I reconstructed a sweater similar to this a few years ago, but I never made a tutorial for it. Check out the tutorial below to see how to turn an over-sized shirt into a one-shoulder tunic or dress:
2. Lay your shirt flat. Cut off the sleeves and neckline.
3. Take one sleeve, and cut off the side seam.
4. Lay the sleeve out flat.
5. Cut 3 long strips from that sleeve. Mine were each 2.5" x 18."
6. Fold each of those strips in half lengthwise and sew, right sides together.
7. Sew the other two strips this way.
8. Place a safety pin at the end of your first strip, and feed it back through the tube you made. This will turn the tube right side out. Repeat will the other two strips.
9. (I don't have pictures of this step, but take the large portion of your original shirt and sew up the side seams (right sides together) and hem the top of it. This will create a baggy tube top.)
10. If your tube top is super baggy, sew elastic to the back top hem. Stretch the elastic as you sew so that it gathers evenly.
11. Try on your baggy tube top, and mark with pins where you want each of your braid strips to hit. Also note where you would like the strap to connect on the back. I used my bra strap as a guild and just marked a pin there.
12. Remove the tunic, and pin your three strips where your front pins were located.
13. Sew your strips to your top hem. Make sure your seams end up inside the dress of the tunic.
14. Braid your strips and then pin and sew the other ends to the back of your tunic.
Add a belt if your tunic is a little too baggy, and enjoy.