Project escalation is the phenomenon of continuously devoting resources into a seriously delayed and troublesome project. This study focuses on project outsourcing in which both client and vendor may lead to the result of escalation. As both parties may take a position of termination or continuation of the project, four escalation types were studied. In each escalation type, two cases were studied through in-depth interview. Using content analysis, determinants of escalations were identified. In the case of low intention of continuation by the vendor, but high intention of continuation by the client, credible deterrence resulted in project escalation. In the case of high intention of continuation by the vendor, but low intention of continuation by the client, credible commitment resulted in project escalation. This study provides lessons learned from eight escalation cases to avoid ineffective investment in time and money.