Challenges of Cost Management in Complex Projects

Abstract

Contingency approaches for understanding complexity in projects are intended to help academics and practitioners make distinctions between different types of projects to better understand the relationship between practices and outcomes when applying different project management processes. In this paper, we build on existing research on complex products and systems (CoPS) to address the challenges of managing costs in projects of varying complexity. Based on a qualitative case study, we identify several challenges in performing various cost management functions related to cost estimation, cost control and monitoring, revenue recognition, profitability analysis and margin calculation. The cost management functions are impacted by the large size, complexity, uncertainty and uniqueness of those projects. Keywords: complex projects, complex product systems, cost management, contingency theory