INVESTIGATING THE FACTORS INFLUENCING PROJECT COST OVERRUNS IN THE TELECOMMUNICATIONS INDUSTRY

INVESTIGATING THE FACTORS INFLUENCING PROJECT COST OVERRUNS IN THE TELECOMMUNICATIONS INDUSTRY: A CASE STUDY OF A NETWORK EXPANSION PROJECT BY MTN NIGERIA.

Chapter 1:

Introduction

1.1 Background of the Study

The telecommunications industry has undergone rapid transformation in recent years, driven by advancements in technology and the increasing demand for reliable and efficient communication services (Telecoms.com, 2021). As telecommunication companies strive to meet the growing needs of customers, they face numerous challenges in executing large-scale projects, including network expansions, infrastructure upgrades, and new service deployments.

Project cost overruns have emerged as a significant issue affecting the telecommunications industry. A cost overrun refers to a situation where the actual cost of a project exceeds the estimated or budgeted cost (Flyvbjerg, 2014). Such overruns can result in financial losses, delayed project completion, and compromised project outcomes.

The telecommunications industry is particularly susceptible to cost overruns due to several reasons. Firstly, telecommunication projects often involve complex infrastructural requirements, such as the installation of network equipment, laying of cables, and construction of transmission towers, which can be influenced by a range of external factors (Kang et al., 2016). Additionally, technological advancements and evolving customer demands can lead to changes in project scope, requirements, and specifications, which may increase project costs (Khasawneh et al., 2019).

Moreover, the competitive nature of the telecommunications industry, coupled with the need for swift project execution, can create pressure on companies to deliver projects on tight schedules, potentially compromising cost estimation and control (Cai et al., 2016). The involvement of multiple stakeholders, including vendors, contractors, regulatory bodies, and local communities, further complicates project management and cost control efforts (Li et al., 2015).

Understanding the factors that contribute to project cost overruns in the telecommunications industry is crucial for effective project management and financial planning. By identifying these factors, telecommunication companies can develop strategies to mitigate risks, enhance cost estimation accuracy, and improve project outcomes.

1.2 Statement of the Problem

Despite the importance of managing project costs, the telecommunications industry frequently experiences cost overruns, resulting in financial losses and delays in project completion. The factors contributing to project cost overruns in this industry are multifaceted and require comprehensive investigation. This study aims to identify and analyze the factors that influence project cost overruns in the telecommunications industry, focusing on a network expansion project carried out by MTN Nigeria.

1.3 Objectives of the Study

The main objectives of this research are as follows:

1. To identify the key factors contributing to project cost overruns in the telecommunications industry.
2. To examine the specific factors that led to cost overruns in the network expansion project by MTN Nigeria.
3. To assess the impact of project cost overruns on the financial performance and project outcomes.
4. To recommend strategies and best practices for mitigating project cost overruns in the telecommunications industry.

1.4 Research Questions

To achieve the aforementioned objectives, the study will address the following research questions:

1. What are the main factors influencing project cost overruns in the telecommunications industry?
2. Which specific factors contributed to cost overruns in the network expansion project by MTN Nigeria?
3. What is the impact of project cost overruns on the financial performance and project outcomes?
4. What strategies and best practices can be implemented to mitigate project cost overruns in the telecommunications industry?

1.5 Significance of the Study

This research project holds significant importance for various stakeholders in the telecommunications industry. The findings of this study will benefit telecommunication companies, project managers, and industry professionals by providing insights into the factors that contribute to project cost overruns and suggesting effective strategies for mitigating such risks. Furthermore, the study will contribute to the existing body of knowledge on project management in the telecommunications sector, offering practical implications for future projects.

1.6 Scope and Limitations

The study will focus on the telecommunications industry, specifically investigating a network expansion project carried out by MTN Nigeria. The research will consider both internal and external factors that influence project cost overruns. However, it is important to note that the study may have certain limitations, including the availability of accurate and complete data, potential biases in the responses provided by project stakeholders, and the limited generalizability of the findings to other telecommunication projects.

1.7 Organization of the Study

This research project is structured into five chapters. Chapter 1 provides an introduction to the study, outlining its background, problem statement, objectives, research questions, significance, and scope. Chapter 2 presents a comprehensive literature review on project cost overruns, project management in the telecommunications industry, and related concepts. Chapter 3 describes the research methodology, including the research design, data collection methods, and data analysis techniques. Chapter 4 presents the findings and analysis of the study, while Chapter 5 concludes the research project with a summary of the findings, recommendations, and suggestions for further research.