iBusiness, 2010, 2, 282-294
doi: 10.4236/ib.2010.23036 Published Online September 2010 (http://www.SciRP.org/journal/ib)
Governance-Management-Performance (GMP)
Framework: A Fundamental Thinking for
Improving the Management Performance of Public
Projects*
Yaling Du, Yilin Yin
School of Management, Tianjin University of Technology, Tianjin, China.
Received April 30th, 2010; revised June 3rd, 2010; accepted July 8th, 2010.
ABSTRACT
Public projects play an active role in the development of economy. However, public project management performance
(PPMP) is not very satisfying and urgent to be improved, especially in China which is in its flourishing period of public
project investment and construction nowadays. The purpose of this paper is to propose and theoretically test a funda-
mental thinking for the government to improve PPMP. In this study, project management (PM) and project governance
(PG) are identified to be the controllable factors which affect PPMP greatly through a thorough literature review. In
order to bring PG, PM and PPMP into a whole system, SCP paradigm is applied properly to the agency industry of
public project and, as a result, GMP framewo rk for the analysis of public project is presented through exhau stive rati-
ocination. Subsequen tly, GMP framework is broken down into three parts and each part is testified theoretically to en-
sure the reliability of GMP framework. The finding s indicate that there are two approaches to improve PPMP, i.e. PG
and PM, and PG seems to be more effective in China due to its vast development space.
Keywords: Public Project, Management Performance, Project Management (PM), Project Governance (PG), GMP
Framework
1. Introduction
Nowadays, it is the basic function of each country’s gov-
ernment to provide a wide and diverse range of public
services, such as hospitals, roads, schools, prisons, etc [1].
Public project which can produce public goods for the
community is the crucial way for the governments to
carry out the tasks of public service. With the rapid de-
velopment of economy, the government of every country
in the world meets the challenges of delivering public
services urgently with growing expectations from the
users. On the other hand, faster economic growth makes
the government have the ability to raise adequate capital
for more and more public projects. Therefore, public
projects play an active role in the economic life of every
country, especially in China which adopts an active fiscal
policy again1 to resist the adverse effect of financial cri-
sis in 2008 [2].
The central government of China attempts to promote
its economy through increasing the investment in fixed
assets and this measure brings mass public projects [3]. It
seems that China is in its flourishing period of public
project investment and construction at present. However,
the management performance of public project in China
is not very satisfying. According to China Statistical
Yearbook [4], the investment error rate of the newly in-
creased fixed assets in urban area is always high, even
above 40%, in the last decade. In fact, how to improve
the management performance of public project suc-
cessfully grasps increasing attention in both theory and
practice all over the world.
The objective of this paper is to explore the for ma-
tion mechanism of public project management per-
formance (PPMP) so as to present a fundamental think-
*Sponsored by Nat io n al N at u re Science Foundation unde r Grant No.
7077 2058/G0213.
1China conquered the financial crisis that broke out in 1997 by adopting
an active fiscal policy from 1998 to 2004. Then it began to carry out a
steady fiscal policy from 2005 until the coming of the new financial
crisis in the second half of 20 08 .

Governance-Management-Performance (GMP) Framework: A
Fundamental Thinking for Improving the Management Performance of Public Projects
283
ing for improving it. This however requires viewing
PPMP in the proper perspective as a first step. It is in this
spirit that this paper looks into a myriad of relevant lit-
eratures to classify all the factors affecting PPMP and
then get the controllable factor grouping, i.e., project
management (PM) and project governance (PG). Subse-
quently, we explore the applicability o f SCP paradigm in
this study so that we can bring PG, PM and PPMP into
the same system. Finally, we deduce the Governance-
Management-Performance (GMP) framework to public
projects and further analyze it deeply.
2. Literature Review
In this section, we have to analyze and answer two ques-
tions above all, i.e., what is PPMP and what can affect it,
in order to improve PPMP effectively. Then we should
also investigate the previous researches on the relation-
ship between PM, PG and PPMP to find the break-
through point.
2.1. PPMP
Performance is an ambiguous concept so far, it’s uncer-
tain that performance is the results, the behaviors/pro-
cesses or both in the area of Human Resource Manage-
ment (HRM) [5]. As to construction project, project/PM
performance is rarely defined explicitly and we can only
comprehend it according to a lot of literatures that focus
on performance evaluation indicators. Traditionally pro-
ject/PM performance is evaluated using schedule, cost,
and quality performances, also known as the ‘iron trian-
gle’ [6]. Subsequently a number of researchers have
proposed different sets of performance evaluation indi-
cators in addition to the iron triangle [7]. A close look at
the performance evaluation indicators (e.g. Bryde [8];
Van Truong Luu et al. [9]; Westerveld [10]) would sug-
gest that these could be broadly kept under two broad
categories: the indicators reflecting the results of the
project and the indicators reflecting the behaviors/proce-
sses of PM. The former is just the conventional descrip-
tion of project/PM performance, while the latter is the
content of PM. From what has been analyzed above, we
deem that project/PM performance is the implementatio n
degree of the project/PM object and it is the measure-
ment of both the processes and the results of PM because
the two aspects can not substitute for each other com-
pletely. Therefore, project/PM performance has different
contents on the different observation points of the project:
It includes not only the results on this point but also the
process of PM when we investigate during the project or
the period of PM because the processes of PM now will
determine the results later (for example, when assessing
the PM performance of a project, we should consider
both the results and the processes); but it includes the
results only when we study in the end of the project or
the process of PM due to the complete conversion of
behaviors/processes into results. This study attempts to
rethink the formation mechanism of PPMP and the proc-
ess of PM is regarded as an independent aspect affecting
it (for instance, Florence Yean Yng Ling et al. [11] de-
fined project performance as results only when they in-
vestigate the key PM actions affecting it), so it is rea-
sonable to consider the project/PM performance from the
view of results onl y .
Project performance and PM performance are usually
used confusedly, but they are absolutely diverse from
each other in fact. According to the study of Munns and
Bjerimi [12], project performance reflects the whole life
cycle of the project (including conception, planning,
production/implementation, handover, utilization and
closedown), while PM performan ce is only a part of pro-
ject performance because it reflects the phases of plan-
ning, production/implementation and handover only.
What we focus on is PM performance, this means that
this study restricts to the construction stage of a public
project, i.e. , from feasibility study to final acceptance.
Moreover, public project differs from private project for
its commonweal - goal, so PPMP should emphasize not
the economy of the project only but also its efficiency
effectiveness and equity (4E for short) [13]. From
what has been analyzed above, PPMP is the results of
the PM behaviors during the construction stage of the
public project and 4E should be considered when it is
evaluated.
2.2. PM and PG Which Affect PPMP
PPMP will be improved successfully only if the efforts
are made on the proper and correct points. This means
that, to improve PPMP, the first problem we have to
solve is which factors can affect PPMP greatly and, at the
same time, can be controlled by us. Therefore we con-
sulted 124 literatures (including 80 Chinese ones and 44
overseas) about construction project that focus on ‘pro-
ject management performance’ or ‘project success’ (We
think that PM success is the comparative best status of
PM performance and project success covers PM success
like the relationship between project performance and
PM performance). The influential factors to PM per-
formance involved in these literatures can b e divided into
two groupings (see Table 1) [14]. Uncontrollable factor
grouping includes factors about the context and human
can not change them once the project site is decided. On
the other hand, controllable factor grouping includes
factors that belong to PM and PG, while both of them are
the behaviors and processes of the key project partici-

Governance-Management-Performance (GMP) Framework: A
Fundamental Thinking for Improving the Management Performance of Public Projects
284
pants, so they can be optimized in order to improve the
PM performance. The result above is just con sistent with
the result of reviewing and analyzing mass literatures at
home and abroad, i.e., the research paradigm of improv-
ing PPMP shifts from management paradigm (its theory
system is PM) to economics paradigm (its theory system
is PG) due to the dual requirements of theory and prac-
tice (shown in Figure 1) [15]. Obviously, this study
should focus on PM and PG in order to find the forma-
tion mechanism of PPMP.
Every intact contractual organization involves both
management and governance [16], so does the public
project. It is accepted widely that PM contributes to ex-
cellent PM performance directly, while it needs to be con-
firmed further that PG also has positive effect on PM
performance because PG is a new concept proposed just
during the 1990 s and its effect on PM performance is
indirect and unclear. PM is the means by which the work
of the resources assigned to the temporary organization is
managed and controlled to deliver the beneficial change
desired by the owner [17]. While PG is a controversial
notion and various researchers define it in completely
different ways, for example, researchers in the west pre-
sent it under the framework of Williamson’s Transaction
Cost Economics (Turner [18]; Winch [19]), while some
researchers in China learn from the concept of corporate
governance to define it considering the similarity of cor-
porate and project as contractual organizations [20]. This
study aiming at public project holds that PG is the process
of establishing an institution framework (the whole pro-
ject transaction can be accomplished under it) to win suc-
cess of project management; it defines the rights, respon-
sibilities and interests of the key stakeholders properly in
order to construct well order, and then uses various
mechanisms to maintain the order. According to the defi-
nitions of PM and PG, we can find their distinct differ-
ences in public project s sho w n in Table 2 [21].
2.3. Their Relationships
It is indispensable to review the literatures abou t the rela-
tionship between PM, PG and PM performance in order
to highlight the innov ation of this study.
2.3.1. Relati o n shi p betw een PM an d P M Performance
PM is first documented during the 1950 s and 1960 [23]
and its origin is to ensure better performance of the pro-
ject [7]. There’s a large amount of literatures that focus
on the relationship between PM and PM performance, for
example, Florence Yean Yng Ling et al. [11] investi-
Table 1. Groupings of critical influential factors to PM performance in the 124 literatures.
Grouping name Content
Factors that belong to PM, such as st ro ng / detailed plan and clear r ea li s ti c objectives.
Controllable factor grouping Factors that belong to PG, such as coordination among stakeholders, equal power/empowerment.
Uncontrollable factor grou p in g Factors about the context, including technology condition, macroeconomic condition, political stability,
culture, climatic condition, strength of legal system and urgency.
Figure 1. Research paradigm shifting of PPMP improvement.

Governance-Management-Performance (GMP) Framework: A
Fundamental Thinking for Improving the Management Performance of Public Projects
285
Table 2. Differences betwe en PM and PG in public projects.
Items PM PG
Essence Delivering product under the restrictions of cost, time
and quality. Harmonizing all stakeholders and defusing their interest conflicts.
Goal Realizing th e t ar g ets of co s t , t ime and quality. Realizing the value of the project.
Executor The party which manages the project directly, i.e., the
agent. Involving all the key stakeholders and the government principal is the steersman.
Source of
authority The top manager of the agent. The participation and interaction of all involv ed parties.
Object The resources of the project organization, including
staff, capital, technology an d s o on . A set of relationships (i.e., rights, responsibilities and interests) between the key stakeholders.
Effect on
resource The allocation of resources on the basis of PG framework and their effective utilization. The secondary assignation of resource that follows the assignation by the market.
Content Scope, time, cost, risk, quality, human resources,
communication and procurement management
(according to PMBOK [22])
1) Governance of public project market and governance of individual proj-
ect (according to its r esearch level);
2) Governance structure and governance mechanism (according to the chara
-cter of its content).
Tools Management technique/approach/thought. Contract, reputation of the agent, credit of the partners, market competition,
relevant laws and regulations.
Results Delivery of qualified product on time within the
budget.
1) Macroscopic level: build in g a i ns titutional environment in the market;
2) Microcosmic level: constructing and then maintaining w ell order in an in-
dividual project.
gated PM practices that Singaporean AEC firms adopted
in China and the statistical analysis revealed that PM
practices are significantly (p < 0.05) correlated with per-
formance metrics.
2.3.2. Relati o n shi p be tw een PM and PG
The relationship between PM and PG has been analyzed
by various researchers since the concept of PG came into
being. Frank T. Anbari et al. [24] grouped the researches
on PM into nine major schools of thought and one of
them is the governance school which viewed the project
as a temporary organization. Obviously, they believe that
PG is subordinate to PM. While most of the researchers
in China (Sha Kaixun [25]; Yan Ling and Yin Yilin,
2006 [20]) think that PM and PG belong to the different
research paradigms, the former is on the level of oper-
ation and the latter is on the level of institution. This pa-
per holds the identical view with them. We believe that
different measures should be taken to optimizing PM and
PG. In addition, researches discussed the difference be-
tween PM and PG, but there’s no literature about their
effect mechanism, i.e., how PM and PG effect each
other.
2.3.3. Relati o nship between PG and PM P erformance
A lot of literatures attempted to optimize an aspect of PG
to improve the PPMP in recent years, for example, Li
Bing et al. [26] attempted to achieve proper allocation of
risk in PPP/PFI construction projects, Robert L K Tiong
and Jahidul Alum [27] aimed at selecting a best tender
proposal for BOT projects. In addition, Yan Ling and
Yin Yilin [28] explored how to evaluate and adjust PG
(as a whole) in order to improve the management per-
formance of construction-agent project. Obviously, the
positive effect of PG on PPMP is accepted by these re-
searchers without any confirmation. We guess it is due to
the following reasons: 1) the positive effect of corporate
governance on the company’s performance is proved
empirically [29], so this conclusion is used in pub lic pro-
jects considering their similarity as contractual organiza-
tions, but they are different in essence; 2) PG is a new
concept and researchers haven’t reach agreement on it,
this set a obstacle for the work of confirmation; 3)
enough data have to be collected for the empirical analy-
sis, but it’s more difficult to get enough data abou t a pro-
ject (usually through questionnaire survey) than that
about a listed company (available fro m relevant website).
From what has been analyzed above, the research on
the relationship between PG and PM/PPMP is the weak
part in the area of PPMP improvement. Furthermore, all
the previous studies focus on the relationship of two
elements among PM, PG and PPMP, while there’s no
literature which considers all the three at the same time.
Against this background, the need for bringing PM, PG
and PPMP into a system to explore their relationship is
therefore obvious.
3. Research Method
It is concluded from literature review that PM and PG
can affect PPMP, but their relationships are not very
clear. In this study, how they interact with each other will
be explored through the employment of the Structure -
Conduct - Performance (SCP) paradigm, which is the

Governance-Management-Performance (GMP) Framework: A
Fundamental Thinking for Improving the Management Performance of Public Projects
286
classical analysis paradigm in the theory of Industrial
Organization. To ensure the validity of the research result,
whether SCP paradigm can be applied in the study on
public project indeed should be analyzed and answered
above all.
3.1. SCP Paradigm and its Applicable Conditions
According to SCP paradigm, market structure determines
the conduct of the firms in the market and the conduct of
the firms determines the market performance, so the
government can improve the market structure through
relevant industrial organization policies in order to get
better market performance [30-31]. Obviously, market
structure is the most important element in this framework.
SCP paradigm reveals the law of performance formation
in an industry so as to help the government take meas-
ures to improve the performance of the market. This is
just consistent with the intention and thought of this
study. However, SCP paradigm is suitable for the re-
searches on an individual industry and there are some
requirements should be met by the study objects:
1) SCP paradigm aims at industry, which is a group of
enterprises sharing some important characters. The
enterprises in the same industry provide similar
goods or services and on the same or related value
chain [32].
2) Industry exists in the market so that the enterprises
in it can do trade to sustain and develop. The market
must be steady. It means that the demand and supply
in the market are both long-term and steady and the
enterprises are all stable contractual organizations.
3) SCP paradigm has its own scope of application, it
means that not all the industries can be analyzed
using it. In fact, the typical industries that investi-
gated by SCP paradigm are characterized by its
oligopoly market, for example, initial researches
with SCP paradigm are concentrated in the manu-
facturing industry with monopolistic character (e.g.
mechanical manufacturing, transportation industry
and metal manufacturing). Nowadays, although the
studies using SCP paradigm are not restricted in
manufacturing industry only, they selectively focus
on the industries in which the policies of the gov-
ernment play an important role [33]. This is be-
cause the origin of SCP paradigm is to help the
government seek the policies for better perform-
ance of an industry.
4) Enterprise is the basis of the industry. Since SCP
paradigm is completely established on neoclassical
economics, enterprise is abstracted as a black box
that considers the relationship of input and output
only and the inside of the enterprise is believed to
go smoothly [33]. It means that SCP paradigm ana-
lyzes the enterprises from the perspective of produc-
tion and neglects the institu tion inside it. This view-
point also leads to the decline of SCP paradigm be-
cause more and more attentions are paid to the in-
stitution inside the enterprise since The Nature of
the Firm (by Ronald H. Coase, 1937) is published.
3.2. Applicability of SCP Paradigm in This
Study
This section attempts to testify that pub lic project, which
is the object of this study, meets the four requirements
above simultaneously. The result of this research will be
not reliable when lack of this work.
1) SCP paradigm aims at an individual industry, then
which industry should be analyzed using it in this
study? Industry is defined as a group of enterprises
sharing some important characters, while the key
point is which character is selected to be the basis
for enterprises classification. Therefore, we apply
SCP paradigm to the agency industry of public pro-
ject in this study. Concretely speaking, we classify
the enterprises according to their customer and pro-
duction, i.e., agency industry of public project pro-
vides construction management service and even
operation management service of construction pro-
jects for the government principal. So a project
management company belongs to the agency indus-
try of public project only if it is attending or going
to attend a public project as the agent of the gov-
ernment. The enterprises in this industry take full
responsibility for their own profits and losses and
they trade with the government principal and the
enterprises of other industries as Figure 2 shown.
2) It is obvious that the enterprises in the agency in-
dustry of public project are project management
companies and they are all stable contractual or-
ganizations. Since the agency industry of public
project exists for public project and project man-
agement companies are the agents of public project
only when they are involved in public projects.
Therefore, whether its market is steady depends on
the market of public project. Although public pro-
ject, which is the core of its market, is temporary
organization involving a series of contracts and the
construction of a public project is short-term and
one-off, demand of the public for public goods/ser-
vices is persistent and it is the government’s basic
function to meet these demands. This means the
demand and supply of public goods/services (which
have to be realized by public projects) are both long
-term and steady, and this also means there must

Governance-Management-Performance (GMP) Framework: A
Fundamental Thinking for Improving the Management Performance of Public Projects
287
Figure 2. Trades by the enter prise s in the age ncy industr y of public projec t.
be a great many public projects need to be done by
the government in succession. According to the
analysis above, the market of public project is
steady, so is the market in which the agency indus-
try of public project exists.
3) To the enterprises in the agency industry of public
project, their customer is the government and they
have to take charge of the public projects involved
with substantive capital, many stakeholders and great
expectation of the public instead of the government.
Therefore this industry undoubtedly will be guided
by the government through related policies. Take
construction-agent system (CAS for short, which is
advocated to be applied to non-profit government
investment projects in China) for example, the local
governments made various laws and regulations to
ensure better performance of the pubic project ac-
cording to their actual situation, including the entry
permission and elimination regulations for the con-
struction agents, the implementatio n details of bidd-
ing for the co nstruction agent, and the co ntract tem-
plates for construction commission. Take another
striking example, the most popular PPP (Public -
Private Partnership) option for infrastructure pro-
jects in China is BOT (Build - Operate - Transfer) in
which the private partner undertakes to finance, de-
sign, construct, operate and maintain the facility
during a concession period that is usually determined
by their public counterpart, in return, the private
partner will recover their capital investment through
the operation revenue over the concession period
[34]. To ensure the commonweal - goal of the BOT
projects, the government usually regulates the price
of the public goods and/or services through the con-
tract between them and relevant regulations. More-
over, the fact that every city constitutes an abun-
dance of laws and regulations for public project in-
dicates the significance of the government’s policies
in the agency industry of public project.
4) This research aims at exploring a fundamental think-
ing in order to help the government improve the man-
agement performance of public projects. The gov-
ernment, which is the sponsor of public projects, pur-
chases relevant service from the agent and it is sepa-
rated from the professional PM activities completely.
What the government concern are two things, i.e., the
relationship among the key stakeholders and the re-
sult of the public project (concretely speaking, the
input-output relationship). It’s necessary to regard the
agent of the public project as a black box when the
government focuses on the relationship among the
key stakeholders, especially the contractual relation-
ship between the government and the agent. Because
it goes against the analysis of public project if the
government pays too much attention to the issue
within the agent. Figure 3 indicates that this research
keeps outside the agent of the public project but has
opened the black box of the public project. On the
other hand, it’s necessary to regard the agent of the
public project as a black box when the government
concerns the input-output relationship (in which the
input of the public project is the capital, institutional
arrangement and so on that the government has of-
fered to the agent, while th e ou tput of th e public p ro-
ject mainly is the project product, its effect on peo-
ple’s life and so on that the agent was going to de-
liver to the government) only. Because the input-
output relationship is absolutely independent of the
detail of the agent’s PM process. Thus it can be seen
that the agent of public project should be considered
as a black box changing t he in put i nt o the output.

Governance-Management-Performance (GMP) Framework: A
Fundamental Thinking for Improving the Management Performance of Public Projects
288
Figure 3. Public projects and its agency industry.
4. Analysis and Findings
4.1. Primary Establishment of GMP Framework
From what has been analyzed above, SCP paradigm can
be used in the agency industry of public project. Consid-
ering the object of this research is not the agency indus-
try of public project but the public project into which the
agent is included, we must define the content of S, C and
P respectively.
4.1.1. PG Corresponding to S
In SCP paradigm, market structure (S) is defined as the
characteristic of various relationships, such as the rela-
tionship among the sellers, the relationship among the
buyers, the relationship between the group of sellers and
the group of buyers and the relationship between the en-
terprises in the market and the potential enterprises
planned to enter the market. It is conceptualized in terms
of both economic and cognitiv e factors in practice. While
what market structure (S) correspond to in this research?
The agents of public project and all the organizations
trade with them compose the market we are going to fo-
cus on. Figure 2 and Figure 3 indicates that this market
involves a series of relationships, including the relation-
ship among the agents of public project, the relationship
between the government and the agents, the relationship
between the agent and the design companies/construction
companies/supervision companies/suppliers/banks/insur-
ance companies, and the relationship between the agents
in the market and the potential agents planned to enter
the market. Obviously, the market of the agency industry
of public project involves the relationships among all the
key stakeholders in a public project, which just is the
object of PG.
Government governance and corporate governance are
the polar cases of state- and private-ownership, while
public project governance is the hybrid or alliance forms
of them [35]. So their content is completely different
although they share the same essence. Public project
governance can be broke down into governance structure
and governance mechanism, the former is the frame de-
fining the contractual relationships of the key stake-
holders in a project and the latter is the means to deal
with the contractual incompleteness. So governance
structure focuses on allocating the rights, especially re-
sidual rights of control and residual claimancy; while
governance mechanism (shown as Figure 4 [36]) aims at
harmonizing the key stakeholders using various govern-
ance tools. Essentially speaking, both governance struc-
ture and governance mechanism are dealing with the
relationship among the key stakeholders, especially the
relationship between the government and the agent of
public project. The result of PG is establishing a set of
institutional system with some unique characteristics, and
Figure 4. Content of governance mechanism in public project.

Governance-Management-Performance (GMP) Framework: A
Fundamental Thinking for Improving the Management Performance of Public Projects
289
this is consistent with the content of market structure (S)
in the agency industry of public project. Considering the
result of PG originats from its process, we think that in
this research PG corresponds to market structure (S) in
SCP paradigm.
4.1.2. PM Corresponding to C
SCP paradigm states that firm conduct (C) is various
decision-making behaviors taken by the enterprise fully
considering the supply-demand relationship and the rela-
tionship between other enterprises and itself in order to
win more profit and market share. As to the agency in-
dustry of public project, the economic activities of the
enterprises are not producing and selling product but
providing relevant service for the government, so firm
conduct (C) of this industry is various decision-making
behaviors taken by the enterprises fully considering the
requirement of the government and the relationship be-
tween other enterprises and itself in order to get more
interests at present and even in the future. The interests
here include not only the income of a public project but
also the intangibles such as a better reputation and keep-
ing the agent qualification. Concretely speaking, the de-
cision-making behaviors taken by the agent of public
project include inviting public bidding for the design
companies/construction companies/supervision compa-
nies/suppliers, setting goal/planning/implementing in each
stage, managing the risk in the project, managing the
human resource and their communication in the PM team
and so on. Obviously, these are just consistent with the
content of PM (shown in Table 2). Therefore, we suggest
that in this research PM corresponds to firm conduct (C)
in SCP paradigm.
4.1.3. PPMP Corresponding to P
In SCP paradigm, market performance (P) denotes the
result of a series of firm conduct under a certain market
structure. It measures the running efficiency of the whole
market and the state of its resource allocation. To ascertain
the content corresponding to market performance (P) in
this research, three aspects should be taken into account:
1) According to its definition, market performance (P)
measures not the running efficiency of an individual
enterprise but that of the whole market.
2) To the agency industry of public project, the result
of the enterprises’ conduct is th e project produ ct and
the effect of the enterprises’ conduct on the envi-
ronment, society, people’s life and so on. These are
the content of traditional PPMP. Obviously, the
observation point of this study should be in the end
of the PM process. PPMP here includes the result
part of generalized PPMP merely, while the process
part of generalized PPMP is consistent with PM.
3) In Industrial Economics, market performance is us-
ually discussed fro m the perspective of the consu m-
ers, and the consumers of the agency industry of
public project are the governments. Therefore, we
should analyze PPMP defined above on the stand-
point of the government.
In a word, what market performance (P) in SCP para-
digm corresponds to is the traditional PPMP (the result
part of generalized PPMP) of all the public projects in
the market on the standpoint of the government.
4.1.4. Adjusting and Summarizing
After defining the corresponding content of SCP para-
digm’s three components in this research, we get a pri-
mary fundamental thinking for public project analysis,
i.e., Governance-Management-Performance (GMP) fra-
mework. However, GMP framework can be applied only
to the collectivity of public projects in the market as a
result of its evolvement from SCP paradigm. Can GMP
framework be used in an individual public project? We
insist that SCP paradigm has to be applied to the whole
market due to the impartibility of market structure (S).
While public project governance (G) can denotes not
only governance of the whole public project market but
also governance of individual project (as shown in Table
2). Since public project governance (G) which corres-
ponds to market structure (S) can describe both the mac-
roscopic level and the microcosmic level, PPMP (P)
which corresponds to market performance (P) certainly
can denote both the performance of the whole public
project market and the performance of an individual pub-
lic project.
From what has been analyzed above, we can come to
the conclusion as follows:
1) Scope of application: GMP framework can be ap-
plied to both the whole pub lic project market and an
individual p u bl i c pro ject .
2) Explanation of GMP framework (shown in Figure
5): Public project governance (G) has positive effect
on public project management (M), and then public
project management makes for better public project
management performance (P).
3) Its standpoint: GMP framework is a fundamental
thinking for the analysis of public project and it is
developed for the government to improve the man-
agement performance of public project.
It is obvious that GMP framework is consistent with
the opinion of Xi Youmin [16] that corporate governance
influences corporate management and its performance
greatly to a great extent and the idea of Yan Ling [20]
that PG can contribute to PPMP via PM. Moreover, GMP
framework is also accord with the basic idea of institu-

Governance-Management-Performance (GMP) Framework: A
Fundamental Thinking for Improving the Management Performance of Public Projects
290
Figure 5. A fundamental thinking for improving the manageme nt performance of public project s.
tional Economics that institution2 works on economic
behavior and economic performance and is the funda-
mental motivation of economy development.
4.2. Theoretical Analysis of GMP Framework
The preceding sub-section applies SCP paradigm to the
agency industry of public project so as to get a funda-
mental thinking for improving management performance
of public project, i.e., GMP framework. The main pur-
pose of this step is to testify the reliability of GMP
framework theoretically. So it will be broken down into
three parts (G → M, M → P and G → P) and the ef-
fect mechanism of each part will be explored briefly.
4.2.1. Effect of PG on PM
The analysis of G → M is to answer how PG works on
PM. Xi Youmin and Zhao Zengyao [16] claim that cor-
porate governance defines the institution system for the
transaction, under which corporate management drives
the corporate to the set goal. The comparison of PG and
PM in the literature review shows that so does the public
project. Based on this fact, we insist that PG optimizes
PM through its three basic functions, i.e., incenting, re-
stricting an d h armonizing (s h ow n in Fi gur e 6).
1) The function of incenting
The success of a public project depends on not only
the exogenous variables which are uncontrollable, what
is more important is the effort degree of the agent which
is controllable. So it is significant for the government to
incent the agent of the public project who implements
PM instead of it. In this study, the agent incenting in
public project is classified as reward incenting, incenting
through sharing residual rights of control and residual
claimancy and reputation incenting. Each of them has its
strongpoint and weakness: reward incenting only has a
distinct short-term effectiveness and is inclined to lead
the agent to opportunistic behaviors; incenting through
sharing residual rights of control and residual claimancy
Figure 6. Effect of PG on PM.
can make the government and the agent interest commu-
nity so as to urge th e agen t work hard for the gov ernment,
but it is difficult to make the residual rights of control
and residual claimancy be distributed symmetrically in
public project because of its commonweal-goal; reputa-
tion incenting is a recessive mechanism with long-term
effectiveness, but it relies on the highly developed public
project market. In a word, the function of incenting deals
with the motivation of the agent in order to enhance its
working enthusiasm and exert its poten tial abilities fully,
then PM can be optimized to a great extent.
2) The function of restricting
Restricting always goes together with incenting for
they supplement each other. So the government also has
to restrict the agent. In this study, the agen t restricting in
public project is classified as direct restricting and indi-
rect restricting. The former includes the laws and regula-
tions that are con stituted by the govern ment to define the
due PM behaviors for the agents and the supervision to
the agents by the government and the public. The latter
means that the government creates some threats to urge
the agent to select the PM b ehaviors that is advantageous
to the government. It includes transferring some risks to
the agent, adding some punishment measures in the con-
tract, eliminating the incompetent agent form the public
project market and disclosing the information about the
agent. In a word, the fun ction of restricting deals with the
moral hazard problems of the agent; it makes the PM
behaviors of the agent canonical in order to avoid the
agent’s deviation from the goal of the public project.
3) The function of harmonizing
2As said in the last section, the result of PG is establishing a set o
f
institutional system.

Governance-Management-Performance (GMP) Framework: A
Fundamental Thinking for Improving the Management Performance of Public Projects
291
In view of its essence (see Table 2), harmonizing is
the core function of PG. Strictly, the ultimate purpose of
incenting and restricting is harmonizing. We insist that
the harmonizing function of PG includes harmonizing the
stakeholders’ interests, goals and behaviors. All of the
three level harmonizing can reduce conflicts and uncer-
tainties in the process of PM so as to establish order in
the public project and make the process of PM smooth.
In addition, G → M can be proved in another way. It
is well known that the level of PM depends on two as-
pects successively: first, the inherent competence of the
PM team for the public project, this is determined by the
mechanism of agent selecting which is an important part
of PG; second, to what extent the agent exert its compe-
tence in the public project, this is determined by the in-
centing and restricting to the agent which includes the
rest contents of PG. Both the two aspects are determined
by PG, so the level of PM depends on PG indeed.
4.2.2. Effect of PM on PPMP
It is proved through a th orough literature review that PM
performance can be directly affected by PM greatly.
Moreover, a mass of practices indicate that efficient PM
can enhance PM performance 30% or more [37]. In this
case, how does PM realize its positive effect on PM per-
formance? Figure 5 illustrates th at P in GMP framework
indicates the result part of generalized PPMP and M in
GMP framework indicates the process part of generalized
PPMP. Therefore, the analysis of M → P is to answer
how to transform PM behaviors into relevant results
more effectively. We believe that PM performance is
come true through the four basic functions of PM, i.e.,
planning, organizing, leading and controlling (shown in
Figure 7). It is obvious that the functions of PM are the
same as the functions of management. However, their
difference is that the resources of a project are those
needed in the transaction and available, such as capital,
time, technology, personnel and facility [38]. In a word,
PM team, i.e., the agent of the public project, can make
the best use of everything through the four basic func-
tions of PM so that it can ge t a better result, i.e., PM per-
formance, for the government at last.
4.2.3. Effect of PG on PPMP
GMP framework which is obtained through the employ-
ment of SCP paradigm in the agency industry of public
project indicates that there is no direct effect of PG on
PPMP. This sub-section will argue its validity from two
aspects:
1) Analysis from the characteristic of PG
It is analyzed above that the result of PG is establish-
ing a set of institutional system, including the institu-
tional environment in the macroscopic level and a well
Figure 7. Effect of PM on PPMP.
order in the microcosmic level. The institution itself is a
kind of productivity; proper institutional framework can
reduce the conflicts and uncertainties but doesn’t have
any function of producing [39]. So it can only create
performance via management behaviors.
2) Analysis from the assignation and utilization of re-
sources
Project is not only a way of managing resource butalso
a way of allocating resource. It is pointed out that PG
deals with the secondary assignation of resource that
follows the assignation b y the market and PM deals with
the further allocation of resources on the basis of PG
framework and their effective utilization [16]. It is com-
prehensible that there will be no performance if we allo-
cate the resources but don’t utilize them.
According to the analysis above, no matter how per-
fect the PG is, the project is impossible to be completed,
let alone PM performance, if the agent doesn’t carry out
PM, such as planning and controlling its schedule, cost
and quality. Therefore, PG can’t work on PPMP directly;
it can only contribute to the improvement of PPMP via
PM.
4.3. Validation of the Research Results
Based on the analysis above, we get a fundamental
thinking for improving PPMP, i.e., Governance - Mana-
gement - Performance (GMP) framework. It indicates
that the PPMP is a consequence of both PM and PG and
PG is a more radical driver for PPMP improvement than
PM. The findings also can be extended to:
1) According to the confirmed relationship of Govern-
ance → Management → Performance in public
project, PPMP is the consequence of both PM and
PG. Therefore, the public project must have any de-
fect in its PG or PM if its management performance
is not very well.
2) The confirmed relationship of Governance → Man-
agement → Performance in public project also indi-
cates that there are two approaches to improve PPMP,
namely PG and PM. The forepassed studies on PPM P
improvement are dominated by the approach of PM.
While, in this study, the positive effect of PG on

Governance-Management-Performance (GMP) Framework: A
Fundamental Thinking for Improving the Management Performance of Public Projects
292
PPMP is testified thoroughly and the complemen-
tarity of the fire-new viewpoint, i.e., PG, and the
original viewpoint, i.e., PM, so acutely emerges.
3) GMP framework implies that PG is of overriding
importance to PPMP, so the government may pay
more attention to it. Take China for example, the
central government began a push of government in-
vestment system reformation since 2004 and CAS is
advocated to be applied to nonprofit government
investment projects to improve their performance.
Even nowadays, there are still many problems ex-
isting in the practices of CAS. The central govern-
ment of China is increasingly conscious of the fact
that PG is more effective than PM in China at pre-
sent due to its vast development space.
5. To Improve PPMP Using GMP
Framework
According to GMP framework, the government has two
distinct ways to improve the management performance of
public projects.
1) Optimizing PM
PM is to managing scop e, project organization, quality,
cost, time procurement, information, and in order to de-
liver the beneficial change desired by the owner [40].
Strictly speaking, PPMP is the result of PM and PM is
the process of making PPMP. So it is comprehensible
that good PM leads to good PPMP.
2) Optimizing PG
GMP framework indicates that PG can contribute to
the improvement of PPMP via PM. As pointed out above,
public project governance can be broken down into gov-
ernance structure and governance mechanism and the
characters of their contents are distinct. The former is
relatively steady and it should match with the context and
feature of the public project, while the latter is more
flexible and it can be modified in a certain public project
if needed. Governance mechanism attaches itself to some
certain governance structure. Therefore, the governments
have two approaches to improve PPMP based on PG:
 Selecting a proper governance structure (existing
one or original one) for the public project at the be-
ginning. There are many factors should be consid-
ered, such as the feature of the project, the context,
the requirement of the owner and so on.
 Evaluating and then heightening the level of gov-
ernance mechanism under a certain governance
structure in the process of the public project. We
should make certain the key evaluation indicators
and the approach to evaluate. Finding the aspect of
PG which has limitation and taking appropriate im-
proving measures.
6. Conclusions
This study is not an attempt to improve PPMP com-
pletely in management paradigm or economics paradigm
as the studies before. It aims at presenting and testifying
a fundamental thinking for improving PPMP based on its
formation mechanism. To this end, thorough literature
review and theoretical analysis were carried out to iden-
tify two groups of factor s aff ecting PPMP greatly, i.e. PG
and PM, and then SCP paradigm is applied to the agency
industry of public project to get GMP framework which
is the critical contribution of this study. GMP framework
reveals all the driving factors in the process of PPMP
formation and improvement and their priority. Therefore,
it will be a powerful tool for public project analysis and
may help the government to improve PPMP further. An-
other contribution is the approach undertaken in this
study. GMP framework is evolved from SCP paradigm
which is a hypothesis in the traditional theory of Indus-
trial Organization and the agency industry of public pro-
ject is presented and chosen to be the object of SCP para-
digm. It is an original attempt to get the conclu sion about
public project from the analysis of the agency industry of
public project.
Limitations are unavoidable although extensive efforts
were taken into this study. The most impor tant on e is th at
our conclusion is not based on the actual data of public
project but comes from theoretical analysis merely. It is
the important subject of our future research to testify
GMP framework empirically. In fact, we are in the proc-
ess of gathering certain actual data (including abundant
data that reflect PM, PG and PPMP respectively) of con-
struction-agent project in China at present although it is
really a hard work. A sophisticated statistical analysis
using structural equa tion modeling (SEM) will be carried
out when enough data is collected and it will be th e most
convincing proof of GMP framework. In a word, this
research is at its infancy and it requires more effort from
those involved in this field.
7. Acknowledgements
This study is based on a research project funded by Na-
tional Natural Science Foundation of China (NSFC) (No.
70772058/G021 3), and, of course, ap preciatio n and grati-
tude for providing other types of support for this study
are extended to our colleagues in Institute of Public Pro-
ject & Cost Engineering (IPPCE), Tianjin University of
Technology.
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