Track: Business Management

Abstract

Mega-projects improve the livelihoods of people and boost the country’s economy. When mega-projects are to be constructed, the government notifies the public of the details including the budgeted cost. Most of these projects spiral out of control when it comes to budget and time. State-owned entity (SOE) mega-projects are funded by taxpayers’ money and as a result of cost overruns, the extra funds required to cover the extra expenses are resourced from other departments’ budgets or borrowed from other countries. Developing countries are hit the hardest when it comes to cost overruns in projects. The literature review results show that there are many explanations for cost overruns however these explanations can be summarised into four categories i.e. political, technical, economical and psychological.

A case study methodology of one African mega-project is investigated to determine the contributing factors towards cost overruns. Data is collected through interviews and company documents. The findings of the case study reveal that variation orders and contractual claims during the execution phase of an African mega-project contribute as factors towards cost overruns. Innovative project management measures need to put in place in order to eradicate cost overruns.