GOVERNANCE REGIMES FOR LARGE COMPLEX PROJECTS
Roger Miller; Brian Hobbs
Project Management Journal; Sep 2005; 36, 3; ABI/INFORM Global
pg. 42
GOVERNANCE REGIMES FOR LARGE
COMPLEX PROJECTS
(!BSTRACfJ
This paper presents a framework for
building governance regimes for large
complex projects. The framework is
based on three sources: 1) a re-examina
tion of a study of 60 large capital projects
(Miller & Lessard, 2000), 2) the institu
tional, corporate, and project gover
nance literatures and 3) interviews
centered on the revision of the British
Private Finance Initiative and on the
development of the Norwegian project
approval process. The literature tends to
treat governance issues as being static,
but project development processes and
environments are dynamic. The gover
nance regimes must adapt to the specific
project and context, deal with emergent
complexity, and change as the project
development process unfolds. Learning
to manage project governance regimes is
difficult for organizations that are not
involved in great numbers of large com
plex projects. The framework based on
the progressive shaping of the project
through the project development life
cycle is designed to help overcome this
dilemma.
Keywords: project governance; life cycle;
mega-project; complexity; organizational
learning
2005 by the Project Management Institute
Vol. 36, No. 3, 42-50, ISSN 8756-9728/03
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ROGER MILLER, Jarilowsky Professor of Technological Innovation and
Competitiveness, Ecole Polytechnique, Universite de Montreal
BRIAN HOBBS, PMP, Department of Management and Technology Ecole
des sciences de la gestion, Universite du Quebec a Montreal
Introduction
T
his paper presents the basis of a new research initiative to develop gover
nance frameworks for megaprojects, both private and public, in a context
where the owner does not undertake large numbers of such projects on a reg
ular basis. Many governments and most private firms, even in capital-intensive
industries, are in this position. The situation in which an organization manages a
stream of megaprojects over an extended period of time is unusual. When under
taking a very large project without an adequate governance regime, most organi
zations are exposed to high probability of failure and the resulting significant
negative impacts. Megaprojects are qualitatively more complex and riskier, and
therefore require governance regimes that are different from those of more routine
and less risky endeavors.
This paper starts with a re-examination of a study of 60 large projects in which
the authors were heavily involved. The literatures on the corporate, institutional
and project governance are then examined in light of the results of this study. This
is followed by the examination of two situations in which long streams of
megaprojects have been managed over an extended period of time and in which
there has been a concerted effort to learn from this experience. These are the revi
sion of the British Private Finance Initiative (PF!) and the development of the
Nmwegian project approval process. Finally, the paper returns to the learning
dilemma most organizations face when undertaking a megaproject, and presents
the research program that is currently underway.
A Re-examination of the Results of the IMEC Research Program
From 1996 to 2000, the authors were ve1y heavily involved in a major research ini
tiative to investigate the management of large complex projects, the International
Research Program on the Management of Large Engineering and Construction
Projects (IMEC) (Miller & Lessard, 2000; Miller & I Iobbs, 2002). The prima1y
focus of this research was the study of the long and complex "front end" of these
projects. The lessons learned from the IMEC Program constitute the starting point
for this paper and the research presently undertaken by the authors. The primary
lessons from the IMEC Program have been summarized under the following eight
themes:
 1. The long, complex and critical front end. The front
ends of projects were very long, seven years on aver
age, and often very expensive (up to 33% of the total
budget). The management of this phase was critical
and showed significantly more impact on project
performance than the management of the engineer
ing, procurement, and construction phase.
2. Megaprojects are embedded in institutional frame
works. The anchoring of projects to institutional
frameworks was one of the most critical aspects of
these projects. In 63% of cases, important regulatory
or institutional changes were a critical part of the
project development process. Often the projects con
tributed to the creation or the modification of the
institutional framework into which they became
embedded, through a process of co-determination.
Projects embedded in strong institutional frame
works were much better able to withstand and sur
vive the impacts of emergent uncertainty.
3. The construction of coalitions within networks of
relations. In large complex projects the governance
relationship is very rarely a binary relationship
between one project sponsor and one governing
body. Project development, execution, and delivery
will most often involve a large number of stakehold
ers joined together in coalitions and alliances in the
role of project sponsor or in support of the project
sponsor. This sponsor group will typically face a
series of governing bodies, each of which will have a
role to play in project approval. The sponsor group
and the governing bodies will interact with other
stakeholders, some of whom may be opponents of
the project or its sponsor. The interactions among the
different groups of stakeholders involved in project
development, approval, and delivery can best be rep
resented as a dynamic social network.
4. High uncertainty and high risk. The projects inves
tigated were exposed to many different types of risk,
several of which are not typically taken into account
by traditional project management methods.
Governments reneging on commitments, slowly
materializing or insufficient markets, and social and
political challenges to legitimacy were among the
most important sources of risk. The level of uncer
tainty was extremely high, partly because of the large
number of potential sources of risk, the projects' vis
ibility, and their innovativeness. The length of time
required for project development and anchoring
increased the projects' exposure to emergent risk.
Each project encountered an average of four unfore
seen and potentially catastrophic events during their
long life cycles. Examples of such risks include
macro-economic events such as the Asian economic
crisis, changes in the political landscape, and the par
ent organization of a partner encountering financial
difficulties and restructuring.
5. Development through episodes of project shaping.
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The development of the project during the front-end
phase was shown to be a time-dependent, non-lin
ear, and iterative process, during which the project
was formulated, tested, challenged, and reformulated
through a series of episodes. Unforeseen risks and
issues emerge in successive episodes and must be
managed. The process is described as that of project
shaping through episodes. (See Figure 1.)
6. Strategic depth. The investigation of the strategies
deployed in the development and delivery of these
60 projects revealed a vast array of strategic options.
No consistent relationship was found between indi
vidual strategies and project performance. The proj
ects and their contexts varied so greatly that no one
strategy was appropriate to all cases. A strong correla
tion was found, however, between the variety of
strategies deployed, or strategic depth, and project
performance. Making a wide array of strategies avail
able required a strong sponsor/developer, a strong
leading coalition or support network, and a flexible
governance structure. The need for strategic flexibili
ty is in-line with the episodic nature of the project
development process and the uncertainty as to the
nature of the challenges and risks in future episodes.
The need for strategic flexibility creates a strategic
planning paradox in that being well prepared for the
requirements of early episodes may result in inade
quate preparation for later episodes and the associat
ed emergent risks. Project development requires a
rich and varied pool of strategic resources and the
flexibility to adapt to emergent situations.
7. Strong sponsors. The study showed that the capabil
ities of the project sponsor/developer had an impor
tant impact on the way the project unfolded and
ultimately on performance. Strong sponsors showed:
Integrative business perspective
Ability to evaluate complex systems from mul-
tiple perspectives
Relational and coalition-building competencies
Political and negotiating skills
Resources necessary to support long develop
ment processes
Possibility of diversifying risk through a por1-
folio of projects or other activities
Will to abandon bad projects.
8. Scrutiny. I ligh performing projects are subjected to
intensive scrutiny. The project sponsor plays an
important role in ensuring that projects are scruti
nized. The involvement of other stakeholders with
diverse interests and perspectives in a governance
structure that encouraged scrutiny also contributed
to the development and delivery of feasible projects;
examples include risk and financial evaluations by
those providing funding, and environmental and
social acceptabi Iity evaluations th rough diverse
3
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Extedd
Negot1at1ons
Holisti
Proposal Abandon
lnitiat
Exploration Aband0n
1 4 30
COST OF SHAPING EFFORT ($ MILLION)
Figure 1: Project Shaping through Episodes (From Miller & Olleros, 2000, p. 106)
mechanisms of public consultation. Often, the own
ership structure created a context in which stake
holders with both the ability and the incentive to
scrutinize projects had decision-making power.
Rigorous scrutiny provided through diverse mecha
nisms contributed significantly to the development,
selection, and delivery of feasible projects.
Interaction Between the Project and the Institutional
Framework Throughout the Life Cycle
The life cycles of all projects have many things in common.
They all start with a relatively high level of uncertainly, and
if they are not terminated prematurely, end with the delivery
of an artifact, which is usually put into service. The IMEC
Program showed that the life cycles of large complex proj
ects have characteristics that distinguish these projects from
many other types of projects. As has been previously men
tioned, the front end of this type of project is very long and
non-linear. Figure 2 presents a graphic representation of the
life cycle of large complex projects and the interactions
between the project, the institutional framework, and the
contextual environment.
At the outset, the level of ambiguity of large complex
projects tends to be extremely high. Most projects of this
type go through a long "search" period during which both
the problem and the solution are sorted out. During this
period, some of the players are already known but many
more are yet to be identified. In a significant number of
cases, this period of preliminary search lasts for decades. For
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90 120
example, many transportation infrastructure projects and
facility development projects are in the air for decades
before the timing is right to move to some form of concrete
proposal for action.
The search phase may be initiated by a perceived need
or opportunity, or by a signal from an important player that
he or she is open to proposals for a particular project or type
of project. Governments create opportunities and signal
their interest through policy statements and through
changes to the institutional framework. This phase is very
entrepreneurial. Not only are the problem or opportunity
and the solution being sorted out, coalitions of players are
also taking form. The rhythm is broken and sporadic.
Projects often go into limbo after periods of considerable
exploratory activity. Exploratory processes often lead to dead
ends and are abandoned, at least temporarily.
The passage from the exploratory search process to the
next phase of "strategic structuring" is often quite fuzzy; it is
much a question of gathering momentum. Several elements
come into place. The opportunity or problem becomes
more clearly defined and a conceptual solution takes form.
A project sponsor/developer often emerges with a coalition
of potential participants. Political support, whether it be
internal to the parent organization or external, starts to be
organized. During this phase, the level of activity increases
but remains sporadic as the project goes through episodes of
strategic shaping during which both the concept and the
supporting coalitions <1re developed in more detail, tested
for their acceptability, and redesigned (Miller & Olleros,
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PROJECT ENVIRONMENT
Figure 2: The life cycle of large complex projects (Adapted from Miller & Hobbs, 2002, p. 209)
2000). The process of shaping and reshaping the project con
cept is cyclical. Major setbacks are not uncommon because
this protracted process is vulnerable to significant and unfore
seen changes in the project environment. Timing is key.
During this phase, considerable effort is put into nego
tiating institutional arrangements that will anchor the proj
ect, giving it legitimacy and protection from challenges in
the future. A retrospective analysis of this phase will often
identify a project champion, a person, or organization that
has played the role of sponsor and developer of the project.
This role is central to the efforts to shape and reshape the
project and to the timing of successive periods of more
intense activity.
In most major projects, a time can be identified when
most of, if not all, the pieces come into place, and when sig
nificant and irreversible commitments are made. This is typ
ically the time when major contracts are signed and
financing is secured. This point marks the end of the strate
gic structuring phase and the beginning of the design and
execution phase. From this point, the management of the
project is more in line with conventional project manage
ment the01y and practice, which does not mean that it is
issue-free, but that the issues and their management are more
in line with well established project management practice.
The final phase of large complex projects is the delive1y
and commissioning of an artifact and its being put into serv
ice. This phase is receiving more attention in the project
management literature and is often treated as part of bene
fits management (OGC, 2003). In addition to the issues
related to realizing business benefits typically associated
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Design and Execution Commissioning and Ramp-Up
with benefits management, large complex projects often face
particular issues related to both market and social-political
reactions to their delive1y. Large infrastructure and capacity
development projects take a long time to implement. The
market conditions and the market's immediate response are
often very difficult to predict. If the initial market reaction is
unfavorable or slow in materializing, the financial impact
can be catastrophic. When this happens, the sponsoring
coalition and/or the institutional actors often step up to play
a vital role in restructuring the project to prevent its immi
nent demise. As this scenario is not uncommon, a gover
nance regime for large complex projects should include the
possibility that such actions will be necessary.
The IMEC Program showed that project performance is
heavily determined by the activities of the very long front
end phases. This research also showed that once a deal has
been made, financing has been obtained and contracts
signed, the engineering and construction phases tend to be
comparatively short, typically three years. Because this type
of project is often vulnerable Lo both market and/or social
political reactions upon delivery, the commissioning and/or
ramp-up phases are also critical to its success, and must be
included within the scope of project governance.
This is, of course, a schematic representation of the evo
lution of large complex projects. It highlights the four phas
es that have been described, each with its particular dynamic
properties. A governance framework for such projects must
account for this variability and non-linearity. The driving
force is the interplay between the sponsor's efforts in strate
gic shaping, the actions and reactions of the institutional
5
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 pl ayers, and the evolving project environment. Through this
i n teraction, the concept and the sponsoring coalition take
form, and the project is anchored i n to the i nstitutional
framework.
Reconciling Uncertainty and Responsibility
The primary focus of the analysis of the GO proj ects i n the
I MEC Program was on the reconcil i ation of u ncertainty and
feasibil ity, but what about responsibil ity? The questi ons of
social responsibil ity and the pub l i c good are complex. I t is
n ot feasible to address them i n any depth in the context of
a summary re-exam i nation of the case studies. H owever, this
re-exa m i nation did produce some i nteresting observations,
both of exa mples of "responsible" and "i rresponsible"
behavior and i l lustrations o f the complexity of these issues
in the particu lar context of l arge infrastructure projects.
Naively, one m ight picture the issue of social responsi
bil ity in a framework where a govern i ng body, be it a corpo
rate governance structu re or a pub l i c i nstitutional
framework, has established a process for approving projects
that are proposed by i ndependent parties, both pub l ic and
p rivate. The govern i ng body has the role of i nsuring that
responsible choices are m ade and that the project promoter
behaves responsibly. The fo l lowi ng observations from the
examination of large i n frastructure projects contrast s harply
with this na ive straw man model of project governance.
These are summarized in Figure 3 .
The assumption o f the moral high ground. Assuming
that one pa11y will necessaril y occupy the moral high
ground has been shown empirically to be inappropriate.
Th e "worst exa mples of i rresponsi ble behavior"
observed during the IMEC Program were governments
reneging on their commitments. Furthermore, Fl yvberg,
Bruzelius, and Rothengatter (2003 ) have shown that in
this type of project, the governing bodies do not always
make responsible choices.
Large i nfrastructure projects are visible and con
testable. They are never truly private endeavors.
Because of their visib i l ity and their environmental,
social and economic i m pacts, these types of projects are
always subjected to considerable public scrutiny and
are frequently contested ve1y actively by groups with
widely varyi ng i nterests and perspectives. Public scruti
ny and contestab ility are central to the promotion of
the publ ic good. H owever, these can lead to perverse
effects such as constituents pressuring politici ans to
renege on their co mmitments and projects being cap
tured by interest groups and being held for ransom.
I n stitution a l frameworks are often co-determi n ed.
The lega l and regu latory fram eworks i nto which proj
ects are anchored are subj ect to change. The changes
can be t h e resu l t of l obbying and n egotiation .
Governments also in troduce changes to sti mulate
i nterest in and to promote certain types of projects.
The more strntegica l ly i m portant and innovative the
project, the more l i kely i ts development w i l l require
changes to the i nstitutional framework.
S E l' T E \ 1 1\EH 2 0 0 5 I P R O J E t."f M ,\ N /\( : E \
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Governments as project participants. Governments
participate i n large infrastructure proj ects, even in "pri
vate" projects. They play diverse roles, i ncluding pro
m o ter, provider of funds and other resources,
facilitator, and protector. I l owever, m any govern ment
offi cials refuse to accept this reality i n defense of their
role as independent guardian of the publ ic good. This
l eads to contradictio ns, del ays, and m isunderstandi ng.
Complex network of actors and i n terests. Issues of
social responsibi l i ty and the pub l i c good are not sort
ed out in the context of a b i nary rel ationship, but
rather in the context of a complex n etwork of actors
and i nterests.
I ndeterminacy. Not al I issues, i n terests, and actors are
known at the outset. The project con cept and the con
text will evolve over t i me through successive episodes.
IDEALIZED GOVERNANCE REALITY
Bi nary relation Network relations
Established process Evolution & indeterminacy
Set by governing body Co-evolution
Assures responsible choice Not necessarily
Assures promoter is Not necessarily
responsible
ROLE OF THE STATE
I ndependent body Participant
Moral high ground Not necessarily
Figure 3: Contrasts between an idealized vision of mega project
governance and em pirical observations
Because of the h igh l evel of uncertai n ty, the reso lution
of issues of social responsib i l i ty cannot be thought of i n
terms of a predeterm i ned process for resolving known
issues. It must be thought of as a flexible process for making
certai n that issues are identified and resolved, knowing that
new issues will em erge as the proj ect unfolds. Because of the
visibility and contestabi l i ty of l arge infrastructure proj ects,
the issues of proj ect feasib i l i ty and soci al responsibility are
tightly intertwined. The mechanisms for resolving both are
strongly conditioned by the uncertain and emergent nature
of the project development process.
Paradoxes in the "Ideal" Role of the State
Major i n frastructure proj ects are very u n l i kely to be under
taken and realized un less the state is actively i nvolved i n
both the promotion a n d t h e structuri ng of such projects.
Likewise, the introduction of new proj ect development and
delivery strategies is i mpossible un less the state is actively
i nvolved in the strategies' promotion and i mplementation.
On the other hand, the state has a role as protector of the
pub l i c good, a rol e that is m ore easily fi l l ed from the posi-
. i E N T J 1 > t : R J\: A I .
 tion of an independent governing body that sets up regula
tory regimes prior to project proposal and that makes deci
sions to authorize projects proposed by others. In their
important study of public infrastructure mega projects,
Flybjerg et al. (2003, p. 109) state that "Governments should
not act as project promoter, but should, instead, enforce the
arm's-length principle" and that regulatory regimes "should
be specified up front as far as possible. " (p. 1 1 8) The argu
ment behind these is the need for the state to maintain its
independence as protector of the public good, a role that the
state must fill. H owever, examination of public infrastruc
ture projects reveals that without the state's active involve
ment, megaprojects are not possible. Furthermore, the
examination of such projects has revealed that the regulato-
1y regimes that govern such projects often require modifica
tion as the project concept and the regulatory regimes
co-evolve over a period of several years until a feasible solu
tion is developed.
The state is, thus, in a paradoxical situation in which it
is difficult to reconcile its roles as promoter, active partici
pant, regulator, and ultimate approval authority. The diffi
cult co-existence of these roles manifested itself in the form
of hesitations and contradictions in several of the projects
studied during the IMEC research program. It may be
impossible to resolve this paradox completely. I lowever,
mechanisms must be found to develop and implement proj
ects that reconcile stakeholder interests and public policy.
The IMEC Program showed that effective scrutinizing of
projects contributed to their performance and to the resolu
tion of this paradox. There are many mechanisms that can
support the scrutinizing of projects, but these must be
adapted to the specific project and its context. The design of
the governance regime should allocate risks, responsibilities,
and decision-making power in such as way that those with
the expertise to scrutinize projects have both the opportuni
ty and the incentive to do so. For issues related to the pub
lic good, the transparency and access to information are
essential components of the process (Flybjerg et al., 2003,
pp. 111- 11 5).
Rethinking the Design of Governance Regimes
The length of the life cycle in general and the front end in
particular is a challenge and an opportunity for the design
of project governance structures. Its very length is a chal
lenge because the governance structure must adapt to con
ditions that will undoubtedly change and to many
unforeseen events that will emerge over this time period. For
example, most such projects will need to survive at least one
election in democratic countries. In addition, the nature of
the issues that need to be addressed will also change as the
project unfolds in successive episodes of project shaping,
and as conditions evolve. The protracted nature of the proj
ect life cycle also provides an opportunity for adaptation.
Because the process is spread out over a long period of time,
there is an opportunity to transform the governance struc
ture as the project unfolds. Rather than thinking of the
design of megaproject governance structures as a search for
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the one best structure, the design of such regimes can be
thought of as a flexible strategic process that will draw on a
variety of governance mechanisms to deal with different
issues in different phases of the project life cycle. Some of
these issues are predictable, while others will be emergent.
This opportunity is unique to large complex projects.
A Re-examination of the Literature on Governance
When designing or analyzing a project governance structure,
one turns naturally to three streams of literature: on corpo
rate governance, on institutional governance, and on project
governance. The corporate governance literature addresses
the issue of what structures should be set up to govern an
organization, and is most often presented as a hierarchical
binary relationship between a principal and an agent
(Williamson, 1 996). Those writing on corporate governance
make an assumption that the governance structure will
remain in place for some time. There is a sharp contrast
between the bina1y, hierarchical, and static nature of corpo
rate principal-agent governance relations, and the time
dependent co-determination found in the network relations
typical of the governance of megaprojects.
The institutional governance literature provides rich
descriptions of several regimes, including markets, contracts,
hierarchies, regulatory, and associations ( Hollingsworth,
Rogers, & Boyer, 1997; North, 1 990). Rather than asking
which of these is the most appropriate for a given project or
context, these governance regimes can be seen as design ele
ments in the context of large complex projects. A particular
project or institutional framework could draw on several of
these governance regimes and vary their usage to manage
different issues at different phases of the project life cycle.
The IMEC Program showed that the best project strategies
combined a large number of individual strategies, a reality
captured by the concept of strategic depth and flexibility.
Analogously, project governance regimes could be analyzed
not with the goal of identifying the single best structure to
put in place, but for the rich mix of governance regimes to
be put in place to manage different issues and different
stages of the life cycle and the variation in their usage as the
project and its context evolve.
Project governance has only recently become an issue of
importance in the project management community and lit
erature. The Association for Project Management (APM)
Governance Specific Interest Croup (S I C) has published a
standard on project governance titled "Directing Change: A
Guide to Gove rnance of Project Management " (APM
Governance S IC, 2004). This standard specifically addresses
the bridge between corporate governance and corporate
strategy on the one hand, and project management on the
other. The standard does not specify the specific structures
and processes that should be put in place. It provides guide
lines largely in the form of key questions to be addressed.
Many of these can be seen as criteria for the design of proj
ect governance regimes, or as issues that must be resolved.
The standard is set in the context of the management of the
projects of a particular organization, public or private.
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 Megaprojects can rarely be treated within the context of a
single organization. The standard is, therefore, not directly
applicable to megaprojects. I lowever, both the general
approach of specifying design criteria and issues that must
be resolved and some of the specific key questions can be
drawn upon in the design or analysis of governance regimes
for megaprojects.
In both the corporate and project governance litera
tures, governance is conceptualized as an oversight function.
The structures that exercise the oversight function are stable,
while the activities and the context are seen as dynamic and
changing. The structures are designed to manage the dynam
ic nature of the activities and the context without changing
themselves. The governance of large complex projects
requires governance regimes that are themselves dynamic
that can change themselves to adapt to the emerging con
text. If corporate and project governance can be seen as
typically addressing first-order control, then governance of
large complex project can be seen as requiring second-order
control or self-organizing properties.
Institutional Learning
The creation and management of project governance struc
tures and institutional frameworks is critical to the success
ful development and delivery of megaprojects. Their
development and operation is extremely complex. H ow do
organizations learn to manage such complexity? The period
of the IMEC Program was one of much innovation and
experimentation with alternative strategies for project devel
opment and delivery. Much was undoubtedly being learned.
The results of the IMEC Program showed that some spon
sors and developers had acquired skill in this area through
considerable effort and through involvement in a stream of
large projects over time.
Over the last 10 years, there has been more interest in
the governance of projects in general and the governance of
large complex public projects in particular. Enough experi
ence has also been acquired to allow significant learning on
the governance of this type of project. Where a stream of
projects had been managed over a period of time, there is an
opportunity for significant learning. A systematic approach
would be to examine the results of the past stream of proj
ects, identify appropriate changes, implement them, and
measure their impact. Despite the opportunities for learn
ing, few systematic efforts have been found. Two examples
have been identified and are described briefly. These are the
development of the Norwegian megaproject approval
process and the revision of the British Private Finance
Initiative (PF!).
The Norwegian partners in the IMEC Program from the
Norwegian University of Science and Technology (N LIST)
have been pursuing the development of a framework for
scrutinizing large public projects in cooperation with their
ministry of finance (Magnussen & Samset, 2005; N LIST,
2005). From 1995 to 2000, the N UST with several partners,
ran a major initiative on project management, of which par
ticipation in the IMEC Program was part. In 2000, the
Ll ' T L \ \ H L I{ 2 0 0 ) I P R O I F C I
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Norwegian Ministry of Finance put in place a quality control
process by which the cost of major projects was validated by
independent consultants. The conclusion after five years is
that independent scrutiny may make project budgets more
reliable, but that more fundamental scrutiny of project con
cepts is needed earlier in the life cycle if very significant
improvements in performance are to be forthcoming. In
2005, a new quality control process was put in place that
requires scrutiny of the project concept earlier in the front
end. The aim is to validate the choice of concept before the
pre-planning phase. This process will include the require
ment to present alternatives and to validate the needs analy
sis. It will also require the examination of uncertainties,
anticipated socio-economic benefits, relevance, efficiency,
and sustainability. This is referred to as the "quality-at-entry
regime.
The experiment with this regime is interesting for sever
al reasons. It is an experiment in institutional learning in
which the NLIST is playing a significant role. The modifica
tions that are being put in place after the initial five-year
experiment are consistent with the obse1vations made here
on the value of scrutiny early in the project front end. The
fact that all large government projects must go through a
central clearinghouse is likely to support both more rigor
ous scrutiny and allow for further institutional learning.
The second example is the revision of the Private
Finance Initiative (Pf!) in Great Britain. In 2004, a series of
inte1views were conducted with key actors in this program
from both the government and private sector. Within the
Pf!, the British Government has undertaken over 450 proj
ects for a total value in excess of 35 billion pounds over a
1 2-year period. There has, therefore, been considerable
opportunity for learning. In 1 997, Sir Malcolm Bates
reviewed the program and recommended several significant
changes to its management. (Bates, 1997) This review and
the subsequent changes are presented here as an example of
institutional learning.
In the first wave of PF! in Great Britain between 1 992
and 1997, the management of projects was fragmented
among many different government agencies. This resulted
not only in significant redundancy in effort and often-unsat
isfactory project performance, but also a fragmented, expen
sive, and incomplete learning process. During the first wave
of Pr!, the cost of external consultants represented 12% of
total project costs, as inexperienced organizations searched
for advice on how to set up private-public partnerships.
following the Bates Review, a task force was set up in
HM Treasury to centralize and channel learning. This task
force influenced future PFI projects by producing policies,
tools, processes, guidelines, standard contracts, and docu
mentation for use in the many different agencies undertak
ing PF! projects. Through the Bates Review and later
publications, the program has been restructured (Bates,
1 997). Results reported by H M Treasury show that National
Audit Office assessments have documented significant
improvement in project performance following these
changes. "Over 7 5 % of PFI projects were delivered on time
0- I .A, t\ A. ( , l '.\l l-. I .l ( ) \ " R '.\/ . \ L
 or early, and in no case did the pub I ic sector bear the cost of
construction overruns, a significant improvement on previ
ous non-PFI experience" ( 1 IM Treasury, 2003 , p. 4 ). They
also report projects meeting public sector managers' initial
expectations in 75% of cases. This rather spectarnlar
improvement in project performance is cited here in support
of the argument that organizations can learn how to struc
ture project governance regimes and that this learning can
have a significant impact on project results.
In order for such learning to take place, the organiza
tion must do a large number of projects, and there must be
the political will to scrutinize both projects and the institu
tional framework through which they are managed. The
presence of a stream of projects seems a necessary, but not a
sufficient, condition for institutional learning and improve
ment in project performance. In the Norwegian and British
examples, both the examination and redesign of the frame
work and the scrutinizing of projects have been centralized,
with the ministry of finance having an important role.
Necessary Political Will
Organization al barriers to scrutiny and learning have been
observed in both the British and Norwegian examples,
and elsewhere. The political will to establish better
processes-to scrutinize and to be scrutinized-is often
lacking both at higher levels and in local agencies of gov
ernments and divisions of corporations. It is unusual for
a powerful politician or corporate executive to invite
scrutiny of either his or her pet projects, or of the process
es that are in place for the development, selection , and
govern ance of major projects. Likewise, lower-level organ
izations often attempt to avoid scrutiny. There is a will to
control the decision-making processes that govern strate
gic investments. This will to maintain influence and free
dom to act motivates attempts to avoid scrutiny.
Political will has driven both the British and
Norwegian examples cited above. The 1997 review of the
Fl'! program was undertaken by the newly elected Labor
government to examine the program set up by the previ
ous Conservative government. The revised program has
since become a major policy instrument of the Labor gov
ernment. In Norway, the initiative to critically review and
improve the governance process for large projects has
been driven by the prime minister's office. Both of these
initiatives are exceptional and required strong political
will at ve1y high levels. However, it is unlikely that a gov
ern ment would make such a critical examination of pro
grams it has initiated itself. Likewise, one might question
whether the prime minister's office will subject its own
high-priority "political" projects to the same scrutiny as
other projects.
Strong political will and courage are as important in
the private sector. In a recent investigation of large invest
ment projects in a company from a capital-intensive
industty, one of the authors discovered that a thorough
process was in place to scrutinize large capital invest
ments, a process involving the board of directors. I n
l l ' 1 1 \ J I ; \ IZ 2 0 0 ", I P R ( ) l f: C I l .\ :-4 A < , r l l N r ./ u t R /\ A J
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
recent years, the firm had made large capital investments
to increased capacity in two different areas of activity. I n
o n e o f the areas, project performance has been very good,
but it has been questionable in the other. llpon further
investigation, it was discovered that projects in the high
performing sector were being seriously scrutinized by the
board following the established process, while in the other
sector of activity, senior executives acting as project cham
pions had short-circuited the process and not subjected the
projects to the same intense scrutiny. Subjecting one's own
projects to serious scrutiny requires considerable courage.
In both the private and public sectors, the presence of
strong political will for critical examination and process
improvement is as exceptional as it is necessary.
The Learning Dilemma
The British PF!, with its volume of large complex projects,
is a rather extreme example of an opportunity to learn
from experience in managing such projects. Many organi
zations are in a situation where they will not have a suffi
cient stream of projects to support learning, either because
large complex projects are exceptional in their context, or
because they are experimen ting with what is, to them, a
newer type of project. The government of the territory in
which the authors reside has issued a policy statement sup
porting the use of public-private partnership projects for
the supply of public infrastructure projects of many types.
The local government has little or no experience in the
matter and is forecasting that this type of project will be
used only exceptionally. The possibilities for acquiring
extensive knowledge on the governance of this type of
project are, therefore, very limited. This same learning
dilemma is also present in the private sector, as very few
firms undertake very large, risky projects on a regular basis.
Even in capital-intensive and resource-based industries,
such projects are less than common . Both the desire to
maintain control of the decision-making process, and the
lack of experience and know-how, foster a situation in
which improvisation is common.
Conclusion: The Research Agenda
This paper and the material and ideas behind it are the
basis of a new research agenda, the objective of which is
to contribute to the building of a governance framework
upon which decision-makers could draw. A specific gover
nance regime must adapt to the particular project and its
context. The approach taken is, therefore, not the design
of a governance regime but rather the identification of
design criteria that should be brought to bear when devel
oping a governance regime for a megaproject. Several of
the criteria contrast with the traditional conception of
governance as a static, bin ary, hierarchical process.
Governance regimes for megaprojects are time-dependent
and self- organizing. They involve a network of actors in a
process through which the project concept, the sponsor
ing coalition, and the institutional framework co-evolve.
9
4
1
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ROGER MILLER is Jarislowsky Professor of Innovation and Project Management at Ecole Polytechnique in Montreal, and a founding partner
of SECOR, a strategy consulting firm with offices in Montreal, Toronto, and Paris. His work has focused on strategy and industry dynamics,
public policies i n science and tech nology, and project management. H e was the director of the IMEC (I nternational program in the
Management of Engineering and Construction), sponsored by 10 large international project developers. IMEC results were published by
MIT Press as The Strategic Management of Large Engineering Projects: Shaping Risks, I n stitutions and Governance.

Roger is presently the di rector of MINE Programme, a program aiming to understand the management of in novation in the context of the
new economy. The data for this research consists of 240 case studies and a worldwide survey of 1 500 Chief Technology Officers. The
research is conducted by a core team located in Ecole Polytech nique, with partners at University of Sussex, Torino, MIT, Stanford
and Toronto.

BRIAN HOBBS, PHD, PMP holds a degree in ind ustrial engineering, an MBA, and a PhD in management. He has been a professor in the
master's program in project management at the University of Quebec at Montreal for over 20 years. This program, of which he is a past
d i rector, is accredited by PMl's G lobal Accreditation Center. Dr. Hobbs is very active internationally in both the project management
professional and research com munities. He filled a three-year term on PMl's Standards Members Advisory Group (MAG) ending in 2002.
He is a reviewer for both the Project Management Journal and the International Journal ofProject Management. He has presented several
papers at both research and professional conferences organized by PMI and other project management organizations worldwide. In recent
years, he has been the member of two teams of researchers that have been awarded com petitively bid research grants by PMI.

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Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.