Budget Overruns in Large-Scale Projects: Root Causes and Preventive Project Management Practice

Abstract

Over budgeting on large scale projects on either end is an issue of concern, which most times means the project may not be delivered on time, chances are high the stakeholders may not feel contented with the program and hence lack of financial effectiveness. This paper examines underlying causative factors of exceeding budgets on projects and the assessment of prevention of project management in a mixed methodological approach. The quantitative analysis employed surveys undertaken among 120 project professionals and the qualitative analysis based on in-depth interviews with 15 senior practitioners in infrastructure, energy and IT industries. The results indicated that incorrect estimation of cost, unmanaged changes to scope, poor risk management practices, and decentralized stakeholder organization were identified to be the most common causes of budget overruns. On the other hand, introducing the cost forecasting tools of higher complexity, regular change control systems, alignment with stakeholders strategies, and digital technologies, including Building Information Modeling (BIM) and artificial intelligence (AI), greatly increased the budget performance.The paper also pointed out the differences across sectors and regions in overruns on budgets and the significance of adaptive governance and transparent reporting system. The findings not only endorse existing theoretical construct such as the Iron Law of Megaprojects but also bring new insight into how technology and the behavior of the organization contribute to cost control. At the end of this paper, realistic suggestions and areas of future studies are provided as the conclusion to bolster project delivery results. The research adds value to the academic and the industry as the challenges of the modern world to create effective cost-retaining approaches to complex, high-value projects require evidence-based insights which are provided in the current research.

Keywords: Artificial intelligence, Budget overrun, Building Information Modeling, Cost estimation, Project governance, Risk management.