Governance for special-purpose organizations

Countries and governments are inclined to set up organizations with a special mandate that aims to drive, lead and coordinate the required preparation to deliver mega projects such as Dubai Expo 2020, FIFA World Cup Qatar 2022™, NEOM etc. Such organizations are set up with a clear vision and ultimate objective that will require to be achieved in the medium and short-term – typically within a span of 10 years. The organizations will operate under a strict mandate and timelines with high strategic and reputational risks should there be any deviation. We refer to these as ‘special-purpose organizations’.

To enable special-purpose organizations to achieve their objectives progressively, they require effective governance which instills consistent alignment with the strategic objectives, sets the tone at the top and cascades the direction of the various functions of the organization. From start to finish, effective governance ensures that the organization remains on track to achieve the end goal.

But why is governance so important when this is a special-purpose organization and investing in governance could sound secondary, as opposed to direct investment in underlying preparation?

Another point of view may emerge, does governance not just mean more bureaucracy which entails time and cost? What value can governance really deliver?

Various value drivers call for an effective governance structure for such special-purpose organizations. There is a lot at stake for the organization and the pursuit brings excitement for the organization, coupled with pressure to deliver. The fine margins between success and failure can be measured by any number of factors – economic, environmental, legal, political, social, technological etc. Reputational risk needs to be considered globally, and is especially important in the Middle East region.

There are various value drivers of which five are listed below that are sought after by special-purpose organizations to achieve effective governance for delivering mega projects:

1. A governance structure that sets the tone at the top
   
   As per its definition, governance is the act of overseeing the control and direction of an organization[1]. Governance is typically instilled in an organization by establishing forums at each level in its hierarchy. The governance framework instilled by such an organization should be tailored to its objectives and key stakeholders at each level in its hierarchy.
   
   At the simplest level, a governance structure will set the tone at the top of the organization from where its mission, vision and objectives are cascaded down to project level. An effective project management office (PMO) will be key to oversee the delivery of these projects in alignment with the strategic objectives.
   
   
2. Informed and timely decision-making
   
   All special-purpose organizations require effective strategic decision-making supported by a PMO to track the progress against delivery of milestones in the project plan, as well as understand risks and issues to delivery of these milestones at any given point in time. After turning data into useful information, the PMO will then provide reporting by exception to each level of governance for timely decision-making.
   
   
3. Increasing resilience to challenges
   
   Special-purpose organizations require a diligent resiliency framework that would allow the organization to anticipate any negative implications in a timely manner and thus, have mitigation plans and responses to any unforeseen events which would reduce any operational or reputational impact. Governance provides a structured mechanism for responding to threats to ensure business continuity such as during a pandemic. The stakeholders involved in the governance of a special-purpose organization will have a mandate to act swiftly through consensus.
   
   
4. Building public trust
   
   As special-purpose organizations are set up by countries and governments, the public are an involved and/or impacted stakeholder. Effective governance for such organizations should ensure there is accountability to the public, transparency of information, and decision-making with the public’s best interest at heart.
   
   
5. Delivering long-term value
   
   Economic sustainability remains a hot topic in the Middle East. Special-purpose organizations should have legacy as part of their core and be intertwined with delivery of a country’s long-term vision. Through governance, leaders of special-purpose organizations can identify and regularly monitor how the significant investments made by countries are building a brighter future for its citizens.
   

Conclusion

An effective governance framework is essential to support the organization in being uniquely positioned to steadily progress towards achieving its objectives while maintaining the protection of the interests of all the stakeholders in the organization i.e. shareholders, governing bodies, employees, customers, vendors, regulators, the community etc. It will support such organizations to promote transparency and clearly articulate the division of responsibilities among different authorities.

The views and opinions expressed herein do not represent nor reflect those of Deloitte & Touche (M.E.) LLP (DME). Opinions, conclusions and other information in this blog post which have not been delivered by way of the business of Deloitte & Touche (M.E.) LLP (DME) are neither given nor endorsed by it.