Front-End Project Governance: Choice of Project Concept and Decision-Making– An International Perspective

Abstract

The demand for new investment projects is increasing; however, the preparation of a large number of those projects has had practical problems and the relevant systems and processes have been criticized. According to recent publications, a lack of problem analysis, lack of alternatives, contested information/misinformation, and many pitfalls in the decisionmaking process are among the main causes for concern. Following on from this, improving the front-end project governance processes and systems has been the subject of increased attention as it may be seen as a requirement for the success of investment: by increasing the effectiveness of a project governance system, it will be possible to select and implement the right project concepts and make optimal decisions. However, achieving effective project governance and control has so far proved to be a challenge but important.

With this in mind, this thesis aims to increase the understanding of the front-end governance of public investment projects by exploring the experiences of different countries, and to contribute knowledge within the evolving debates on what to do to develop effective governance frameworks. The thesis looks at project governance processes and systems of three countries (the Netherlands, Norway and Ethiopia), aims to put forward good experiences through comparison and also hopes to answer the following questions: How do project governance systems and processes in these countries function to select project concepts and make decisions? What good experiences exist to improve the mechanism of choosing a right project concept and for making optimal decisions?

To answer these questions I have collected data from the three countries in person, primarily through interviews, questionnaires and case studies, as well as reviewing a range of secondary resources, namely documentation and scientific literature. Findings of the research indicate that the Netherlands and Norway have made efforts to improve the effectiveness of their front-end project governance systems. Both countries have tried to develop contemporary processes, procedures and project governance structures that aim to develop the right project concepts; have developed stage gates for the quality assurance process; and have established go/no go approvals.

In these countries, many reforms have been introduced: more attention has been given to identifying the needs and priorities of stakeholders; obligatory requirements have been developed to search for alternative concepts; and ex-ante evaluation criteria have been identified and adopted. On the other hand, due to a positive economic outlook, Ethiopia is planning and implementing ambitious investment projects. There have been achievements in this regard but the findings of this research indicate that there are significant problems that are associated with the front-end project governance system of the country.

The project governance systems and processes of the Netherlands, Norway and Ethiopia have some similar features but needless to say they have differences too. This research provides project governance experiences of the three countries. In these experiences, regardless of them being good or bad, there can be lessons other countries can learn from. The good experiences that are identified in this study include: the Dutch experience to involve as many participants as possible in the early phase; the efforts to integrate different policy issues horizontally and vertically in the project preparation process; the use of IT infrastructure to get feedback from stakeholders; and the Norwegian system of outsourcing the review of project initiative documents to independent consultants.

In general, this study shows some similarities and some differences in the project preparation and decision-making processes, procedures and systems of the three countries. Expanding similar research to other countries is possible and can be an opportunity to learn from differences. In addition to this, I suggest that developing a system to translate the lessons into action and to track whether the designed effect has come as planned can be useful to improve the effectiveness of project governance system.