Project Governance: East Europe Project Analysis and Recommendations

This report examines project governance through the lens of the East Europe Tunnel Project, a large-scale construction endeavor facing delays and budget overruns. The paper explores the importance of project governance in achieving project success, defining its role in decision-making, accountability, and stakeholder management. It delves into the responsibilities of institutions involved in project governance, such as national governments, bankers, and contractors. Furthermore, the report provides recommendations for addressing strategic and technical issues, including the application of stakeholder theory, transaction cost economics, and agency theory to improve project outcomes. The analysis highlights the significance of these theories in optimizing stakeholder relations, understanding governance structures, and resolving conflicts, ultimately aiming to enhance project management practices and ensure project success.

Running head: PROJECT GOVERNANCE
Project Governance
Name of the student
Name of the University
Author’s Note

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Introduction
The paper mainly reflects on “East Europe” project which was mainly undertaken for
creating proper connection between Italy as well as Greece with the help of underground tunnel
which is mainly presented as one of the largest privately funded construction-based projects. The
entire project gets completed but the project faces issue related with delay and over budgeting. It
is found that the promotion as well as investment within the tunnel is considered as one of the
challenging affairs and additionally the project managers also experienced a lot of challenges
while undertaking the work of the project (Joslin and Muller 2016). Furthermore, it is analyzed
that though the project was executed, it seems that the managers of the project has experienced
some of the issues both at strategic as well as technical levels. Moreover, in order to assure that
the project delivers the business objectives as well as benefits as expected it is generally related
with the project governance.
In this paper, proper focus is on the role that project governance generally plays in
achieving success within the project. In addition to this, the paper also elaborates the names of
the institutions that are mainly responsible for project governance. Moreover, proper
recommendations will be provided for a similar project that faces issues at the strategic as well as
technical level by applying different governance theories.
Discussion
According to Derakhshan, Turner and Mancini (2019), project governance is one of the
infrastructures that generally surrounds the project which further deals with responsibility as well
as accountability. It is considered as one of the frameworks that helps in making proper decisions
regarding the progress of the project. The benefits of good governance generally include proper

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optimisation of investment as well as avoidance of common reasons as well as proper motivation
of the staff with the help of better communication.
Importance of project governance in the success of the project
According to Muller (2019), project governance is one of the oversight functions that is
mainly aligned with the organization’s governance model that further encompasses with the life
cycle of the project. It generally helps in providing the project manager as well as team with
proper structure, procedures as well as different types of decision-making models as well as tools
that are helpful in managing as well as successfully controlling the project work in order to
ensure successful delivery of the project (Badewi 2016). Project governance generally act as one
of the crucial elements that is mainly used in complicated as well as risky projects for managing
the issues effectively.
It further helps in defining, documenting as well as communicating different project-
based practices for providing a proper comprehensive method in order to control the project and
for ensuring its success quite effectively (Muller, Shao and Pemsel 2016). It further contains a
proper framework that helps in making proper decisions about the project that further helps in
defining responsibilities as well as liabilities for accomplishing the work of the project and
generally governs the effectiveness of the project manager.
Governance models is one of the components of project governance with the help of
which the project generally formulates a proper baseline for the critical elements like project
scope, timeline, complexity as well as stakeholders (Loch, Mahring and Sommer 2017). It is
found that the tools that are based on the above indicators helps in deciding what changes the
governance framework mainly requires and what components are important for achieving

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success within the project. It is stated by Hallgren and Lindahl (2017) that defining
accountability as well as responsibilities is considered as one of the core practices of a project
manager tasks and therefore it helps in distributing the responsibilities as well as accountabilities
quite effectively for achieving success.
Institutions that are responsible for project governance
According to Haq et al. (2018), project governance is one of the management
frameworks within which a number of decisions related with the project are made. It is found
that the project sponsor generally plays an important role while governing the work of the project
quite effectively. It is found that in the East Europe project, funding was mainly provided by the
national governments, bankers, contractors as well as different types of regular agencies.
Therefore, these multinationals institutions that are involved within the project must govern the
project effectively by properly setting proper policies, functions, procedures as well as
responsibilities that helps in defining the management, establishment as well as control of the
projects effectively (Muller 2016). In addition to this, the institutions generally help in providing
proper administrative services as well as support within the governance functions including the
different board members. They also help in business assurance related function for providing an
excellent service to all the project stakeholders that is mainly dependent on the business-related
partnering approach.
Recommendations for projects experiencing issues at both tactical and strategic levels
It is found that proper recommendations are generally provided to the projects that
experiences issues at both strategic as well as technical levels. The recommendations are
elaborated below:

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Use of stakeholder theory
The stakeholder theory generally addresses different types of business ethics, morals as
well as values while successfully managing the stakeholders who are mainly involved within a
project or an organization. It generally seeks for optimizing relations with various stakeholders
and therefore it helps in improving efficiencies throughout the project or organization. It is found
that by using stakeholder theory, the issues that the organization faces at strategic level can be
solved quite effectively (Gotcheva, Aaltonen and Kujala 2019). The values that are produced by
the stakeholder generally includes greater productivity all across the organizations as the
organization stakeholders feel valued and as a result, they work harder for achieving the project
goals quite effectively. It is analyzed that as the stakeholders of the project are valued then the
chain of stakeholder increases which also increases the number of investors in the project and as
result project will not face budget related challenges during its progress (Badewi 2016).
Additionally, the stakeholder theory further helps in driving much more profit by practicing
ethical benefits within the project. With the help of proper stakeholder theory proper ownership
as well as leadership will generally be created in the project that will further create positive
impact on the project progress.
Transaction cost economics
The transaction cost economics generally helps in suggesting that the costs as well as
difficulties which are associated with market transactions generally favours hierarchies and
sometimes it generally market as an economic based governance structure. With the help of
transaction cost economics, the project members can be able to understand the various
governance-based assumptions and as result no issue related with improper governance or due to
overbudgeting will generally occur within the project (Loch, Mahring and Sommer 2017). The

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significance as well as impact that is mainly associated with the criteria generally allows the
organization to properly decide whether to proper expand internally or to effectively deal with
the various external parties.
Use of agency theory
It is found that ineffective team integration with the clients, suppliers as well as other
stakeholders of the project creates a number of issues. It is analyzed that the team members are
not able to create proper organizational culture which generally affects the behaviour of higher
management and on synchronized communication related structure as well as dedicated network
structure. Therefore, the organizations that faces issues at both strategic and technical levels must
utilize agency theories for properly explaining as well as resolving issues in the relationship that
mainly exists between different agents (Gotcheva, Aaltonen and Kujala 2019). This particular
theory generally helps in delegating various decision-making authority as decisions making plays
an important role in achieving success within the entire project. Furthermore, the organizations
must use corporate governance in order to change different types of rules which are generally
under the agent that operates as well as restores the principal-based interests (Badewi 2016). The
principal that is mainly utilized by properly employing the agent must represent the principal’s
interest for overcoming the lack of information about the agent’s performance as well as task.
Furthermore, theory can also be used for motivating the team members so they can be able to
handle issues and conflicts related with the project and can be able to finish the entire work on
time.
Conclusion
It can be concluded from the entire paper that in order to deal with issues at strategic as
well as technical levels, it is quite necessary to utilize proper project governance. It is analyzed

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that governance not only helps in setting policies as well as procedures for the project but it also
helps in achieving success. In addition to this, it is identified that a number of a number of
governance theories like stakeholder theory, agency theory as well as transaction cost
economics-based theories are mainly utilized for properly resolving issues at strategic and
technical levels as well as for achieving success within the project by avoiding issues. Moreover,
the paper also elaborates the initiations that generally work as a governance institution within the
east Europe project.

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References
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