Toward a unified theory of project governance: economic, sociological and psychological supports for relational contracting

To confront the extreme governance challenges posed by large, multi-phased infrastructure projects, the authors propose the application of a theoretical framework to construct a structure composed of regulative, normative and cognitive elements. The right combination of these institutional elements can allow participants to counteract problems such as displaced or “broken” agency _ in which later participants suffer from agreements crafted by earlier decision-makers holding different interests _ contracts that are overly rigid or brittle, and the absence of a shared purpose or mission. Sociological, political and psychological concepts and arguments are employed to supplement the economic and legal perspectives now dominating project governance. The harnessing of practices such as relational contracting, work group norms, network systems of decision-making, reputational capital, procedural justice and shared identities can lead the way toward crafting a more flexible, robust and effective governance structure.