Chaos Theory: Implications for Cost Overrun Research in Hydrocarbon Megaprojects

Cost overruns are a recurrent problem in hydrocarbon (oil and gas) megaprojects. An understanding of why and how they occur is needed if they are to be mitigated; such knowledge can provide managers with the foundations to develop techniques to reduce and contain their negative impacts on a project’s performance. This paper examines the nature of cost overruns in hydrocarbon megaprojects using the theoretical lens of chaos theory. The underlying principles of chaos theory are reviewed and its research implications for examining cost overruns identified. By viewing megaprojects as chaotic or dynamic systems, the industry and research community may be better positioned to develop innovative solutions to mitigate cost overrun occurrence

Cost Overruns in Hydrocarbon Megaprojects: A Critical Review and Implications for Research

Cost overruns are prevalent in hydrocarbon (oil and gas) megaprojects. A recent report indicates that 64% of ongoing megaprojects globally are facing cost overruns. Despite their increasing occurrence, there has been limited published research in the mainstream literature that has specifically examined why and how they occur. Consequently, suggestions regarding how to constructively address cost overruns in hydrocarbon megaprojects are scant. To better understand the causal nature of cost overruns in hydrocarbon megaprojects, this article provides a critical review of the extant literature. Findings from the research indicate that complex interactions between project characteristics, people, technology, and structure and culture contribute to cost overruns occurring. As a result, it is suggested that chaos theory can be used to explain how cost overruns arise in hydrocarbon megaprojects. This article provides a reference point for engendering future research in this pervasive and fertile area

Cost Overruns in Hydrocarbon Megaprojects: A Critical Review and Implications for Research

Cost overruns are prevalent in hydrocarbon (oil and gas) megaprojects. A recent report indicates that 64% of ongoing megaprojects globally are facing cost overruns. Despite their increasing occurrence, there has been limited published research in the mainstream literature that has specifically examined why and how they occur. Consequently, suggestions regarding how to constructively address cost overruns in hydrocarbon megaprojects are scant. To better understand the causal nature of cost overruns in hydrocarbon megaprojects, this article provides a critical review of the extant literature. Findings from the research indicate that complex interactions between project characteristics, people, technology, and structure and culture contribute to cost overruns occurring. As a result, it is suggested that chaos theory can be used to explain how cost overruns arise in hydrocarbon megaprojects. This article provides a reference point for engendering future research in this pervasive and fertile area