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Project Management and the Relationship to Corporate Governance. by Andrew Willis and Michael Porier July 18, 2002. Risk Consulting Approximately 800 Professionals Representing 75 Different Universities, Possessing 40 Representative Degrees, and 50 Professional and Technical Certifications.

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project management and the relationship to corporate governance

Project Management and the Relationship to Corporate Governance

by Andrew Willis and

Michael Porier

July 18, 2002


Risk Consulting

Approximately 800 Professionals

Representing 75 Different Universities,

Possessing 40 Representative Degrees, and 50 Professional and Technical Certifications

  • Technology
  • IT Internal Audit
  • IT Process Assessment
  • Enterprise Security
  • Application Controls and Effectiveness
  • Business Continuity Planning
  • Project Risk Management
  • Business Process
  • Internal Audit Services
  • Trading and Marketing
  • Treasury Operations
  • Environmental
  • Supply Chain Management
  • Construction Risk Management
  • Financial & Commodity
  • Deal Structuring & Accounting
  • Market Risk Management
  • Risk Systems
  • Risk Measurement & Valuation

Company Background

Protiviti is an independent business and technology risk consulting firm that specializes in information security, technology and operational risk consulting, internal audit, and financial and commodity risk consulting.

Our Risk Consulting services trace their origins back to 1989, as many of our team members were formerly aligned with the Andersen professional services firm. From Andersen, we bring with us thirteen years of investment in tools, methodologies, and people which has prepared us to provide a broad spectrum of services across all industries. We have already made the investment and our clients are the beneficiaries of our cumulative experiences.

Our vision at Protiviti is to be the premier provider of independent risk consulting services. Our clients immediately gain access to over 50 partners and more than 750 professionals across the United States, which represent a national pool of resources unfettered by restrictions in scope of practice or independence conflicts. We have 13 partners and over 175 professionals in the Houston and Dallas offices, who possess deep knowledge and experience providing unique solutions to clients from all parts of the corporate value chain. We enjoy critical mass in key offices and across key industries, and our strategic alliances enhance our range of solutions.


Company Locations

We have hundreds of senior professionals in 25 major markets with unparalleled experience gained from working with world-class global companies.

Atlanta, GA

Chicago, IL

Cincinnati, OH

Cleveland, OH

Dallas, TX

Denver, CO

Ft. Lauderdale, FL

Houston, TX

Kansas City, MO

Los Angeles, CA

Milwaukee, CA

Minneapolis, MN

New York City, NY

Orlando, FL

Philadelphia, PA

Phoenix, AZ

Pittsburgh, PA

Sacramento, CA

Salt Lake City, UT

San Francisco, CA

San Jose, CA

Seattle, WA

St. Louis, MO

Tampa, FL

Vienna, WA


“I cannot imagine any condition which could cause this ship to flounder. I cannot conceive of any vital disaster happening to this vessel.” E.J. Smith, Captain of the Titanic

t rends in project management today
Trends in Project Management Today

Project Management Statistics

  • 31.1% of projects will be cancelled before completion
  • 52.7% of projects will cost 189% of their original estimates
  • 16.2% of software projects are completed on-time and within budget
  • 9.2% of projects within large companies are completed on-time and within budget
  • 222% of the original estimate is the average time overrun on projects
  • $145 billion will be spent on unsuccessful projects

Reasons for Project Failures

Source: Michael O’Malley


Article Title: Project Failures Spur Management Back to Basics

p roject success by size in dollars
Project Success by Size (in dollars)

According to a study performed by The Standish Group, the chance of a successful project decreases as the project size increases.

Source: Standish Group


Article: CHAOS: A Recipe for Success

e xamples of failed projects
Examples of Failed Projects
  • Other potential impacts of poor project management
  • Business performance/return on investment will suffer
  • Loss of confidence in the organization’s ability to successfully complete projects and causing future initiatives to suffer
  • Loss of customers
  • Legal repercussions


Article Title: Top 10 Corporate Information Technology Failures

w hat is project management
What is Project Management?

Project Management

“Project management is the application of knowledge, skills, tools, and

techniques to project activities in order to meet or exceed stakeholder needs

and expectations from a project. Meeting or exceeding stakeholder needs

and expectations invariably involves balancing competing demands among:

  • Scope, time, cost, and quality
  • Stakeholders differing needs and expectation
  • Identified requirements (needs) and unidentified requirements
  • (expectations)”

Source: Project Management Institute - Project Management Body of Knowledge

Page: 6

p roject risk management framework source
Project Risk Management Framework (source)

The PRM framework illustrates Protiviti’s approach to managing project management risk. Our methodology, depicted by the outer circle, is a continuous process of risk management activities targeted to minimizing the potential impact of risks to the success of a project.

Confidential: This document is for your company\'s internal use only and may not be distributed to any third-party.

p roject management component processes
Project Management Component Processes

A stimulus such as a business need, project plan, or market demand will spark the need for another project or project phase to begin. During the initiating processes, the organization realizes and commits to this need.

In the planning stage of the project or phase, a plan is established to address the needs of the project and to reach the project objectives.

Executing involves gathering the necessary resources to perform the project plan activities and the actual execution of the plan.

Controlling processes primarily involve the monitoring of project progress to identify significant variances to prevent problems from arising.

During the closing processes, final open items will be resolved and a formal acceptance of the project or phase completion will occur.

Source: Project Management Institute - Project Management Body of Knowledge

Page: 29

p roject risks
Project Risks

These four risks are inherent in any project and within all of the 5 processes of the project life cycle:



Business Integration



Project Management

Project Support



Project Management Office




Strategic alignment




Project Life Cycle

Project environment






Business environment

p roject elements
Project Elements

Strong control environment ensures that project risks are mitigated and the primary goals of quality, time, and cost are achieved.

Project management is the balancing of quality, time, and cost. It is difficult to achieve all three goals on one project.

Is the project

satisfying the needs

for which the project

was undertaken?


The foundation of a project control environment is comprised of the people, processes, and technology.

Is the project

being completed

in a timely


Is the project

being completed

within the

approved budget?



p rm methodology
PRM Methodology

Steps to ensure a strong project management framework. These steps should be part of a continuous improvement methodology to ensure that projects continue to deliver needs and expectations to stakeholders.

  • Through these methodologies, we will assist your organization:
  • Evaluate your current risk management process,
  • Target areas for improvement,
  • Enable change, and
  • Perform ongoing monitoring and improvement.
d o you need prm
Do you Need PRM?

Is there a high dependency upon technology-centric projects to support or drive business strategy and key business processes?

Does the implementation of major new systems or products have significant impact on business strategy?

Does the introduction of unproven or unfamiliar technologies have strategic business impact?

Is your infrastructure highly complex, fragmented and/or immature?

Have you experienced significant personnel turnover, open positions, and gaps in key technical and management positions?

Have you experienced significant or rapid changes in the business?

Does management have concerns about cost containment and ROI?

Has management been dissatisfied with project management issues?

w hat is corporate governance
What is Corporate Governance?

“Corporate governance is about promoting corporate fairness, transparency, and accountability.”– J. Wolfensohn, president of the World Bank. July 21,1999

“Corporate governance deals with the ways in which suppliers of finance to corporations assure themselves of getting a return on their investment.”– Journal of Finance, 1997

Directors Company Mgmt Shareholders Stakeholders

Directors Company Mgmt Shareholders Stakeholders

Fairness Responsibility Accountability Transparency

Fairness Responsibility Accountability Transparency

w hy bother with governance
Why Bother with Governance?

Provides assurance that management is acting with integrity

Creates competitive advantage

Reduces fraud and malpractice

Shareholder protection

Affects valuation

Compliance with laws and regulations

g overnance framework
Governance Framework

Other Stakeholders

Board of Directors


IT Steering


Audit Committees





p erception vs reality
Perception vs. Reality


IT projects deliver quality, are on time and within budget

Harness and exploit IT to return business value

Leverage IT to improve efficiency and productivity while managing risks


Business losses/damaged reputations and lost market position

Enterprise and core process inefficiencies due to IT

Failure of IT initiatives to bring innovation or deliver promise

e nterprise governance
Enterprise Governance

Corporate Governance

Traditionally includes:

Duties of Directors/Leaders

Legislative/Fiduciary Compliance

& Control

Ethics & Integrity

Business Operations, Risks &


Financial Accounting & Reporting

Asset Management

IT Governance


Enterprise/IT Objectives


Compliance & Control

IT Resources


Knowledge Management



Net Centric Technology

IT Operations, Risks, &



IT Asset Management

Corporate Governance focuses

on the enterprise’s:

Future Health


Accounting Management

Risk Management

Manage Critical Events

Trustee Financial Resources

IT Governance focuses on IT’s:

Alignment with enterprise objectives

Use of IT resources

Management of IT related risks

Value delivery

Source: Ron Saull, IT Coordinators Association

Presentation Title: IT Governance in Use

k ey issues confronting project sponsors
Key issues confronting project sponsors
  • Do not receive adequate decision support information

Status reports do not support management

Minimal to no third-party assessments

  • Projects tend to be initiated under irrational assumptions

In an effort to “do the deal” significant warning indicators are often overlooked

Political agendas skew decisions

  • Project financing has not adequately allocated commercial risks

SPE’s and other finance mechanisms capitalize projects

  • Underlying data does not have transparency or integrity

Project management and control systems are not effectively operating

Processes and internal controls inadequate

  • Public Confidence