National Audit Office NAO

Mega-projects need a governance culture that responds and adapts to challenge but maintains focus. Mega-projects go through the same phases as standard projects, but each phase is likely to be more complex and uncertain, with a greater likelihood for decisions to be reopened , and multiple stakeholders involved, requiring a more iterative approach. Resolving issues on mega-projects can be difficult, owing to their size and complexity. It is therefore important to have suitably qualified and experienced people, with the right behaviours and culture, involved in governance.

Given the nature of mega-projects outlined in Part One, they are likely to encounter problems during delivery, such as cost and schedule increases, being overtaken by external or once-in-a-lifetime events, or new technologies being difficult to introduce. High Speed Two (HS2), for example, faced issues such as protests, planning appeals and judicial reviews. Governance systems therefore need to be prepared to respond effectively to issues, and it can be helpful to test how it might react to different scenarios .

Mega-projects are often so costly, and carry so much risk and uncertainty, that cost increases can dominate the financial position of a department or even the whole of government and can also create opportunity costs elsewhere. Complexity can also lead to projects and their promised benefits being delayed. In 2023, the government decided to cancel Phase 2 of High Speed Two (HS2) due to the increasing costs of Phase 1, repeated delays to the schedule and changing patterns of travel since the COVID-19 pandemic. 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.

HM Treasury and Cabinet Office generally allocate funding to individual departments to deliver their policies and projects. An individual department, which tends to be the project’s sponsor, will produce a business case, be responsible for delivering the project within its delegated authorities and be accountable for the project’s performance . However, when it comes to mega-projects, this model may not be the most effective, and government does not systematically identify whether an alternative approach might be more appropriate.

One of the functions of governance is to focus on outcomes, benefits and value as well as cost and schedule. In our report ‘Delivering value from government investment in major projects’, we noted that clear vision and objectives, strong political leadership and a leadership culture focused on the intended value of the project are key. This was also reinforced in our interviews for this report. However, we have seen some recent mega-projects where the purpose of the project was not clear, where there has been a lack of clear strategic rationale and a failure to secure widespread support for the project.

Making decisions to respond swiftly to issues, while maintaining discipline over scope, cost and schedule, and with many stakeholders to consider is necessary but can be difficult. These projects are often highly political and affected by the political cycle , and they can potentially have sizeable sunk costs, which means cancelling is less palatable.

Those involved in governance need to think through what internal and external assurance they need, the skills and experience they need within that assurance, when they will need it, and how the various types of assurance fit together in an integrated assurance plan. If this is not done, there is a risk that, instead of there being informed assurance at key points, assurance becomes ongoing non-expert commentary which could cause delay and confuse accountability.