Chaos Theory : Implications for Cost Overrun 1 Research for Hydrocarbon Megaprojects

6 7 Abstract: Cost overruns are a recurrent problem in hydrocarbon (oil and gas) megaprojects 8 and whilst the extant literature is replete with studies on their incidents and causes, underlying 9 theories that explain their emergence remain scant. To mitigate the occurrence of cost 10 overruns, an understanding of ‘why’ and ‘how’ they occur must be accrued; such knowledge 11 provides managers with the foundations to develop pragmatic techniques to attenuate them. 12 This paper explains the nature of cost overruns in hydrocarbon megaprojects through the 13 theoretical lens of chaos theory. The underlying principles of chaos theory are reviewed and 14 its research implications for examining cost overruns identified. By conceiving megaprojects 15 as chaotic or dynamic systems, the industry and research community are better positioned to 16 develop ‘innovative’ solutions to mitigate cost overrun occurrence. 17 18

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