Abstract Architecture, engineering, and construction (AEC) projects are central to international development, where success emphasizes long-term development outcomes and sustainability. However, AEC projects are inherently environmentally intensive, and higher potential environmental impact often triggers greater regulation, coordination, and implementation challenges, thereby increasing the risk of project failure. In this setting, donor agency governance plays a critical role in managing project complexity. Existing research provides limited quantitative evidence on how ex ante environmental risks affect project success and rarely examines how donor agency governance operates in this relationship. To address these gaps, this study examines the relationship between potential environmental impact, donor agency governance, and project success in World Bank-financed AEC projects. Using World Bank project data combined with country-level data sets, we estimate OLS and Logit models on a sample of 1,419 AEC projects across 151 countries. The findings reveal the following: (1) higher potential environmental impact is significantly associated with lower project success; (2) donor agency governance at both preparation and implementation stages improves project success; and (3) implementation-stage governance, rather than preparation-stage governance, plays a dominant role in mitigating the negative effects of potential environmental impact. This study provides large-scale quantitative evidence on the link between potential environmental impact and project success, extends project governance research by revealing the mechanisms of donor agency governance, and introduces project-level governance discourse into the international development literature. The findings also offer practical implications for donors, borrowers, and project organizations.
Wang et al. (Wed,) studied this question.