Analysis of cost escalations in pharmaceutical projects

Purpose – The purpose of this paper is to examine different possible issues that can contribute to cost escalations in pharmaceutical capital projects and identify remedial measures to control them. Design/methodology/approach – The study is supported by a detailed survey performed around some big pharmaceutical companies of Indian sub-continent. Various issues that lead to cost escalations of projects have been identified. Both exploratory and confirmatory factor analyzes have been applied to the feedback data. Findings – The study derived and validated four prominent factors leading to cost escalations. The paper discusses these factors along with the remedies identified to control project cost. Convergent and discriminant validity have been well established for the model. Research limitations/implications – The data needful for the study were collected from only four big pharmaceutical companies established in Southern India. Through frequent and elaborate interactions with senior project managers of those companies, it became possible to get a consolidated list of reasons that contribute to cost escalations in pharmaceutical projects. The list and the feedback data may be more exhaustive if some more companies would have been surveyed. Future research is committed to cover some more notable pharmaceutical companies both nationally and internationally and enhance the sample size. This would add more strength to the analysis and derive more consistent and validated results. Practical implications – This study provides necessary support to the project people to analyze different issues that stand as hurdles for project success and enable them to look for remedies to resolve them. The results would help the project managers to enhance their awareness in controlling the project costs. The study stands as a stepping stone and a roadmap to embed further research in this direction. Originality/value – Since several significant issues impact the progress of the projects, this work focussed on analyzing cost-related issues in projects; since there is meager research work done in the area of pharmaceutical project management, as an attempt to fill the research gap, this work carried out detailed analysis of different issues leading to cost escalations in pharmaceutical capital projects; factor analysis, including exploratory and confirmatory, has been applied to the data collected and several important factors derived and the measurement model well validated; the research work was done in close interaction with the project people working in four big Indian pharmaceutical companies and useful information was collected; in addition to generation of important factors from the factor analysis, the study was further extended to collect various remedies to mitigate the issues that lead to cost escalations; the research work has enough strength to act as a role model to motivate researchers and project people to further their research on other issues and also refine the present work.