The need for a project governance body

Abstract

Purpose – From a project owner's perspective, it is obvious that a project shall contribute to achieving the organisation's strategic goals. The purpose of this paper is to find out what project owners can do to ensure value creation in their projects, what owners actually do in the few cases in which they are actively involved in ensuring value creation and what is the result of their choice. Design/methodology/approach – The authors have analysed 12 projects in the Norwegian construction industry, using a qualitative approach. A general business framework for understanding projects has been applied in order to identify possible shortcomings and success factors. The authors have used semi-structured in-depth interviews combined with questionnaires for data collection. Findings – The study reveals an absence of project strategy, resulting in projects which only to a small extent achieve strategic goals. This lack of strategic perspective in project management is also recognised by the research literature as a common tendency. Traditional project management approaches concentrate on time, cost and quality, instead of on providing strategic success. Based on business literature, the authors identify the value proposition and the customer value proposition as being essential. Practical implications – The authors recommend construction project owners – as described in the literature – to appoint a project sponsor responsible for communicating a value proposition and business rationale to the project supplier. The sponsor should also be responsible for aligning the suppliers’ customer value proposition with the owner's strategy. The authors recommend that the project sponsor be supported by a project governance body. This will help project owners to ensure value creation in their projects, as described in the literature. The authors pinpoint a need for bridging theory and practice. Originality/value – The originality of the paper lies in introducing insights from business literature to the construction industry. In the value proposition the owner defines the benefits the project is to provide. The customer value proposition is the statement where the supplier aligns the proposed project output with the project owner's needs. The project governance body is responsible for ensuring this communication process.