A report issued by Ernst & Young UK found that the majority of oil and gas mega-projects are over budget and behind schedule.
The report looked at 365 oil and gas projects across the globe and found that the cummulative costs of the projects ran $500 billion over initial estimates, or 59 percent higher than initial budget projections.
Collective costs for the projects ran over initial projections by $1.7 trillion, up from $1.2 trillion.
About 64 percent of mega-projects experience cost overruns and 73 percent are hit with scheduling delays.
Projects in the Middle East face the highest likelihood of cost overruns with 89 percent of those projects exceeding initial budgets.
The report found that 58 percent of North American mega-projects exceed initial cost estimates.
The majority of mega-projects are upstream with an average cost of about $6.6 billion, the report said.
There are currently 75 mega-projects in North America totaling $482 billion in investments. The Asia-Pacific region has the most mega-projects with 99 currently listed totaling $945 billion in investments.
Project delivery success is also decreasing, especially in segments such as deepwater where projects are more logistically complicated, risky and expensive.
“Poor execution can potentially result in the project being economically uncompetitive and negatively impacting an organization’s overall financial results,” EY’s oil and gas advisory leader Axel Preiss said.