Executive-level Capital Project Decision Making: Rational or Rationale?

By Denise Chenger, George Jergeas and Francis Hartman.

Published by The International Journal of Sustainability Policy and Practice

Format Price
Article: Print $US10.00
Article: Electronic $US5.00

The Project Management Institute estimates current annual global investment in all capital projects and infrastructure to be US $12 trillion dollars, yet we have very little information on how and who initiated the investment decisions. Projects continue to fail at high rates despite the creation of numerous programs and processes aimed at improving project success. Interviews were conducted with 21 executives in the upstream oil and gas industry to provide insight into how high profile capital project decisions were made. While capital projects were thought to be initiated by managers as an output of the strategic planning process, a key finding was these major projects were independently and intuitively conceived by the CEO alone or the CEO and other executives or board members (followed by further financial analysis). Four decision-making paths were identified based on the type of opportunity. These findings have implications for existing project management practices. For example, in general, only project risks are currently evaluated. These findings suggest an adaptation to how risk is managed in order to encompass a more robust perspective of risk. The findings also raise questions about broader external implications. If major decisions are made independently by CEOs, how are companies ensuring our corporate leaders are trained to make good decisions since major projects not only impact the organization but also extend further to the communities in which the company operates?

Keywords: Project Management, Stage Gate, Strategy, Upper Echelon, Decision Making, Risk Management

The International Journal of Sustainability Policy and Practice, Volume 8, Issue 3, pp.65-74. Article: Print (Spiral Bound). Article: Electronic (PDF File; 412.237KB).

Denise Chenger

Full Time PhD Candidate and Part Time Instructor, PhD – Civil Engineering, , Instructor – Bissett School of Business, University of Calgary (for PhD studies), Mount Royal University, Calgary, AB, Canada

Denise has over 20 years of operations experience with ten of those in the oil and gas industry in both the US and Canada working at and with executives on strategic planning, implementation and significant organizational change initiatives including with a US Fortune 100 company. She recently returned to full time studies at the University of Calgary to pursue a Doctorate in Philosophy. As a PhD Candidate in Project Management (Civil Engineering), her focus and passion is on the softer side of projects by studying the impact of executive level decision making of major project on the greater organization in addition to the communities in which they operate. Denise also instructs strategy and human resources at the Bissett School of Business, Mount Royal University and has developed courses for the new Construction Project Management Degree program at SAIT Polytechnic, both in Calgary, Alberta.

George Jergeas

Professor, Project Management, Civil Engineering, The University of Calgary, Canada

Francis Hartman

Professor, Project Management, Civil Engineering, The University of Calgary, Canada