The global economy has been relieved for more than a year now because of the stability in the prices of oil and gas. The price in the industry has been estimated to have been tamed approximately at $100/bbl. oil. It is vital to note that the relief came right at a time where investment in the oil and gas had been crippled with unprecedented risks and overruns. The issue of cost overruns in projects cut across at every sector of the oil and gas supply chain. Specifically the upstream sector is of much concern since that is the source of every oil and gas. The various units in the upstream oil and gas sector are equally prone to this canker (cost overrun). Aside the persistent operational cost overruns in the industry, the other cost element that has defiled available cost control methods and strategies in the industry is Capital cost or Expenditure (CAPEX) for projects. Several researches and studies conducted revealed that approximately between 8 out of every 10 upstream oil and gas project overrun its time and cost (CAPEX).

Forecast from IEA shows that the global energy investment in infrastructural building between now and 2030 devoid of any overrun stands at $22 trillion. It directly suggests that, approximately $1 trillion capital investment will be made yearly. Currently the annual growth in capital investment in the industry is on an average of 36%. Ironically, the higher investment drive has equally been matched with more complex risk and high level of cost overrun. Despite the fact that cost overrun is seen at the thing that runs through the history of the oil and gas industry, the current rate is largely attributed to the complex geographical locations of most of the oil fields, cost of advanced technologies, tighter regulations and several others. It is therefore not too early to predict that, activities, pricing and cost uncertainties in the operations of the industry will still persist and even deepen all things been equal. The simplest indication is the emergence of and the anticipated dominance of large projects with difficult locations coupled with expensive technologies.
A report produced by Oil and Gas Executives and the energy industry stakeholders offered reasons why CAPEX predictability has become a major obstacle that needed immediate and critical attention and consideration.

Prior to this report, numerous projects had already been reported to have overrun their CAPEX. It can be said that, the report by oil and gas executive only re-echoed what has widely been noted as a big challenge for some time now within the operations of the oil and gas industry. Picking only from the immediate past decades, countless examples can be given to substantiate this argument. Shell’s Sakhalin II project situated off the coast of Siberia in the Eastern part of Russia more than doubled its CAPEX after four years of its sanction. The initial estimated cost for the project was $10billon in 2003. As early as just 2 years after the commencement of the project, the figure doubled to $20billion in 2005. During reporting time for this project cost in 2007, the actual cost stood at $22billion more than 100% of initial cost estimate. The capital expenditure (CAPEX) of a project is one of the main cash flows use to calculate net present value (Kjetil et al. 2002). Automatically, the CAPEX of oil and gas project determines all the other economic variables such as breakeven point, profit and net returns. Hence the future success or failure and profitability and loses of oil and gas project depends heavily on the decision made on CAPEX.

Similarly, projects in the Canadian oil sands have witnessed increasing overruns for close to a decade now. On average a typical oil and gas project in Canada has a cost overrun of 50% to 100%. The case is not different in several offshore developments, pipelines, refineries and many other departments in the industry. Again, earlier drafts written have reported on series of cases of overrun in the industry that has attracted general concerns by stakeholders in the industry. This case has become very alarming in the oil and gas industry which calls for urgent solution.

The growing concern is striking as a result of the inability of CAPEX managers in the oil and gas industry to make any significant changes to tame cost overrun. It has proven that the over reliance of the traditional method of forecasting and reporting rather than using information to drive change has over lived its usefulness. It has been argued that cost overrun can be reduced to the barest minimum if CAPEX managers devote 80% of their time and resources to drive early changes in project scope and budgets.
It is as a result of the aforementioned series and trends of problems of cost overrun that has inspired the researcher to undertake this study. After intensive investigation done in the industry, CAPEX overrun stood tall and was seen worth pursuing as one single element that has diverse effects that runs throughout the supply chain in the oil and gas industry and hence worth researching into.

Objective
1. To develop a validated model that achieves accurate project timing and cost predictions

Research Questions
1. Identify and discuss the causes of CAPEX overrun in the upstream oil and gas sector
2. How effective are the CAPEX control models in the upstream oil and gas sector?
3. How can accurate time and cost be achieved in upstream operations?

The research intends to develop a validated model to help predict offshore project cost in the upstream oil and gas industry. The dominant causes would be indentified and investigated and existing cost overrun models would be evaluated. The aim of the research is to deliver a resultant prediction model that will help solve some of the problems in the costoverrun in the complete oil and gas supply chain.