To theorize how project governance configurations influence ISD performance, one must first con-sider how the accomplishment of the activities encompassed by each class of project decision rights influences performance. Building on Jensen and Meckling , decision rights exercise effectiveness is broadly defined as how well the activities encompassed by either of the two classes of project decision rights are accomplished during the ISD process. Project performance encompasses two dimensions , ISD efficiency and ISD effectiveness. ISD efficiency is defined as the extent to which a project is completed on schedule, within budget, and with minimal extraneous rework . ISD effectiveness is defined as the extent to which the project satisfactorily fulfills the client department’s needs . Consider next how the effective exercise of the two classes of decision rights influences ISD performance.