Understanding Formal and Informal Governance on Infrastructure Projects - Literature Review [industry report]

Chen, Le, Manley, Karen, & Lewis, Joanne (2012) Understanding Formal and Informal Governance on Infrastructure Projects - Literature Review [industry report]. Queensland University of Technology, Brisbane, QLD.


In Australia, collaborative contracts have been increasingly used to govern infrastructure projects. These contracts combine formal and informal mechanisms to manage project delivery. Formal mechanisms (e.g. financial risk sharing) are specified in the contract, while informal mechanisms (e.g. integrated team) are not. The paper reports on a literature review to operationalise the concepts of formal and informal governance, as the literature contains a multiplicity of, often un-testable, definitions. This work is the first phase of a study that will examine the optimal balance of formal and informal governance structures.

Desk-top review of leading journals in the areas of construction management and business management, as well as recent government documents and industry guidelines, was undertaken to to conceptualise and operatinalise formal and informal governance mechanisms. The study primarily draws on transaction-cost economics (e.g. Williamson 1979; 1991), relational contract theory (Feinman 2000; Macneil 2000) and social psychology theory (e.g. Gulati 1995). Content analysis of the literature was undertaken to identify key governance mechanisms. Content analysis is a commonly used methodology in the social sciences area. It provides rich data through the systematic and objective review of literature (Krippendorff 2004). NVivo 9, a qualitative data analysis software package, was used to assist in this process.

Formal governance mechanisms were found to be usefully broken down into four measurable categories:

(1) target cost arrangement

(2) financial risk and reward sharing regime

(3) transparent financials and

(4) collaborative multi-party agreement

Informal governance mechanisms were found to be usefully broken down into three measurable categories:

(1) leadership structure

(2) integrated team

(3) joint management system

We expect these categories to effectively capture the key governance drivers of outcomes on infrastructure projects. These categories will be further refined and broken down into individual governance mechanisms for assessment through a large-scale Australian survey planned for late 2012. These individual mechanisms will feature in the questionnaire that QUT will deliver to AAA in October 2012.

Impact and interest:

Citation counts are sourced monthly from Scopus and Web of Science® citation databases.

These databases contain citations from different subsets of available publications and different time periods and thus the citation count from each is usually different. Some works are not in either database and no count is displayed. Scopus includes citations from articles published in 1996 onwards, and Web of Science® generally from 1980 onwards.

Citations counts from the Google Scholar™ indexing service can be viewed at the linked Google Scholar™ search.

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ID Code: 81229
Item Type: Report
Refereed: No
Keywords: Governance, Infrastructure, Australian, Construction, Collaborative contracting
Divisions: Current > Schools > School of Civil Engineering & Built Environment
Current > QUT Faculties and Divisions > Science & Engineering Faculty
Copyright Owner: Copyright 2012 The Authors & Queensland University of Technology
Deposited On: 28 Jan 2015 03:19
Last Modified: 09 Feb 2015 05:56

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