Over Budget, Over Time, Over and Over Again: Managing Major Projects

Abstract

It is useful to distinguish between “causes” and “root causes” in explaining cost overruns, benefit shortfalls, and delays in major projects. Conventionally, the following are listed as causes of project underperformance in the literature: project complexity, scope changes, technological uncertainty, demand uncertainty, unexpected geological features, and negative plurality, i.e. opposing stakeholder voices. No doubt, all of these factors at one time or another contribute to cost overruns and benefit shortfalls, but it may be argued that they are not the real, or root, cause. The root cause of underperformance is the fact that project planners tend to systematically underestimate or even ignore risks of complexity, scope changes, etc. during project development and decision-making. Such ignorance or underestimation of risks is often called optimism, and if we accept this terminology the root cause of underperformance is optimism, whereas complexity, scope, technology, etc. are simply specific issues about which planners have been optimistic and through which optimism therefore manifests itself. Below, the focus will be on root causes of underperformance and not on conventional causes.