Construction glossary

What is a Cost Overrun?

A cost overrun, in the context of the construction industry, refers to the excess amount that needs to be spent over the initially agreed or budgeted cost for completing a particular project. It’s an unanticipated increase in costs that occurs due to various factors such as inaccurate estimation, changes in project scope, unforeseen challenges, or increase in material or labor costs. In essence, it’s when the actual cost of the project exceeds the estimated cost. It is critical to manage and minimize cost overruns as they can seriously impact the overall profitability and success of a construction project. Effective project management, regular monitoring, vigilant control measures, and contingency planning are some strategies to mitigate such cost overruns in construction projects.

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Other construction terms

Actual Cost

What is Actual Cost?

Actual cost, in the construction industry, refers to the accurate amount reasonably spent on a project. This includes every expense incurred during the planning, development, and execution phases. The...
Net D

What is Net D?

Net D, in the context of the construction industry, refers to the "net deliverable" square footage or area of a constructed property. It applies to the actual usable space that remains after the subtr...
Accounts Payable (A/P)

What is Accounts Payable (A/P)?

Accounts Payable (A/P) in the context of the construction industry refers to the amount of money a company owes to its suppliers or vendors for goods and services received but not yet paid for. These ...

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