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Program and Portfolio Management Assignment 2: Part B

2.0 Governance problems and recommendation

According to PMI (project Management Institute, 2012), program governance is the process
of developing, communicating, executing, monitoring, and assuring the regulation, principles,
organizational structures, practices and procedures associated with a proposed program. A
proper and well-designed governance framework is essential for efficient and effective
project decision-making (Garland, 2009).
An investigation on the Arena project reveals several governance problems that create a lack
of oversight leading to project delay and cost overruns and project delay. These problems and
recommendations for improvement associated with the Arena project are discussed as
follows:
2.1 Problem 1 (Poor project management administration)

An appropriate governance structure was not established to oversee the project

Key plans were not put in place at the right time
The critical elements of the Strategic Asset Management (SAM) Framework and

normal approval processes were not followed

The rapid decision for the project due to government priority caused variations in the

framework that were not carefully considered and minimized.

The project team was inadequately resourced
A client agency was not appointed until December 2007 and DHW remained solely

responsible for both client and delivery role

2.2 Recommendation for problem 1

The governance framework and project management systems the reflect the scale and

complexity of the project should be put in placed

Establishment of a client agency with responsibility for the project planning and

scope. For the Arena, the potential agencies are the WA Sports Centre Trust,
Department of Sport and Recreation, WA Tourism Commission, and Department of
Culture and the Arts. Either of these agencies could be appointed as the client agency
rather than leaving DHW to take full responsibility for client agency role, as well as

delivery.
A proper project steering committee should be formed to provide strategic oversight

and drive the project.

The risks at each stages should have been identified and managed accordingly

2.3 Problem 2 (Poor estimate of cost and time)

The original cost estimate and opening date were based on insufficient scoping and

planning without systematic or sufficient analysis

External scrutiny or legal advice was not sought in making the decision
During the contract negotiation, major changes to the Arena design were made

without taking into account of its impact on project cost and schedule
DHW underestimated the risk and agreed to bear the responsibility of cost increase

and delay associated with design changes

Potential alternatives, such as re-tendering or reviewing the other offers etc. were not

considered in this case

2.4 Recommendation for problem 2

Effective strategic planning and project scoping through adequate and systematic
analysis

Embrace effective contract management in which careful analysis and evaluation are
made, about what might happen during the operation, to ensure that things are
included in the contract documents (OGC, 2010).

Seek for experts or appropriate legal advice for important business decision

Perform a preconstruction planning of project tasks and resources needs and effective
site management should be in place

Project management software (for example Microsoft Project, Montecarlo

simulation) might be used as an option to assist with budgeting and scheduling

The project should be funded only when the scope is well defined and estimated
budget and schedule are realistic

2.5 Problem 3 (Poor communication and record keeping)

The Minister for Housing and Works or Cabinet were not fully informed the key

information such as contract negotiation, pricing uncertainties etc.

DHW and OSP did not document (neither electronic or hard copy) and provide any

written record of the key issues and risks involved

The poor record keeping on the project contravened the State Records Act 2000 and
the project files transferred from DHW were found to be incomplete and in disarray

2.6 Recommendation for problem 3

Communication forms one of the basic strategies for effective program management. In the
Arena case, communications between the stakeholders could be improved by the following
means:

Regular meetings to discuss business decisions or directions

Arrangement for discussions through phone calls or face-to-face conversations
Internal or external correspondence (including emails) sent or received that relate to

agency work
Proper documentation of project status, risks and decisions and maintenance of
adequate records (either in electronic or hard copies form) throughout the project life
cycle

(Word count - 701 words)

3.0 Stakeholder identification, analysis and management

According to Bourne & Walker (2006), stakeholders in the project management context can
be defined as individuals or organizations or groups, who have an interest or some aspect of
rights or ownership in the project, and could impact or be impacted by the deliverables of the
project. Cleland (1999) stated that successful accomplishment of project objectives is
critically dependent upon effective stakeholder management skills that fully address their
expectations and manage accordingly throughout the project life cycle.
In the Arena project, the following stakeholders are identified depending on their connection
with the project:
-

The government, the minister for Housing and Works and the cabinet

Department of Housing and Works (DHW)

Department of Treasury and Finance (DTF)
Office of Strategic Projects (OSP)
BGC Construction (BGC)
WA Sports Centre Trust (Venues West)
Community of Perth

Among these stakeholders, the two agencies - DHW and DTW, their interests, influence, and
distance regards to the project will be discussed together with the justification of relevant
management theme for each agency.

3.1 Stakeholder identification

Stakeholder 1: Department of Housing and Works (DHW)

Based on the stakeholder model developed by (Walker, 2003), DHW can be identified as core
team stakeholder as the department was responsible for most major activities associated with
the project such as scoping, planning, tendering and contracting.
Stakeholder 2: The Department of Treasure and Finance (DTF)
DTF on the other hand, falls under the stakeholder category of the project sponsor.
3.2 Interest
Cleland (1995) states that it is important to develop an organizational structure of
stakeholders through understanding each stakeholders interest to address the best way to
manage stakeholders needs and expectations. According to Ward and Chapman (2003),
stakeholders have a vested interest (from very low to very high) in the projects success and

the impact of that interest can be ranged from very high to very low.
The stakeholders interest can be due to multiple factors depending on their position or
relation to the project. In the Arena case, DHW and DTF are investigated to have high
interest due to their mission relevancy, economic interest and legal right.
3.3 Influence
DHW and DTF possess political power as well as position power in the project, which makes
these agencies susceptible to have high influence over the project. According to Yukl (1998),
position power derives from either statutory or organizational authority and contributes to
have control over the information, physical and social environment, rewards and penalties
associated with the project whereas political power relates to control over decision processes
and institutionalization.
The influence mapping of DHW and DTF are described in the following diagram:

BGC
(contractor)

Venues West

External Opinion
shapers
DHW (project
leader

OSP

Community

DTF (sponsor)

Opinion on Arena
project

Shape interest in project

success

Contributes to
Network connection
Influences
Figure 1 Influence mapping (Modified from Bourne and Walker, 2003)

3.4 Distance
Application of the stakeholder circle model discussed in the Bourne and Walker article, it is
apparent that the positions of both DHW and DTF agencies are close to the center of the
circle that have pivotal impact on the project success. DHW forms influential stakeholder
close to the project and DTF can be regarded as one of the stakeholders of significant
influence.
Using Bourne and Walkers stakeholder circle model, the position of DHW and DTF in
relation to the center of circle is illustrated as follow:

DHW
DHW

DFT

Figure 2 Stakeholder circle showing distance (Modified from Bourne and Walker, 2003)

3.5 Management

Both DHW and DTF possess high power and high influence on the Arena project. Based on
their power and influence, the stakeholder management for these two agencies should be
planned and implemented carefully.
-

Their support should be maintained throughout the project cycle

They should be updated with the information concerning with the progress of the

project and risks involved for better control of the project

Maintain effective communication through meeting and reports as communication

forms the core strategy for stakeholder management

Organizational behavior and ethics are necessary to be considered as stakeholder
management comprises ethics of nurture and care (Smyth, 2008)

(Word count 659 words)

4.0 Bibliography
Bourne, Lynda, and Derek H. Walker. "Visualising and mapping stakeholder influence."
Management Decision (2005): doi:10.1108/00251740510597680.
Preston, Lee E., and Harry J. Sapienza. "Stakeholder management and corporate
performance." Journal of Behavioral Economics (1990): doi:10.1016/00905720(90)90023-Z.

Project Management Institute. A Guide to the Project Management Body of Knowledge

(PMBOK Guide). Newtown Square, Pa: Project Management Institute, 2004.
Western Australia. Office of the Auditor General. The Planning and Management of Perth
Arena. West Perth, W.A.: Office of the Auditor General for Western Australia, 2010.
Wood, David A. "Risk Simulation Techniques to Aid Project Cost-Time Planning and
Management." Risk Management (2002): doi:10.1057/palgrave.rm.8240108.
Yang, I-Tung. "Impact of Budget Uncertainty on Project Time-Cost Tradeoff." IEEE
Transactions on Engineering Management (2005): doi:10.1109/TEM.2005.84.