Nobody in modern corporations have unlimited authority to do whatever they want. Their authority usually has financial and functional limitations.

It is not rare that projects that have gone out of control have become a burden to the managers that initiated them or even become the reason for their exit. They have stretched or exceeded their level of authority and also incurred unwanted risks and obligations to the company.

The scenario often occurs in projects that that turn out to be substantially more challenging than expected (having much higher costs, taking more time and demanding more from the organization).

It can be stressful to all involved when the sponsor’s level of authority is being exceeded. The sponsor needs to deal with the situation and communicate the bad news to relevant stakeholders. The project may be asked to provide detailed information, to re-plan, to change direction. It might even be necessary to evaluate the relevance of the project. The processes can be time-consuming and remove focus from delivery

Define level of authority

To understand the governance structure of the project, it can be an important activity to define and understand the sponsor’s level of authority both the formal and practical limits, and to understand who the sponsor involves when limits are exceeded.

The formal limits (financial and functional) are defined in the role of the sponsor whereas the practical limits define when the sponsor feels a need to involve additional stakeholders in the decision-making.

It may be important to know who stakeholders above the sponsor’s limit of authority are, and to know how to involve and prepare them. In some cases, the sponsor may want to take this responsibility in other cases in which the project may have active role.

Without having the knowledge about the stakeholders, there is a risk that they turn up as “phantom stakeholders” (unidentified stakeholders, in non-defined roles impacting the project in non-controllable ways)

The following questions can be used to address sponsor limits of authorization (ref 1)

• Do you approve the initiation of the project or are more persons involved?
• What types of change requests can you approve?
• How is the management level above or beside you get involved / informed about the project?
• When do you need to involve others in decisions regarding the project?
• Are there specific areas where the involvement of others is needed?  
• Do you inform additional stakeholders or shall the project do anything to keep them informed and involved?

Ref 1: Roeder, 2013, Managing Project Stakeholders, Wiley