not always report important issues to Sydney Water’s Board of Directors in a clear, complete and timely manner (Auditor-General’s Report to Parliament, 2003, p.15).” according to the report, the procedures of reporting the project’s progress to the Board of Directors were inadequate.
The report indicates that in most cases, the information presented to the Board by management was brief, lacked clarity and worst of all; was incomplete.
Considering the fact that reporting the project’s status and progress was pivotal since it enabled the Board to make decisions and assessments regarding the project, the information provided by management was not adequate enough to give a complete picture of how the project was fairing.
Such deficiencies indicated that the Board never has adequate information on the significant issues and risks that affected the project. For example, it was not until September 2002 that the Board was informed that their desire to deliver a fully tested CIBS solution could not be fulfilled. This was especially surprising to the chairman of the Board who was led to believe that the project was progressing as expected.
The chairman stated that she came to learn of this during a briefing with the managing director and the general manager in October 2002. In this briefing, the managers informed her that they had doubts on whether the project would be delivered as expected.
In addition, some of the aforementioned issues that were noted by the steering committee were not adequately reported to the Board. These issues were present as early as March 2002 but were not adequately explained in the reports forwarded to the Board. In his defense, the managing director stated that he had informed the Board of these issues but even so, there was no evidence of this in the reports presented to the Board.
Similarly, in April 2001, the managing director was tasked with the sole duty of delivering the CIBS project on time. Part of the terms and conditions of this role was that the managing director had to present bi-monthly reports to the Board regarding the progress of the project. Evidently, this requirement was not fulfilled.
This can be attributed to the fact that since September 2001 to February 2002, no reports were presented to the Board. Instead, only briefs were included in other documents which were then forwarded to the Board. In addition, the detailed reports that were submitted were not as comprehensive as would be expected. For example, they did not include project costs and projections against the set budget.
Another inconsistency in reporting to the Board can be cited from the fact that the general manager as well as the project director contributed in one way or the other in drafting the reports. However, the managing director had the final say on what should or should not be included in the report.
On the same note, a project director was hired in February 2002. After his review on the project, he advised the managing director and the general managers on various concerns that threatened the viability of the project. Some of the concerns included lack of enough time and money to complete the project within the set period and lack of expertise required to complete the project in accordance to set standards.
However, during the briefing, the managers highlighted the need for a deadline extension and financial resource increment but failed to inform the Board on the threats that could have otherwise, made them rethink the whole project.
In other words, in their reports, the managers avoided telling the whole truth to the Board in a bid to hide their incompetency. Evidently, the reporting processes used by management were not adequate and the Board in particular did not perform its duties as would have been expected.
From the findings documented in this report, it is evident that the Board did not manage the project in the manner that it was expected to and as a matter of fact, the Board seemed to not have understood the complexity of the project. To begin with, the Board approved this project well knowing that Sidney Water did not have the required IT architecture in place.
After establishing the IT architecture, it was noted that the completed framework lacked 19 of the 20 requirements needed in such architectures. In addition, the Board failed in their task to delegate because they never pressured managers to perform their duties as expected.
For example, the finance general manager was supposed to review the project’s business environment and manage all financial issues pertaining to the project. However, the Board never asked the GM-finance to perform these duties.
The Board of directors is expected to ensure that project members conduct themselves in a prescribed manner and perform their duties a s expected. This was not the case at Sydney Water. For example, the Board had instructed the managing director to present bi-monthly reports regarding the project’s progress. The managing director failed to fulfill this requirement.
In such a situation, the Board was expected to enforce the management to perform this task as expected. The Board did not do this. There were other instances where the Board failed to perform their duties.
For example, approval of financial and resource requirements was done without having adequate information to justify such requirements. In addition, the fact that the Board came to realize that the project was a failure after years of progress shows that the Board did not understand the project and that it was not adequately informed.
Disclosure and reporting during the project
From this report, it would seem as though thee was no adequate disclosure and reporting during the project. From the very onset, the project was approved for commencing without a corporate information technology strategy (CITS) and it was only after the project commenced that the conflict between Sydney Water’s IT department and PwC was realized.
This conflict was mainly in regard to the level of competence of the project’s architectural specification. Both parties did not share their views on whether the project would successfully be integrated into the current system. As such, failure to disclose this information saw the initial test fail because it the developed architecture was not compatible with the current one.
In addition, the DMR report submitted in February 2001 showed that the project plan was not properly integrated at the beginning of the project. The company’s needs should have been clearly identified before the project began. However, this was not the case and as a result, it affected the scheduling processes of the project. On the same note, testing of the CIBS was not done on time and it was not exhaustive in nature.
There were many errors in the program and the fact that the project would not be delivered on time was disclosed later on after the project had consumed much financial and structural resources. Even though the management knew that the project would fail, they only shared this information after the Board showed its concern over the cost and time requirements surpassed the expected amounts.
More evidence of non-disclosure can be cited from the fact that Sydney Water never submitted all the information regarding to its selection process of the project team. For example, there was no adequate information regarding the selection processes that was used to vet the primary contractors.
In addition, the management never provided the Board with comprehensive information regarding the project’s status and progress. Instead, they offered incomplete, brief and unclear reports which showed that they were hiding some critical facts regarding the future of the project.
On the same note, PwC were allowed to continually report their progress in an inconsistent and unclear manner. For years, they took advantage of this weakness and requested for additional time and money to cover up their numerous mistakes.
With regards to the cost estimate, the final cost represented a gross overrun of 96.9 million to the original budged estimate of 38.2 million dollars. These cost overruns are a clear indication that much of the project’s activities were not clearly considered or discussed. The fact that the Board signed off on these finances shows that they were never kept on the loop.
In addition, there were important contingencies which were excluded from the original budget despite them being of great significance to the project. Upon its approval, the original project had a 10% contingency factor as compared to the 30% required standard. The reasons as to why this factor was reduced were not clearly stated but it was evident that the Board had signed off on this issue.
The fact that the Board signed off on such a risky move shows that they did not understand what such a decision meant. In addition, the fact that there were no documented records showing how this reduction was arrived at indicates that there was a lot of secrecy in the decision-making process on Sydney Water.
In regard to risk management, there were no written plans on how Sydney Water intended to deal with risks at various levels of management. Some inconsistencies, as pertaining to risk assessments were also noted at different levels of management.
The reporting of risks also began from September 2001 to April 2002. This was contrary to set standards which stipulated that risk assessment reports should be submitted regularly as soon as the project commences up to the day it is completed.
The report also suggested that Sydney Water had a poor record management system. The authors of this report indicate that they were unable to fully review the company because they could not access all the information required to do so.
For example, the report clearly suggests that some of the information regarding the project were protected by law under the client confidentiality privilege which meant that pursuing such information would have some legal implications on the review Board.
On matters relating to the reporting, it is clear that there were various inconsistencies in these processes. For example, the report indicates that the managing director did not report or disclose matters affecting the project as expected.
Instead, he omitted all the information that would make him look incompetent and submitted reports that showed the Board what they wanted to see. In addition, the fact that there was some information kept from the review Board shows that the company was not fond of disclosing its activities to outsiders. Conclusively, it can be argued that Sydney Water was not as efficient in disclosing and reporting the project’s progress as expected.
Reference
Auditor-General’s Report to Parliament 2003, Review of Sydney Water’s Customer Information and Billing System, Auditor-General’s Report to Parliament, Sydney.