This study explores how institutional environments influence risk allocation and drive the adoption of collaborative governance models in transport megaprojects. The research question is: “How do institutional environments influence the praxis of risk allocation and drive the institutionalization of collaborative governance models in transport megaprojects?” It examines political, regulatory, and stakeholder pressures, highlighting the rise of incentivized target cost as an emergent collaborative logic. The findings suggest that institutionalizing collaborative governance is essential for effective risk allocation in complex transport megaprojects.