Executive summary
Establish a three-tier structure before mobilisation: an executive sponsor accountable for the business case, a steering committee that approves scope, budget and schedule baselines and resolves cross-functional conflict, and a project director with delegated authority for day-to-day execution decisions up to a defined financial threshold. Document decision rights, escalation paths and meeting cadence in a governance charter signed by all parties before contracts are issued.
Governance is distinct from project management. Management executes the plan; governance decides what the plan is and approves changes to it.
The most common governance failure on industrial projects is a steering committee that receives status reports but never exercises its approval authority, leaving the project director to absorb decisions beyond their mandate.
Why projects fail without this
- Multiple internal stakeholders with competing priorities for the same capital
- Contract value large enough that change orders need pre-agreed approval thresholds
- Cross-border or multi-site project requiring coordinated authority
- History of scope or budget drift on prior capital projects
- Financing agreement imposes reporting or governance covenants
- Project spans multiple functions — engineering, operations, finance, procurement
How disciplined teams run it
Three-tier structure
Sponsor, steering committee, project director — the standard model for mid-to-large capital projects.
Single sponsor model
Appropriate for smaller, single-site projects where one executive can hold full authority.
Programme governance
A governance layer above multiple related projects, used when several capital projects share resources or a common budget envelope.
Joint venture governance
Shared decision rights across partner organisations, requiring an explicit deadlock-resolution mechanism.
Comparison table
| Decision type | Project director | Steering committee | Sponsor |
|---|---|---|---|
| Change order within threshold | Approve | Informed | Informed |
| Change order above threshold | Recommend | Approve | Informed |
| Schedule baseline change | Recommend | Approve | Informed |
| Scope change affecting business case | Recommend | Recommend | Approve |
| Contract award | Recommend | Approve | Informed |
Decision rights by tier
Risks and governance considerations
- Decision thresholds must be expressed in absolute figures, not percentages, to avoid ambiguity as budgets evolve
- Steering committee membership should be fixed for the project duration to preserve institutional memory
- Escalation paths need defined response times, not just a reporting line
- Governance charters signed after mobilisation are far less effective than those agreed before
- Conflicts of interest — where a steering committee member also manages a supplier relationship — should be disclosed and managed
What to prepare
- Governance charter with named individuals and delegated authority limits
- RACI matrix covering all major decision categories
- Escalation protocol with maximum response times
- Meeting cadence and reporting template agreed before mobilisation
- Conflict-of-interest disclosure for steering committee members
What to measure
Frequently asked questions
Who should chair the steering committee?
Typically the executive sponsor or a senior executive independent of day-to-day delivery, so the chair can arbitrate conflicts between the project director and functional stakeholders.
How often should the steering committee meet?
Monthly is typical for projects of 12–36 months; shorter cycles risk decision fatigue, longer cycles risk decisions arriving too late to matter.
What happens when the steering committee cannot agree?
The charter should name the sponsor as final arbiter, with a maximum time limit on deadlock before that authority is invoked.
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Continue on the platform
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Global B2B Group does not sell equipment and does not represent lenders, export credit agencies or development banks. This material is published to help industrial organisations plan, structure and prepare capital projects. It is general information for decision-making, not financial, legal or tax advice.