Link to thesis. - Concept - NTNU

PAPERSGovernance Frameworks for Public Project Development and Estimationgenerally the governing party of publicinvestment projects is not the top of thepyramid; there is a superior purposeabove the project. Abbott and Snidal(2001) discuss the use of standards as amechanism of international governanceand show how they can play differentroles in different circumstances.They look at different governmentarrangements, varying combinations ofprivate and public governance, andvarying levels of governance (national,regional, and global). Flyvbjerg et al.(2003), investigating several internationalmega-projects, observe the same:governance is relative—the same formulawill not work everywhere. North(1990) notes, “The institutionalistapproach aims to identify the variousgovernance modes that enable coordinationof major actors in society.” Eachsociety seems to develop its own architecture,and optimal solutions are hardto identify. Among many definitions forgovernance, we have chosen this one asthe best for our purpose (given uncitedin Wikipedia):the use of institutions, structures ofauthority and even collaboration toallocate resources and coordinateor control activity in society or theeconomy.For public investment projects onthe national level, the focus is publicgovernance, which has two parallelsubsystems: the political (making decisionsand giving priority, not discussedfurther here) and the administrative.Different authors define (public) governancedifferently. Traditionally the areain mind is called public administration(PA). New public management (NPM)has taken over the arena over the lasttwo decades. NPM has introducedmany of the same ways of thinking anddesigning systems in the public sectoras is traditionally used in the privatesector in Europe (Pollitt & Bouckaert,2000) and Scandinavia (Bush, Johnsen,Klausen, & Vanebo, 2005). Critical literature(Christensen & Lægreid, 2001; seeKlausen in Bush et al., 2005) points outthat NPM does not fully take into considerationthe specific public-sectorcontext. The public sector is increasinglyorganized through independent publicentities, strategic leadership, and contracts;this also increases the importanceof projects in the public sector.Because of the NPM reforms’ shortcomings,several post-NPM reformshave been introduced to reinstate amore central political/administrativecontrol (Christensen, 2007). Governanceframeworks like the ones discussed inthis article are examples of such post-NPM reforms.Public governance is defined by theOECD (2005) as follows:“Governance” refers to the formaland informal arrangements thatdetermine how public decisionsare made and how public actions arecarried out, from the perspective ofmaintaining a country’s constitutionalvalues in the face of changingproblems, actors and environments.The most common governancefield is corporate governance; “a system[that] shapes who makes investmentdecisions in corporations, what typesof investments they make, and howreturns from investments are distributed”(O’Sullivan, 2003, p. 24) or “thelaws and practices by which managersare held accountable to those who havea legitimate stake in the corporation”(Jacoby, 2005. p. 69). Corporate governancesystems are composed of threeareas: internal governance processes(structure, composition, and authorityof the board; the relationship betweenboard and management; and internalfinancial and auditing controls), thequality of the independent auditingfunctions in the national economy, andthe nature and quality of the corporatelaw and regulatory mechanismsdesigned to shape corporate activity(Monks & Minow, 2004, referred inDetomasi, 2006). Detomasi (2006)emphasizes that despite these commonelements, corporate governancesystems reflect social, political, andeconomic purposes and differ dramaticallybetween nations with regard topurpose, structure, and function.Authors like Detomasi (2006),Jacoby (2005), O’Sullivan (2000), andAbbott and Snidal (2001) all discuss differencesin the governance systemsfound in different countries. Thereseem to be two important categories,the main difference being who areregarded as legitimate stakeholders:• Shareholder-value systems (UnitedStates, United Kingdom, Canada),where only shareholders are legitimatestakeholders. The U.S. “policy governance”model asks, “How can a groupof peers, on behalf of shareholders,see to it that a business achieves whatit should (normally in terms ofshareholder value) and avoids unacceptablesituations and actions?”Carver (2001) notes, “The model doesnot prescribe a certain structure, but aset of principles.”• Communitarian systems also holdnonshareholder constituencies suchas employees, banks, and the communityin general as legitimate stakeholders,in some countries by law(Germany, Norway, etc.), and in otherswith no legal requirement to do so(Japan).Clarke (2004) makes a similar distinctionbut divides the latter into“relationship-based” systems (Europe)and “family-based” systems (AsiaPacific). Today, shareholder-value systemsseem to be dominating internationalgovernance trends, influencingcountries like France and Japan tophase out systems of cross-shareholdingto make way for international andinstitutional investors.When designing public investmentprojects, decision makers have to considerthe welfare of all relevant stakeholders(users, interest groups, societyin general), which seems parallel to thecommunitarian model. Our chosendefinition is useful because it allows bothshareholder-value and communitarianmodels; it also points to structuresS28 2008 ■ Project Management Journal ■ DOI: 10.1002/pmj