A cost overrun in construction is a situation where the actual cost of a project exceeds the original estimate or budget. It can happen for many reasons, such as changes in the scope of work, unforeseen circumstances, poor planning or poor management.
Cost overruns can have significant consequences for a project, including delays, quality problems, disputes between the parties and even cancellation of the project. They can also have a significant financial impact on the project stakeholders, including the client, contractor and subcontractors.
To avoid cost overruns, it is crucial to carry out thorough cost estimating and planning before the project starts, to identify and manage potential risks, and to establish effective communication and collaboration between all project stakeholders. Effective project management practices, such as regular progress monitoring, cost tracking and contingency planning, also help to minimise the risk of cost overruns.
