Lesson 1

LESSON 1
BUSINESS
ENVIRONMENT
• Foundation
• Strategic Alignment
• Project Benefits and Value
• Organizational Culture and
Change Management
• Project Governance
• Project Compliance
Copyright 2023© Project Management Institute, Inc. All rights reserved.

Version 3.0 | 2023 Release This material is being provided as part of a PMI® course.
Learning Objectives
• Define ‘project’ and how it relates to the • Discuss strategic alignment and its
larger discussion of project management. elements.
• Discuss the different types of • Explain the impact of business factors
organizational structures and how on strategic alignment.
they relate to your project’s
• Determine how projects align with
management.
business strategy.
• Discuss the principles of project
• Identify types of business value.
management.
• Describe change management theory and
• Discuss the principles of agile and
its relation to organizational change.
how they relate to your project’s
management. • Define and discuss project governance.
• Explain project compliance and its
importance.
Copyright 2023© Project Management Institute, Inc. All rights reserved. 2

This material is being provided as part of a PMI® course.
Foundation
TOPIC A
3
Project
A project:
• Creates a unique product, service or result

• Is time-limited
• Drives change
• Enables value creation for a business or organization
Project success depends on:
• Organizational project maturity

• Project manager effectiveness
• Funding and resource availability
• Team member skill levels
• Collaboration and communication within the team and with key
stakeholders
• Understanding of the core problem and related needs

The Evolution of ca. 1969 – PMI founded
Project The application of
Management knowledge, skills, tools and
techniques to project
activities to meet the project
requirements
Can you describe, in

your own words, how
project management has
changed during this
time? 2022 - Toward a systems view
“Projects do not simply produce outputs, but more

importantly, enable those outputs to drive
outcomes that ultimately deliver value to the
organization and its stakeholders.”
- PMBOK® Guide - Seventh edition
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© Project Management Institute, Inc. All rights reserved.
Project Management Life Cycles and Development Approaches
Description Key Roles Value Delivery Proposition
Plan-based approach: • Project sponsor • Deliverables transitioned to
• Activities completed in authorizes project customer at completion
a distinct or linear
fashion • Team led by project • Value realized in both short
• New phase begins only manager and long term
when the previous
phase is completed
Change-based approach: • Product owner controls • Iterative or incremental

• Agile, incremental or value proposition delivery to customer during
iterative development • Project team delivers work life cycle
• Timeboxed cadence • Process roles include team • Regular customer feedback
(iterations/sprints) or lead, scrum master, agile cycle enables continuous
continuous flow coach, facilitator development of value
toward a ”final” product
Any combination of the above

Project
Management There are several types of PMO
Office (PMO)* structures, each varying in the Directive
degree of control and influence • Manage shared resources
they have on projects within the • Coordinate communication
organization across projects
PMOs can be: Agile Centers of Excellence

Many large and (ACoEs)
established project- Supportive aka Value Delivery Office (VDO)
oriented organizations
• Develop best practices,
have a PMO, but PMOs are
not a requirement for methodologies, standards and ACoEs enable, rather than
project management templates manage, project efforts:
practice. • Coach, mentor, train, guide
project managers • Coach teams
• Build agile mindset, skills and
Controlling capabilities throughout the
• Monitor compliance with project organization
management standards, • Mentor sponsors and product
policies, procedures and owners
Copyright 2023
templates via project audits © Project Management Institute, Inc. All rights reserved.
7
OPM: Organizational project management (OPM) – strategy execution framework
that coordinates project, program, portfolio and operations management, and
A System for which enables organizations to deliver on strategy
Value Delivery
External Environment
Internal Environment
System for Value Delivery
Portfolio A Portfolio B Program B.1
Program A.1 Program A.2 Program B.1 Projects
Projects Projects
Projects Projects
Operations

Projects,
Programs,
Portfolios,

“Project management is like juggling three balls – time, cost, and quality.
Program management is like a troupe of circus performers standing in a circle,
each juggling three balls and swapping balls from time to time.”
- G. Reiss

Projects,
Programs, Collection of projects, programs,
Portfolio subsidiary portfolios and operations Aligns with
Portfolios Management managed in a group to achieve business strategies
strategic objectives
Group of related projects,

subsidiary programs and program Controls
Program activities managed in a coordinated components and
Management manner to obtain benefits not interdependencies
available from managing them to realize benefits
individually
Enables
achievement of
Project Part of a broader program, portfolio
organizational
Management or both
goals and
objectives

This material is being provided as part of a PMI® course. 11
Organizational
Structures
• Functional The structural model used by an organization will have a huge impact on how
• Matrix project managers interact with team members and stakeholders
• Project-oriented
Organizational structure and governance affects/determines:
• Composite
• How organizational groups and individuals interrelate
• How much authority the project manager has
• What resources will be available
• How the project will be conducted
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Functional
Organization
Structures
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Matrix
Organization
Structures Weak Matrix
“project manager” role
seldom identified
Strong Matrix
“project manager” role
designated
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Projectized
Organization Projectized
“project manager” is in total control
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Relative Authority in Organizational Structures
Functional Matrix Project-oriented
Team member Functional

Conflicted loyalty Project
loyalty department
Both functional
Team member
Functional manager manager and project Project manager
reporting
manager
Project manager Coordinator to full Full-time and

Seldom identified
role project manager responsible
Full-time on project
Team member role Part-time on project Part-time on project
(preferred)
Control of project Nonexistent Medium – shared with

manager over team (functional manager functional High
members controls) manager/sponsor

Interactive/Activity
Think of your current or a recent

project. Can you identify the
organizational structure type and
describe how it affects your
project in the following ways?
• How organizational groups and

individuals interrelate
• The project manager’s authority
• Resource availability
• How the project is conducted

17
Watch the Video here: https://youtu.be/YHIMcCfCFgU?si=jRN59BqdHL-NVud0
Project
Management a. Be a diligent, respectful and caring steward
Principles b. Recognize, evaluate and respond to system interactions
Guidance for All c. Navigate complexity
Project d. Create a collaborative project team environment
Practitioners
e. Demonstrate leadership behaviors
f. Optimize risk responses
g. Effectively engage with stakeholders
h. Tailor based on context
i. Embrace adaptability and resiliency
j. Focus on value
k. Build quality into processes and deliverables
l. Enable change to achieve the envisioned future state

From Principles to Performance Domains
Stakeholders
Use the 12
principles to
Uncertainty Team
guide
behavior in
the 8 project
performance
Development
domains Measurement Principles Approach and
Life Cycle
A project performance domain is

a group of related activities that
are critical for the effective
Delivery Planning
delivery of project outcomes. As
the performance domains interact
Project Work
and react to each other, change
occurs. (PMBOK® Guide –
Seventh Edition)
Agile
Derived from:
• Four values from the Agile Manifesto
• 12 principles
There are more than 50 known agile

practices and methods in use!
Copyright 2023©
2022© Project Management Institute, Inc. All rights reserved. 21
21
The Agile
Manifesto for
“We are uncovering better ways of developing software by doing it and
Software helping others do it.
Development
Through this work we have come to value:
Individuals and interaction over Process and tools
Working software over Comprehensive documentation
Customer collaboration over Contract negotiation
Responding to change over Following a plan
That is, while there is value in the items on the right, we value the items
on the left more.”
-2001
Principles
Behind the Agile
Manifesto
1. Our highest priority is to satisfy the customer through early and
1 to 6 continuous delivery of valuable software.
2. Welcome changing requirements, even late in development. Agile
processes harness change for the customer’s competitive advantage.
3. Deliver working software frequently, from a couple of weeks to a
couple of months, with a preference to the shorter timescale.
4. Businesspeople and developers must work together daily throughout
the project.
5. Build projects around motivated individuals. Give them the
environment and support they need and trust them to get the job
done.
6. The most efficient and effective method of conveying information to
and within a development team is face-to-face conversation.

Principles
Behind the Agile
Manifesto
7. Working software is the primary measure of progress.
7 to 12 8. Agile processes promote sustainable development. The sponsors,
developers, and users should be able to maintain a constant pace
indefinitely.
9. Continuous attention to technical excellence and good design
enhances agility.
10. Simplicity – the art of maximizing the amount of work not done – is
essential.
11. The best architectures, requirements, and designs emerge from self-
organizing teams.
12. At regular intervals, the team reflects on how to become more
effective, then tunes and adjusts its behavior accordingly.

Agile:
The “Far Side” of
“Doing Agile vs. Being Agile”
Adaptive
Approaches
Agile means:
• Iterations are likely to be shorter
• Product is more likely to evolve based on stakeholder feedback
Still used for software development, and agile principles have been
applied to other kinds of development projects, vis-à-vis the agile
mindset.
• Adopt a flexible, change-friendly way of thinking and behaving
• Understand the purpose of these practices
• Select and implement appropriate practices based on context
• Internalize agile values, mindset and behavior
Tailor* Projects
to Contexts
Because each project is unique, we adapt methods to the unique

project context to determine the most appropriate ways of working to
produce the desired outcomes.
Tailor iteratively and continuously throughout the project

Tailor Hybrid
Approaches,
Processes,
Practices and
Apply product knowledge, delivery cadence and awareness of the
Methods available options to select the most appropriate development
approach
Tailor processes for the selected life cycle and development

approach; include determining which portions or elements should be
added, modified, removed, blended, and/or aligned
Tailor practices and methods to the environment and culture

Topics Covered
• Foundational project management concepts

• Project management principles
• The Agile mindset
• Tailoring – hybrid approaches, processes and
practices in project management
28
Strategic Alignment
TOPIC B
29
“You have to be fast on your feet or else a strategy is useless.”
- Lou Gerstner, IBM

PMI Talent
Triangle®
The PMI Talent Triangle® reflects the skills needed by today’s project
professionals and changemakers as they navigate the evolving world of
project management.
Ways of Working (Aligns to the “Process” domain of the ECO)

Mastering diverse and creative ways (predictive, adaptive, design
thinking) to get any job done
Power Skills (Aligns to the “People” domain of the ECO)

The critical interpersonal skills required to apply influence, inspire
change and build relationships
Business Acumen (Aligns to the “Business Environment” domain of the

ECO)
Effective decision-making and understanding of how projects align with
the big picture of broader organizational strategy and global trends
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Strategic
Alignment and
Business Do you:
Management • Know your organization’s strategic plan?

Skills • Understand how project goals matter to the organization's long-term
vision and mission?
• See a high-level overview of the organization?
• Have a working knowledge of business functions eg. HR, finance,
sales, marketing & strategy?
• Have pertinent product and industry expertise?
Can you:
• Explain the essential business aspects of a project?

• Work with SMEs and a sponsor to develop an appropriate project
delivery strategy?
• Implement strategy to maximize the business value of project?

The Project
Canvass
Credit: The Project Management Handbook (HBR)

Book Recommendations

34
Strategic Management Elements and Frameworks
Some agile projects use a goal-

setting framework such as OKRs
(Objectives and Key Results) that
describes the organization’s
objectives and desired key results.
ongoing
Note: From PMI’s Standard for Portfolio Management

Organizational
Influences Influences
Enterprise Environmental Factors Refers to all the implicit input

Conditions outside the
or assets on processes used by
(EEFs) immediate control of the
Internal and influence,
External an organization in operating a
Internal
team, and that
• Internal and external to the EEFs business. This may include,
OPAs
constrain, or direct the
organization (Click to show definition) but is(Click
not limited
to show to, business
definition)
project, program, or
plans, processes, policies,
portfolio.
protocols, and knowledge.
Organizational Process Assets (OPAs)
• Project policies, procedures and
templates
Process, Corporate
• Historical project information External Internal Policies and Knowledge
Procedures Base

Get to Know
the External Use frameworks or prompts to understand external factors that can introduce
Business risk, uncertainty, or provide opportunities and affect the value and desired
outcomes of a project. Brainstorming or discussion with the team can help elicit
Environment scenarios.
• PESTLE: Political, economic, socio-cultural, technical, legal,

environmental
• TECOP: Technical, environmental, commercial, operational, political
• VUCA: Volatility, uncertainty, complexity, ambiguity
Other ways to understand the external business environment better include:
• Comparative advantage analysis
• Feasibility studies
• SWOT (strengths, weaknesses, opportunities and threats) analysis
• Assumption analysis
• Historical information analysis
• Risk alignment with organizational strategy
Internal Business
Environment Factors
• Organizational changes can

dramatically impact scope
• The project manager, project sponsor
or product owner need to be familiar
with business plans, reorganizations,
process changes and other internal
activities
• Internal business changes might cause:
• Need for new deliverables
• Reprioritization of value, including
removal of existing deliverables

OPAs and EEFs
OPAs EEFs
Processes, policies and Internal

procedures
Examples—
Examples— • Resource capabilities
• Organizational charts • Organizational culture
• Procurement rules • IT software
• Hiring and onboarding procedures • Distribution of facilities
Organizational knowledge bases External
Examples— Examples—
• Benchmarks • Marketplace conditions
• Estimates • Laws, regulations and standards
• Libraries or archives • Operating conditions
• Lessons learned repositories • Social and cultural influences
Activity:
Project name: Shawpe Lifestyle Centre
Identify OPAs and
EEFs
List of EEFs and OPAs:
a. Economic demand for a new shopping area

b. Historical society (conservation) building regulations
c. Local neighborhood demand for a better town center
d. Archive of past large infrastructure projects
e. Approved vendor and contractors list
f. Tenant selection process
Which are EEFs? Which are OPAs?

Enterprise environmental factors (EEFs) are conditions either internal or
external to the organization that are not under the control of the project
team, which can influence, constrain, or direct the project at the
organizational, portfolio, program, or project level.

Topics Covered
• Define strategic alignment and business

acumen
• Follow guidelines for effective business
decision-making
• Explore organizational influences on projects
• Explain how projects align with broader
organizational strategy and global trends
44
Project Benefits and Value
TOPIC C
45
“What’s easy to measure isn't always important; what’s important
isn’t always easy to measure.
- Albert Einstein

“Select and
Prioritize the
Project”
https://youtu.be/vD__pVFGCt4?si=zzgbrMpS8W7qXEfP

Business Value
• The net quantifiable benefit (tangible

and/or intangible) identified from a
business endeavor
• It’s part of the objectives or description
of the project in the initiating agreements
• Benefits realization is based on declared
business value
• The initiating agreements are the
business case, or, in some cases, a
contract or statement of work (SOW).
• The goal of a project is to provide value
to a business.
Copyright 2023©
Examine
Business Value
• Projects exist to deliver business value – whether that is monetary value, an
improvement on a product or service, or otherwise.
• Critical thinking and analysis are often used to determine what is of value to
the business
• Communicate with stakeholders, do the research, and use expert knowledge
• Examine, evaluate, and confirm to determine exactly what is or can be of
value!
Components of business value can include:
• Shareholder value or business growth

• Customer value - the value received by the customer of a product or
service
• Employee knowledge - an asset of the business, a frequently
overlooked component of business value
• Channel or business partner value - value derived from relationships with
business partners
Types of
Business Value
Financial New Social Benefit

Gain Customers
First to Market Improvement Regularization

Technological, Alignment or
process, etc. compliance with
standards and
regulations

Needs
Assessment
• In order to determine how organizational resources should be
Obtain Data for allocated, an evaluation and assessment of needs must be conducted.
the Project • This task is usually performed by a business analyst and precedes
the business case
• It involves understanding of:
• Business goals and objectives
• Issues and opportunities
• It recommends proposals to address:

• What should be done
Note: From Business
Analysis for • Constraints, assumptions, risks, and dependencies
Practitioners: A Practice • Success measures
Guide
• Implementation approach
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Business
Documents
• If a business is well organized, you will have access to clear business

documents.
• They can help you determine whether the project is worth the investment
that will be required
• These are developed prior to project start (usually by a business analyst

or key project stakeholder)
• They contain information about the project’s objectives and contribution to

the business goals
• They help the business to determine whether a project is worth the

required investment of time, money, and resources
Review the business documents periodically to ensure alignment

Business Business case: justifies project and establishes boundaries
Documents • Cost-benefit analysis
Business Case and • Business need
• Quality specifications
Benefits • Schedule or cost constraints
Management Plan
Acceptance of the business case usually leads to creation of the
project charter.
Benefits management plan should include:

• Processes for creating, maximizing and sustaining project
benefits
• Time frame for short- and long-term benefits realization
• Benefits owner or accountable person
• Metrics
• Assumptions, constraints and risks
This is a business document, not part of the project

management plan. Copyright 2023© Project Management Institute, Inc. All rights reserved. 53
Benefits
Management

Benefit
Measurement Cost-benefit analysis: How businesses justify the selection
(authorization) of a project
Methods
Business-based - “smaller is better”
• Estimate payback period — Smallest number (duration) chosen
• Assess opportunity cost — What if we didn’t undertake the
project?
Financial-based - largest number (profit) chosen - “bigger is

better”
• Time value of money
• Present value (PV)
• Future value (FV)
• Net present value (NPV)
• Internal rate of return (IRR)
• Return on investment (ROI)
You will not need to calculate any of these for the exam.

Project Selection
Using Present PV applies to projects that span several time periods when the value
Value (PV) and of money might change – e.g., inflation
Net Present
Factors to determine PV include:
Value • Future value
(NPV) • Interest rate
• Number of periods
Net present value (NPV):

• Is used for capital budgeting
• Accounts for inflation and macro-economic change (discount rate)
• Compares the value of a currency unit today to the value of the
same currency unit in the future
• A negative NPV is bad. A positive NPV is good.
• The project with the higher NPV is the better project

How OKRs Help
Deliver Business • OKRs (Objectives and Key Results) is a goal-setting framework used by
Value individuals, teams, and organizations to define measurable goals and track
their outcomes. It helps clarify investment ideas and the metrics used to
measure success
• Objectives are goals and intents
• Key results are time-bound and measurable milestones under these
goals and intents
OKRs best practices:
• Support each objective with between 3-5 measurable key results
• Aim for 70% success rate to encourage competitive goal-making. A 100%
success rate should be re-evaluated as not challenging enough
• Write OKRs that are action-oriented and inspirational and include concrete,
measurable outcomes

OKR Examples
1. OKR example for customer support teams
OBJECTIVE: Improve customer satisfaction.

KEY RESULT #1: Reduce wait time on customer support tickets to 24 hours.
KEY RESULT #2: Improve feedback scores on our customer surveys to an
average four-star rating.
2. OKR example for product management teams
OBJECTIVE: Roll out a refreshed version of our main product.

KEY RESULT #1: Obtain 2,000 new product signups.
KEY RESULT #2: Have product reviews published on 10 major industry
websites.

Incremental
Value Delivery
Businesses need to show value delivered to please stakeholders and,

in many cases, to continue funding the project!
Breaking down the delivery of features and functions (where possible)
enables continuous progress and feedback on the results delivered.
An incremental development approach can:
• Enable value delivery sooner
• Attain higher customer value and increased market share
• Allow partial delivery (or previews) to customers
• Enable early feedback, allowing for adjustments to the direction,
priorities and quality of the product

Which three of the following are a financial-based benefit
measurement methods? (Choose three)
A. Net present value
B. Internal rate of return
C. Return on investment
D. Opportunity cost

Opportunity cost is defined as the value of a
proposed project selected.

ECO Coverage
3.2 Evaluate and deliver project benefits

and value
• Investigate that benefits are identified
(3.2.1)
• Evaluate delivery options to deliver value
(3.2.4)
2.1 Execute project with the urgency
required to deliver business value
• Assess opportunities to deliver value
incrementally (2.1.1)
62
Organizational Culture and Change
Management
TOPIC D
63
“Let him that would move the world, first move himself.”
- Socrates

Reasons for
Projects

Change Management*
• Remaining relevant in today’s business

environment is a fundamental challenge
for all organizations.
• Organizations embrace change as a
strategy for being responsive to
stakeholder needs & desires
• For organizations with PMOs, PMOs
build and sustain alignment between
projects and the organization.
• Change management works hand in
hand with continuous improvement and
knowledge transfer activities at the PMO
level

Manage
Organizational
Change Impacts
on Projects
Understanding the organization’s culture and the impact of a change on
both the organization as well as the project requirements is critical for
successful implementation of the project.
These are the actions required of project managers to manage

organizational change impacts on projects:
• Assess organizational culture

• Evaluate the impact of organizational change to the project and
determine the required actions
• Recommend options for changes to the project
• Continually monitor the external business environment for impacts to
project scope/backlog
Get to Know Organizational
Cultures and Styles
• View of leadership, hierarchy and

authority
• Shared vision, beliefs and expectations
• Diversity, equity and inclusion practices
• Risk tolerance
• Regulations, policies and procedures
• Code of conduct
• Operating environments
• Motivation and reward systems
Copyright 2023©
Risk, Culture and
Change in
Organizations
One of the areas closely tied to the culture of the organization, and which
project managers must be keenly aware of, includes the risk tolerance of the
organization & the individual stakeholders within that organization.
Risk threshold and appetite are shaped by diverse values of:

• Country/region
• Industry/sector
• Leadership
• Project team
These must be understood with care to:

• Establish effective approaches for initiating and planning projects
• Identify the accepted means for getting work done
Often before a project starts, business analysts or engineers conduct a
needs assessment for project approval and funding. Which two of the
following are items identified or specified in a needs assessment for a
new project? (Choose two)
A. The project manager
B. Business goals and objectives
C. Potential constraints, assumptions, risks and dependencies
D. Individual or department who will handle procurement invoices

Change
Management
Framework
“Organizational change requires individual change”
Prosci’s ADKAR® framework is widely known as a model that creates a powerful

internal language for individual change and gives leaders a framework for
helping people in their organization embrace and adopt changes.
The ADKAR® model names five milestones an individual must achieve in order
to change successfully:
• A – Awareness of the need for change
• D – Desire to support the change
• K – Knowledge of how to change – what to do during & after the change
• A – Ability to demonstrate new skills and behaviors e.g. Using a new or tool
process
• R – Reinforcement to make the change stick
Actions to
Support Change
DO DON’T
• Coach co-workers to support the • Force changes – Involve and

business — patience and consult; aim to secure buy-in to
compassionate mentoring are key the reasons for change
• Enable an agile operating • Alienate resisters – Change can

system - Coach team members in breed conflict, so proceed
agile to facilitate adoption of a carefully
change-centered mindset
• Keep knowledge current –

Continuously improve processes
and knowledge

Plan for Change
Define the knowledge transfer, training

and readiness activities required to
implement the change brought by the
project
• Include an attitudinal survey to find out

how people are feeling
• Create an informational campaign to
familiarize people with changes
• Be open and transparent about potential
effects of the changes
• Consider creating a rollout plan
The rollout plan is not a project

management plan component.

Organizational Transformation
for Project Practitioners
• A North Star statement articulates the

vision and strategic objectives
Brightline® - a
PMI initiative
• Customer insights and global
megatrends The Brightline
Transformation
• A flat, adaptable cross-functional Compass and five
transformation operating system building blocks of
transformation - an
• Internal volunteer champions (not enterprise-level
external consultants) change management
framework
• Inside-Out Employee Transformation
(similar to ADKAR)

Every timeboxed iteration in the project has a demo scheduled at the end
during the iteration review session. What is the goal of this demo?
A.To groom the iteration backlog
B. To revise the product roadmap
C. To solicit feedback from the product owner and other
stakeholders
D.To establish the features to be included in the product backlog

ECO Coverage
3.4 Support organizational change

• Assess organizational culture (3.4.1)
• Evaluate impact of organization change
to project, and determine required
actions (3.4.2)
• Evaluate impact of the project to the
organization and determine required
actions (3.4.3)
81
Project Governance
TOPIC E
82
“Knowing is not enough, we must apply
Willing is not enough, we must do.”
- Johan Wolfgang Von Goethe

Project Governance
The framework, functions, and processes
that guide project management activities to
create a unique product, service, or result
to meet organizational, strategic, and
operational goals.
Key benefits:
• Offers a single point of accountability
• Outlines roles, relationships and
responsibilities among project
stakeholders.
• Issue management and resolution

• Information distribution and clear
communication
Governance type differs among Copyright 2023© Project Management Institute, Inc. All rights reserved.
84
organizations and projects. This material is being provided as part of a PMI® course.
Project Too much governance can annoy stakeholders, while relaxed
governance can lead to a lack of stakeholder engagement or
Governance accountability.
What Kind and
How Much?
Project Governance:
• Is typically already in place – established by a PMO or aligned with
organizational policies
• Depends on strategic importance of project, constraints or oversight
requirements
• Critical for managing internal or external business environment

change and deviations in budget, scope, schedule, resources or
quality
• Budget management oversight is a key governance area.

Project Governance: Components
Project governance provides support for projects in the form of reliable processes to follow and
structures or frameworks.
This is a list of the processes governed usually by a PMO.
• Change • Stage gate or phase reviews

• Communication • Guidelines for aligning project governance
• Documentation — i.e., project and organizational strategy
management plan • Project life cycle and development
• Decision-making approach
• Internal stakeholder alignment with project • Project organization chart with roles
process requirements • Project success and deliverable acceptance
• Review and approval of changes above criteria
project manager authority level • Relationship among project team,
• Risk and issue identification, escalation organizational groups and external
and resolution stakeholders
Governance in
Adaptive
Projects
Agile-based methodologies offer clear governance benefits to
stakeholders.
• They provide a clear view of project status from:
• Defined iteration/sprint expectations and outputs
• Releases tied to specific dates
• “Real-time” monitoring of project outputs through daily standups
Iterative approaches enable quicker and less costly identification of

value-based outputs than predictive

Governance
Board
aka Project Board
or Steering • Within an organization, there may be separate or combined
Committee committees to provide support to the project manager.
• The governance board provides project oversight to the project
objectives, performance, and adherence to project policies and
procedures
• May include the project sponsor, senior managers, and PMO
resources
Does anyone have • May be responsible for:
experience with a project • Reviewing key deliverables
governance board? • Providing guidance for project decisions
Describe how it works
with your project. Projects that use Scrum or SAFe® use intermediary governance
boards to liaise between the project and organizational
governance
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Project teams and project managers are given authority to act on change and
Governance issues. The scope of this authority is determined by the organization, through
Defines the PMO or, alternatively, the authority that manages programs or portfolios.
Escalation
For problems outside a project’s thresholds or tolerance levels:
Procedures
• Escalate to the responsible stakeholder who is authorized to take action;
• But if an issue is within the threshold, then work with the team to find a
resolution.
AUTHORITY
Responsible
Stakeholders
Project
TOLERANCE
Team
PROBLEM

Governance and
Life Cycles
A Systems View
Governance system works alongside the value delivery system — the
project life cycle.
Why? To enable smooth workflows, manage issues and support

decision making.
Remember the project
management principle -
Recognize, evaluate and
respond
to system interactions
Value delivery as product of Value delivery embedded in
life cycle – at the end of the life cycle – customer
project participation & incremental
delivery
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Governance Checkpoints: Phase Gates and Iterations
Predictive Adaptive
Split work into phases Split work into releases
Review results at a phase gate – aka,

Review results at end of iterations
governance gate, kill point, or tollgate
Decide:
• Continue to the next phase Gather feedback and take action to improve
• Continue with modifications, or value in next iteration
• End a project or program
Continue until customer’s acceptance criteria –

e.g. definition of done or MVP – is satisfied or
project ends

Project Phases
Relationships
Project phases are logically related activities with delivery of an output, outcome
or deliverable.
They are normally the point at which a decision is made as to whether to
continue to the next phase, improve the results delivered, or cancel/defer future
work.
Phases produce one or more deliverables; outputs from one phase are
generally inputs to the next phase.
They can have sequential or overlapping relationships.
PHASE GATE
PHASE 3
PHASE 1 PHASE 2
0 6 12 18 24 30 36

Apply
Governance to
Predictive PHASE 3
Project Phases PHASE 1 PHASE 2
At the • Verify and validate project assumptions

beginning of a • Analyze risks
phase: • Provide detailed explanation of phase deliverables
• Key deliverables produced

At the end:
• Review to ensure completeness and acceptance
If huge risks are encountered, deliverables are no longer needed

or requirements change, a phase or project will be terminated.

In a multiphase project, which two of the following terms refers to a
decision to continue with the next phase or to end the project? (Choose
two)
A. Kill point
B. Phase gate
C. Threshold
D. Go/no go point

ECO Coverage
2.14 Establish project governance structure

• Determine appropriate governance for a
project (e.g., replicate organization
governance) (2.14.1)
• Define escalation paths and thresholds
(2.14.2)
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Project Compliance
TOPIC F
96
Compliance
Compliance is related to project quality and to the business and industrial

contexts of your project’s product or service. Whatever they are, you are in
charge of ensuring that your project activity and outcomes are aligned with legal
or regulatory standards, as necessary.
• Internal and external standards include:
• Government regulations
• Corporate policies
• Product and project quality
• Project risk
• PMO monitors compliance at the organizational level
• The project team is also responsible for project activity-related compliance,
including:
• Quality of processes and deliverables/products
• Procurement and work by vendors
Compliance Requirements
Legal or regulatory constraints include:

• Requirements for specific practices
• Standards
• Privacy laws
• Handling of sensitive information
Quality: Tailor to your project — How much

process rigor and quality control is
relevant?
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Compliance
Categories
Classification
• Environmental risks
• Workplace health and safety
• Ethical/non-corrupt practices
• Social responsibility
• Quality
• Process risks
Categories vary based on:

• Industry and solution scope
• Unique legal and regulatory exposure

Compliance
Threats
How to
Investigate
The project team needs to understand where compliance-related
project threats come from so they can be identified. Ask:
• Where/who in the organization handles compliance? This may be a
project stakeholder
• What legal or regulatory requirements impact the organization? e.g.,
workplace safety, data protection, requirements for professional
association memberships
• What is the organization’s quality policy? If there isn’t one you will
have to create one for the project
• Are the team and stakeholders aware of compliance matters? Ask
them. This can be a simple and effective way to know what level of
compliance knowledge you are dealing with
Treat Compliance • Noncompliance is one of the most serious risks in a project and in
as a Project organizations. It should be identified as the highest priority on the risk
register, or on a dedicated compliance register if your organization uses
Objective one
• Proactively track and manage risks for compliance requirements
• Be prepared to perform quality audits
• Continuously validate legal and regulatory compliance for deliverables
• Check compliance before the end of the project to avoid transferring issues
• In a risk or dedicated compliance register, include:
o The identified risk
o A responsible risk owner
o Impact of a realized risk
o Risk responses
Larger organizations or those in highly regulated industries typically
have a compliance department or officer.
Compliance
Five Best Practices
• Documentation: Document & update compliance needs and risks

• Risk planning: Prioritize compliance in risk planning
• Compliance council: Includes quality/audit specialists and relevant
legal/technical specialists
• Compliance audit: Formal process – a means of ensuring
compliance
• Compliance stewardship: It’s your responsibility!
Interactive/Activity
Let’s talk about compliance.
• Does your organization have a quality

policy?
• Do you know where to find the quality
policy or standards for your projects?
• What kinds of compliance activities are
you involved with?

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ECO Coverage
3.1 Plan and manage project compliance

• Confirm project compliance requirements
(e.g., security, health and safety,
regulatory compliance (3.1.1)
• Classify compliance categories (3.1.2)
• Analyze the consequences of non-
compliance (3.1.5)
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End of Lesson 1
105

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• Creates a unique product, service or result

Project success depends on:

• Organizational project maturity

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Can you describe, in

“Projects do not simply produce outputs, but more

- PMBOK® Guide - Seventh edition

Change-based approach: • Product owner controls • Iterative or incremental

Any combination of the above

PMOs can be: Agile Centers of Excellence

System for Value Delivery

Portfolio A Portfolio B Program B.1

Program A.1 Program A.2 Program B.1 Projects

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Group of related projects,

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Functional Matrix Project-oriented

Team member Functional

Project manager Coordinator to full Full-time and

Control of project Nonexistent Medium – shared with

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Think of your current or a recent

• How organizational groups and

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A project performance domain is

There are more than 50 known agile

Individuals and interaction over Process and tools

Working software over Comprehensive documentation

Customer collaboration over Contract negotiation

Responding to change over Following a plan

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Because each project is unique, we adapt methods to the unique

Tailor iteratively and continuously throughout the project

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Tailor processes for the selected life cycle and development

Tailor practices and methods to the environment and culture

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• Foundational project management concepts

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Ways of Working (Aligns to the “Process” domain of the ECO)

Power Skills (Aligns to the “People” domain of the ECO)

Business Acumen (Aligns to the “Business Environment” domain of the

Management • Know your organization’s strategic plan?

• Explain the essential business aspects of a project?

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Credit: The Project Management Handbook (HBR)

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Some agile projects use a goal-

Note: From PMI’s Standard for Portfolio Management

Enterprise Environmental Factors Refers to all the implicit input

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• PESTLE: Political, economic, socio-cultural, technical, legal,

• Organizational changes can

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Processes, policies and Internal

Organizational knowledge bases External