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The Treasury has announced it will adopt a new governance and funding framework for the largest and most complex infrastructure projects, following a review by the Office for Value for Money (OVfM).

The study, published on Thursday, identified a new category of 鈥渕ega projects鈥�, which it defined as infrastructure schemes that are strategically important, cost more than 拢10bn, take more than a decade to complex, span multiple departments and cannot be broken into smaller projects.

HS2, Sizewell C and the Dreadnought programme are the only such schemes currently under development, but previous examples would include Crossrail, the 2012 Olympics and the Channel Tunnel.

Despite being few in number, the three current mega projects made up more than 10% of the government鈥檚 total capital budget in 2024/25.

Said that such projects can have a 鈥渓arge negative impact on public finances鈥� when they go wrong and 鈥渢ypically aren鈥檛 set up for success鈥�, the OVfM said, arguing there was a 鈥渟trong case for treating mega projects differently to the rest of the capital portfolio鈥�.

鈥淓arly cost estimates are difficult and unreliable, perverse incentives push projects into delivery before they are ready and convoluted decision-making and assurance structures blur accountability,鈥� it continued. 

鈥淓ven where projects start well, they still often go wrong. Living within annual budgets is prioritised over delivery, contingency is not based on a full assessment of risk, political support waxes and wanes, scope and objectives are changed without a full understanding of the impact on cost or schedule and governance does not evolve.鈥�

It set out a series of changes for how government should manage mega projects. In the government鈥檚 10-year infrastructure strategy, also published by the Treasury on Thursday, said these recommendations would be 鈥渋mplemented for current and future mega projects鈥�.

Under the new plans, a strategy and delivery plan will be laid as a command paper in parliament at the start of the project and at key milestones, for instance when ministers make material changes to scope or objectives.

The body responsible for the scheme in question will be required to develop bespoke decision making processes and integrated assurance plans to avoid unnecessary delays through 鈥渕ultiple layers of non-value adding review and scrutiny鈥�.

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Meanwhile, feasibility studies will be required at the outset to scope a project and projects will be given incremental funding through development, with scheduled reflecting 鈥渦ncertainty at early stages鈥� and narrowing as risk reduces over the lifetime of a project.

The Treasury will also maintain a formally recognised position on project boards.

Schemes will be given a fixed capital envelope for the entirety of their lifetime after a final investment decision is made, but delivery bodies will be able to move money forward and backward between years. 

When cost forecasts exceed the funding envelope鈥檚 contingency, a fundamental reset can be triggered by the prime minister or Treasury.

Delivery bodies will be given automatic freedom to determine pay for specialist roles that require skills not typically held by civil servants, while the National Infrastructure and Service Transformation Authority will also develop a pipeline of project leadership talent across government.