Understanding the cost overrun causation in construction megaprojects – a grounded systems thinking approach

Abstract

Research background: The problem of cost overruns in construction megaprojects is a ‘complex problem’. Although a considerable amount of research has been conducted to identify the isolated factors causing cost overruns in megaprojects, there is a lack of holistic understanding of the complex causal interrelationships between the causes of cost overruns. Therefore, to fulfil this research gap, adding a novel contribution to the existing body of knowledge, adopting systems thinking approach, this thesis aims to holistically examine and understand the cost overrun causation in construction megaprojects and develop a model/substantive theory that represents the complex problem of cost overruns in construction megaprojects. Research methodology and design: The thesis adopted a qualitative research methodology based on a case study research design. California High-Speed Rail project was selected as the case study and data were collected from a range of sources. Data were analysed using grounded theory method and systems thinking approach was used to develop the model (systems map). Seven (07) theoretical propositions that emerged from the data analysis were developed to explain the drivers of each systems map and their cause and effect relationships. The developed model/substantive theory and the underpinning propositions were validated using a two-round modified Delphi survey. Important research findings: The holistic examination of the complex problem of cost overruns revealed that the project cost overruns were an emergent ‘symptom’ caused by multiple interrelated causes and events occurring at different levels and phases of the project thus cannot be attributed to one single cause. Further to the current academic explanations on cost overruns in the project management literature, findings of the research revealed that that ignorance, impulsive decision-making, immature project organisation, and political pressures collectively led to initiating the project with unrealistic cost and schedule estimates and an undefined scope. Scope creep, inflation, community pressure, lawsuits, and multiple delays were collectively responsible for cost overruns during the execution phase. Contribution to knowledge: Using systems thinking approach, this thesis holistically examined the cause and effect relationships between the drivers of cost overruns in megaprojects by developing a model/substantive theory (systems map) of cost overrun causation. The developed systems map could be used as a tool for strategic decision-making in megaprojects to understand how cost overruns emerge as a result of multiple interrelated causes and events occurring at different levels and phases of the project.