Abstract: When the final cost of a project is greater than original estimates the difference between them is termed a cost overrun. Its consequences affect both the customer and contractor. The reasons for cost overrun are many: poor project management; poor choice of vendors and/or equipment; lack of programmer productivity; overly optimistic schedules; poorly understood requirements; and unforeseen costs resulting from world crises such as increased gas and oil prices. Whatever the reasons, the variance between estimate and actual cost needs to be addressed and resolved. A large discrepancy is usually something that could have been prevented with better planning and controls. This chapter discusses problems that contribute to cost overruns. Using structured, modular development and prototypes together with carefully managed project operations will result in a project that stays within the allocated budget. The most important factor in avoiding cost overruns is estimating the project as close to reality as possible. Project costs are usually based on best information available at the beginning of the project. Even with limited data, it is possible to negotiate successful contracts with minimal to no cost overrun.
Publication Year: 1992
Publication Date: 1992-01-01
Language: en
Type: book-chapter
Indexed In: ['crossref']
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Cited By Count: 1
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