Determinants of budget overruns on IT projects

Abstract

Abstract Using data collected from a sample of 76 project managers from 64 firms, we explore the relative impact of project characteristics, frequency of problems encountered on the projects, perceived impact of these problems on the budget performance, project managers’ personal characteristics, and project managers’ conflict management styles on budget overruns on information technology (IT) projects. The study reveals that schedule overrun is the strongest predictor of budget overrun. Usage level of accommodation as a conflict management style, project team size, and project management experience were also found to be important, but to a lesser extent. We then utilize the findings to construct a model that predicts budget overrun as a percentage of the initial budget estimate. We conclude with recommendations for future research.