Despite the challenges that have beset projects like High Speed 2 and the New Hospitals Programme, the government’s commitment to publishing a 10-year infrastructure strategy, alongside the spending review due later in 2025, suggests that investment in major economic and civil infrastructure projects will continue to be one of the main ways the government plans to deliver its priorities.
The arrival of mission-led delivery, the Office for Value for Money and the merger of the National Infrastructure Commission and the Infrastructure and Projects Authority into the National Infrastructure and Service Transformation Authority (NISTA), provides an opportunity for government to look again at how it governs and makes key decisions about major projects.
Against this backdrop our recent report draws out key lessons from our work on infrastructure and transformation projects with the aim of improving how government approaches strategic governance and decision-making on the largest, riskiest and most complex major projects; or what we have called ‘mega projects’.
Mega projects might need a different approach to governance
There is no official definition of a mega project. Our report recommends that HM Treasury and NISTA develop how they categorise major projects including defining a category of ‘mega project’. Our report also sets out some characteristics of mega projects that could be helpful.
One characteristic of a mega project is, of course, its size. Some projects are so costly and carry so much risk that they can dominate the financial position of a Whitehall department or even a government and create opportunity costs elsewhere. The government’s decision to cancel phase two of HS2 was in part due to the increasing costs of phase one. The government stated that the HS2 project accounted for over one-third of all government transport investments at that time, and that it prevented the government from spending on other transport priorities.
Other characteristics include a project’s strategic importance and impact on society, its novelty and the scale of innovation required to deliver successfully, the complexity of a project, including the fact that mega projects tend to cut across the interests of multiple departments and agencies, and the substantial time that mega projects require to complete and for benefits to materialise.
Our report identifies that projects have a much stronger chance of success where there is clear alignment between departments and HM Treasury on critical issues. With this in mind, and with so much at stake if a mega project fails, we recommend that HM Treasury and NISTA should consider using alternative governance approaches for the projects they determine are mega projects, to ensure those who have the authority to make decisions are accountable for the impact of those decisions on the project. This could include, for example, HM Treasury or NISTA having greater involvement in a mega project during its development – such as a formal position on a project board – to provide the project with executive authority and certainty.
Being clear about the rationale, deliverability and affordability
While it is, of course crucial that government gets the early development stages of any project right, our report points out that, despite their size and level of risk, there have been mega projects that have not had a clear strategic rationale that is supported by stakeholders. HS2 and the early competitions for carbon capture and storage are cases in point. On the other hand, the Covid-19 vaccine roll-out benefited from a clear overall objective.
Our report also emphasises that mega projects need time to be developed, and as such warns against committing to mega projects – and their budgets and timetables – too soon. It recommends that the Treasury and NISTA should strengthen the project gateway and business case approval processes to ensure that government has assurance about the affordability, value for money and feasibility of the project before it is given final approval to proceed.
Adapting to change during delivery
Resolving issues on mega projects can be difficult, owing to their size and complexity. Having suitably qualified and experienced people demonstrating the right behaviours is fundamental to effective governance and decision-making. As our work on Crossrail has showed, projects can benefit from having refreshed governance bodies, particularly where different skills may be required, reflecting where the project is in its development, construction or operational stage. Whatever a project’s approach to governance at each stage, it is important that responsibilities, accountabilities and authorities are clear and that those charged with making key decisions listen to and act on the findings of assurance reviews.