Government projects which are particularly costly, innovative, risky, complex and strategically significant have been defined by the NAO as ‘mega-projects’.

Using its back catalogue of work auditing major projects such as HS2, the NAO report sets out characteristics of mega-projects, alongside insights into the governance challenges for these projects during the early stages and throughout delivery, which can take decades. 

As mega-projects can often be costly and carry much risk and uncertainty, it is important that those involved in governance and decision-making are clear about purpose, deliverability and affordability, the watchdog said.  

There have been cases where differing views on critical issues have led to delays, pauses and the resetting of programmes. Mega-projects therefore need a shared and agreed vision and strong leadership, it said. Without this agreement, there is a risk of committing to mega-projects – and their budgets and timetables – too soon. This is particularly important considering the pressure for major projects to get started quickly.  

To address the various risks that mega-projects face, the NAO makes a series of recommendations for HM Treasury and the new National Infrastructure and Service Transformation Authority (NISTA) including:

• HM Treasury and the National Infrastructure and Service Transformation Authority (NISTA) should improve how they categorise and define major projects according to their risk and strategic importance.
• HM Treasury and NISTA should strengthen the governance of mega-projects. This would ensure that accountability sits in the correct place, and that roles and responsibilities are clear and understood.
• HM Treasury and NISTA should improve project gateway and business case approval processes to ensure that government has robust assurance about the affordability, value for money and feasibility of the project before it is given final approval to proceed.  

The report also includes questions for project sponsors to consider as they set up governance arrangements.

Gareth Davies, head of the NAO, said: “This report offers important insights from the National Audit Office’s work on government’s largest and riskiest projects. These lessons will assist the government as it makes changes to the way in which major projects are organised and overseen. 

“Mega-projects often involve high levels of innovation, cost and risk, and can take decades to deliver and see the benefits. This means government needs stronger governance approaches for these projects.”