Cost Overrun

Cost overrun occurs when a project’s expenses exceed its initial budget. This can happen for various reasons, such as unexpected delays, rising material costs, or changes in project scope. For example, if a construction project was budgeted at $1 million but ends up costing $1.2 million due to unforeseen issues, it has experienced a cost overrun. Cost overruns are significant because they can impact the financial health of organizations, lead to project delays, and necessitate additional funding or adjustments to project plans. Monitoring and managing costs effectively are crucial to minimize overruns.