Risk, uncertainty and governance in megaprojects: A critical discussion of alternative explanations
Highlights
► Discusses different explanations for performance problems in megaprojects. ► Examines proposed governance solutions. ► Proposes three-fold typology of explanations and governance solutions. ► Identifies shared acceptance of farsightedness and focus on governance as organization. ► Concludes that future research should focus more on governing as spontaneous organizing.
Introduction
Governance has become an increasingly popular theme in the project management literature. This reflects a widening of focus away from the purely technical and operational tasks that need to be fulfilled to deliver project outcomes, to encompass a much greater interest in how interactions between the multiple actors responsible for undertaking those tasks are organized and coordinated (see, for example, Atkinson et al., 2006, Clegg et al., 2002, Flyvbjerg et al., 2003, Miller and Lessard, 2000, Pitsis et al., 2003, Pryke and Smyth, 2006, van Marrewijk et al., 2008, Williams et al., 2009, Winch, 2001, Winch, 2009). Kloppenborg and Opfer (2002) describe this in terms of an increased focus on stakeholder identification and management.
This reorientation in the literature has coincided with the increasing popularity over the last 25 years of a project form variously described as the megaproject (Flyvbjerg et al., 2003, van Marrewijk et al., 2008), the large engineering project (Miller and Lessard, 2000), or the service-led project (Alderman et al., 2005). These labels are applied to very large-scale projects with several shared features: the project delivers a substantial piece of physical infrastructure or a capital asset with a life expectancy measured in decades; the client is often a government or public sector organization; the main contractor or consortium of contractors are usually privately-owned and financed; the contractor often retains an ownership stake in the infrastructure/asset after the construction phase is completed – typically as a minority shareholder in a special purpose vehicle (SPV) – and is paid by the client for the service that flows from the asset's operation or use over a number of years. It is this final feature, commonly associated in the literature with the notion of public-private partnership (Skelcher, 2005), that most differentiates such infrastructure projects from those undertaken in the years before the mid-1980s.
These characteristics, associated with what Crawford and Pollack (2004) call ‘soft’ projects, are deemed to create exceptional challenges for project managers. There are high levels of complexity along various dimensions (Remington and Pollack, 2007), the potential for significant conflicts of interest between the wide variety of public and private sector stakeholders (Alderman et al., 2005, Clegg et al., 2002), and the need to make decisions and to act under conditions of uncertainty as well as risk (Atkinson et al., 2006, Loch et al., 2006). There is substantial evidence that these challenges are proving somewhat intractable, often leading to substantial cost overruns, delays in completion and failure to deliver against the objectives used to justify projects (see, for example, Eden et al., 2005, Flyvbjerg, 2009, Flyvbjerg et al., 2002, Flyvbjerg et al., 2003, Miller and Lessard, 2000, NAO, 2006, NAO, 2009, Williams, 2005, Williams, 2009). It might seem somewhat paradoxical, therefore, that megaprojects have become increasingly popular in recent years (Williams, 2009). A willingness to take on these challenges is attributed by some to what Bauman (1998) has called the ‘Great War of Independence from Space,’ suggesting that infrastructure enhancements are playing a key role in reducing distance and therefore friction between actors in different parts of the world (Flyvbjerg et al., 2003).
This article discusses how a number of different writers seek to explain the significant performance problems exhibited by many megaprojects, and critically examines their suggested governance solutions. The key aims are to provide a broad categorisation of different types of explanation and associated solutions, and to identify any significant commonalities between explanations. This is achieved by examining each author's fundamental epistemological assumptions about decision-maker cognition and about decision-maker views on the nature of the future (risky or uncertain). The use of epistemological foundations as a basis for categorising different explanations of megaproject performance is inspired by the work of the Rethinking Project Management Network (Cicmil et al., 2006, Winter et al., 2006).
The different ways in which these epistemological assumptions might be handled are examined in the next section, in order to elucidate some spaces within which the selected texts can be categorised and critiqued. Three types of explanation are identified and discussed in the subsequent section. The key insight derived from the discussion is that despite important differences in their epistemological orientation these three types of explanation share an acceptance of the notion of actor farsightedness, albeit differently conceived. It is concluded that this acceptance encourages these explanations to focus on governance in megaprojects – forms of organization designed ex ante – and to ignore governing in megaprojects — micro-processes of organizing emerging ex post. The possibility that changes in governance might occur and the nature of any change as a project proceeds are therefore downplayed. A call is made for future research to include a greater focus on project governing, conceiving it as spontaneous order rather than something that is designed or made (Chia and Holt, 2009). The argument here, though, is not that a focus on governing should replace a focus on governance, but rather that there should be an appreciation of both levels of analysis. It is acknowledged that governing exists in the context of governance and that the two are mutually constitutive. The paper thus adds to calls made by other researchers for a broadening of research to provide a richer understanding of the actuality of projects (Cicmil et al., 2006, Hällgren and Söderholm, 2011) and suggests a way in which this broader agenda can be taken forward.
Section snippets
Epistemological spaces for categorising and critiquing alternative explanations
The argument proposed here is that a proper critical discussion of any explanation requires attention to its underlying assumptions about what we can know about the nature of the world. Without attention to important differences in these assumptions it is hard to gain proper purchase on sometimes rather subtle differences between explanations in approach and emphasis. While this might seem a somewhat obvious point, it is by no means universal practice for academic writers to be reflexive, to
Text selection
The process used to identify the texts discussed here was a version of snowball sampling, where an initial set of key selections led onto further selections (Scarbrough et al., 2004). The sampling involved an initial scan of the literature, both manually and electronically, using a number of predefined search terms: ‘megaprojects,’ ‘large-scale projects,’ ‘major projects,’ ‘complex projects,’ ‘governance,’ ‘risk,’ ‘uncertainty,’ and ‘performance.’ This initial scan identified three prominent
Conclusion: from farsighted governance to spontaneous governing
This paper has identified three distinct types of explanation for the performance problems that plague many megaprojects. The strategic rent-seeking explanation argues that project underperformance is a function of pre-planned opportunistic behaviour by key vested interests leading to the regular approval of non-viable projects (cf. Davidson and Huot, 1989, Flyvbjerg, 2009, Flyvbjerg et al., 2002, Flyvbjerg et al., 2003, Flyvbjerg et al., 2005, Wachs, 1989, Wachs, 1990). The explanation that
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