Unravelling the project escalation enigma: optimising principal-agent dynamics in IT project management

To enhance project success, researchers have tirelessly explored the perplexing phenomenon of project escalation and its detrimental impact on budgets. However, a crucial void remains - the lack of actionable solutions to combat and avert project escalation. This paper seeks to fill the gap by adopting a fresh and innovative approach: applying the agency theory. This research identifies the root causes of project escalation and unveils a new approach to overcome this daunting challenge. The cornerstone of this research lies in establishing an optimal mathematical function and meticulously defining start and stop conditions. Project managers can forecast and exercise control over escalation risks through an ex-ante approach. Such foresight gives project stakeholders the knowledge to discern the opportune moment for project launch and, equally crucial, the conditions that demand immediate cessation to avert the perilous grip of escalation, thereby significantly mitigating risks.