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A cost overrun, also known as cost increase or budget overrun, involves unexpected costs incurred in excess of budgeted amounts due to an underestimation of the actual cost during budgeting.

Cost overrun is a global phenomenon in the construction industry where very rarely projects are finished within the budgeted cost. In a global study on construction project performance, cost overrun was identified the major problem where 9 of 10 projects faced the overrun in the range of 50 to 100%.

Inflation, availability and rarity of project resources and materials can cause project overrun. Some materials are of a higher quality and may cost more or cannot be acquired without extra costs.

The study revealed that 6 causes have a high risk on cost overrun, which were ineffective site management & monitoring, unskilled subcontractors, construction mistakes, incomplete design documents at the tendering stage, and late payment.

Bankruptcy is the ultimate consequence of cost overruns. Two less final but potentially negative consequences of cost overruns are that they impair the investor's future financial capacity and can have social implications for those involved.

Cost overrun can also be termed as budget overrun, cost increase, or cost escalation [19]. Cost overrun is a variance between initially estimated or projected cost and final cost at the completion of the project [20].

6 Common Causes of Cost Overruns in Construction Projects Inaccurate Project Estimates. ... Serious Project Design Errors. ... Not Planning for Change Orders. ... Administration Errors. ... Poor Site Management. ... Not Hiring the Right Team.

Impact of cost overruns on construction projects When the project starts without proper planning, it leads to unexpected costs because accrued and the final cost of the project goes up as high as 80%. Consequently, the project often witnesses time overruns, which ultimately impacts the delivery method.

Time Overruns(Delay): The difference in actual cost that incurred for construction and initially estimated cost known as cost overrun and it is a prime factor that affects successful completion of projects [8].

Cost overrun is the difference between the original cost estimate of the project and actual construction cost on completion of the work [3]. And it can simply explain as a result of one or a combination of several causes which are very important to identify for cost-effective performance [4].

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Form Packages
Adoption
Bankruptcy
Contractors
Divorce
Home Sales
Employment
Identity Theft
Incorporation
Landlord Tenant
Living Trust
Name Change
Personal Planning
Small Business
Wills & Estates
Packages A-Z
Form Categories
Affidavits
Bankruptcy
Bill of Sale
Corporate - LLC
Divorce
Employment
Identity Theft
Internet Technology
Landlord Tenant
Living Wills
Name Change
Power of Attorney
Real Estate
Small Estates
Wills
All Forms
Forms A-Z
Form Library
Customer Service
Terms of Service
DMCA Policy
About Us
Blog
Affiliates
Contact Us
Privacy Notice
Delete My Account
Site Map
All Forms
Search all Forms
Industries
Forms in Spanish
Localized Forms
Legal Guides
Real Estate Handbook
All Guides
Prepared for You
Notarize
Incorporation services
Our Customers
For Consumers
For Small Business
For Attorneys
Our Sites
US Legal Forms
USLegal
FormsPass
pdfFiller
signNow
airSlate workflows
DocHub
Instapage
Social Media
Call us now toll free:
1-877-389-0141
As seen in:
  • USA Today logo picture
  • CBC News logo picture
  • LA Times logo picture
  • The Washington Post logo picture
  • AP logo picture
  • Forbes logo picture
© Copyright 1997-2025
airSlate Legal Forms, Inc.
3720 Flowood Dr, Flowood, Mississippi 39232