Project Governance

Project governance establishes a solid framework that guides project success, creating transparency and confidence in decision making, clarity of roles and responsibilities, and consideration of stakeholder interests.⁠ (Footnote: As defined by the Victorian Department of Treasury and Finance, Investment Lifecycle and High Value/High Risk Guidelines – Project Governance, 2012. )

Government practice requires the use of appropriate governance structures and processes throughout the Infrastructure Investment Lifecycle, noting that the appropriate governance structures may change over time as the project progresses through the Infrastructure Investment Lifecycle (see Governance across the Infrastructure Investment Lifecycle section on this page).

The Project Team must include a description of the governance structure and processes that they will establish to progress the project through the Infrastructure Investment Lifecycle within the Business Case in Stage 2 – Prove of the Capital Framework, however appropriate governance structures and processes are required through each stage of the Infrastructure Investment Lifecycle.

Business Case in the Capital Framework process

Overview of the Capital Framework and the key questions, activities and documents of each stage. Project governance is required across the entire Infrastructure Investment Lifecycle from Stage 0 - Plan to Stage 5 - Measure, however the project governance structures should be documented within the Business Case in Stage 2 - Prove. The Business Case (for a project, program or a precinct) sits within Stage 2 - Prove of the Capital Framework and helps to answer the key questions of this stage: "What is the recommended project option? How well does it meet the service need, align with Government policy and optimise the balance between risk, benefits and cost? What is the proposed scope, budget and timeline?"

Tier requirements

Within Tier 1 and Tier 2 project Business Cases, the Project Team is required to describe the full governance structure for the project, across each of the Stages of the Infrastructure Investment Lifecycle.

Within Tier 3 project Business Cases, the Project Team is only required to outline the proposed governance structure.

Programs and Precincts

For Program and Precinct Business Cases, the Project Team is required to present the proposed governance structure for the entire Program or Precinct. The Project Team should also present the governance structure for each individual project within the Program or Precinct, where the structure is different and already known.

Purpose of this section

The purpose of this section is to:

This Guideline relates to project governance and does not cover the project management activities and structures that must be in place for the Sponsoring Agency, Project Director and Project Team to progress a project through the Infrastructure Investment Lifecycle. The difference between these concepts is shown below:

  • Project governance is the strategic framework for independent and whole-of-government decision making, goal setting and project development and delivery oversight. Primarily, the governance structure for a project is external to the Project Team and provides a line of decision making up to the executive powers administered through Ministers and Cabinet
  • Project management involves the day-to-day management of a project to ensure outcomes are delivered on time, within the agreed scope, to budget and to quality specifications. Project management is a professional discipline and the Project Team have discretion over the management structures and resources needed to deliver projects.

Objectives of project governance

The key objectives of project governance are to:

  • Enable integrity, transparency, and efficiency across project development, strengthening stakeholder confidence
  • Set the strategy for the project
  • Build solid project foundations that support and facilitate oversight
  • Guide and monitor project delivery and performance
  • Manage project risks through appropriate decision-making models and tools
  • Establish overall project accountability to ensure decision making is subject to independent and informed review and enable a forum for constructive feedback.

Collaboration is a critical principle of the Capital Framework

To ensure successful project development, the Project Team must ensure that continuous collaboration occurs with key stakeholders throughout the entire Capital Framework process. Key stakeholders should include MPC, FABG, ICA, EFG, and DDTS, as well as other Agencies that may have an interest in the project (such as those responsible for or affected by its delivery or operations) or are responsible for interrelated projects. Collaboration will support:

  • More comprehensive and robust project development
  • A greater understanding of the project’s risks, uncertainties and challenges, and any mitigation measures required
  • A greater understanding of the project’s opportunities to optimise its expected benefits
  • Early identification of project interdependences to reduce inefficiencies and manage interfaces appropriately
  • More seamless review and approval processes as key stakeholders have been involved throughout the process
  • A higher likelihood of project success.

Collaboration between the Sponsoring Agency, MPC, FABG, ICA, EFG, DDTS and other relevant Agencies should be defined in the governance arrangements through the remainder of Stage 2 – Prove and into Stage 3 – Procure, Stage 4 – Implement and Stage 5 – Measure.

Governance across the Infrastructure Investment Lifecycle

The governance arrangements and processes will change over time as the project moves through the difference stages of the Infrastructure Investment Lifecycle, as outlined below:

  • In Stage 0 – Plan, the governance arrangements are likely to be specific to the Sponsoring Agency and are unlikely to involve any other Agencies
  • In Stage 1 – Develop, the same governance arrangements as in Stage 0 – Plan are likely to apply as the Sponsoring Agency still has overall responsibility for the project, however there is a possibility that other Agencies and stakeholders may be included
  • In Stage 2 – Prove, the Sponsoring Agency will continue to lead the project, but other Agencies (such as Treasury and MPC) are more likely to be included within the governance structures. For designated Major Projects, MPC is likely to set up the Project Board during this stage
  • In Stage 3 – Procure and Stage 4 – Implement, a higher level of governance is normally established to provide oversight over the project as it is procured and implemented. MPC will be involved in the governance arrangements, and there may still be involvement from Treasury, particularly for designated Major Projects
  • In Stage 5 – Measure, the governance arrangements will largely revert back to the Sponsoring Agency, with the potential for some residual involvement from Treasury and MPC as required.

Footnotes: