Common Causes of Construction Overruns & Cost Escalation

The construction industry is notorious for running behind schedule and over budget. This isn’t a recent phenomenon — it’s been going on for decades. Would you believe an astounding 91.5% of projects go over budget, over schedule, or both? 

So, with nearly all projects blowing their budget or schedule completely out of water, how can project planners create better timelines and cost estimates? Unfortunately, many unforeseen circumstances can contribute to delays and construction cost escalations. However, understanding these potential challenges can help you build a better and more accurate budget.

What are common causes of construction project overruns?

There are four common causes of delays and overruns in construction projects. While you can’t control all of these factors, you can build a buffer into your timeline to account for potential delays.

–  1. Underestimating the project

One of the most common, yet avoidable causes of delays is underestimating the project in the planning phase, which can lead to cost overruns in labor and materials. 

Projects can be underestimated for several reasons, including:

• Pressure from management to meet deadlines

• Lack of experience 

• Inflation or other external market pressures

2. Material access delays

Whether materials are back ordered, delayed due to inclement weather, or unavailable due to shortages, material access delays can significantly extend a project timeline. When materials aren’t sourced on time, each phase of the project following sourcing is pushed back, contributing to overall construction cost escalation.

Unforeseen challenges in the supply chain can lead to delays in material sourcing or equipment unavailability, which can negatively impact the project timeline. Recent global events have thrown a wrench in supply chain management, making it difficult to anticipate blockers and delays. Review advice from our team of experts on how to optimize your supply chain.

3. Misinterpreted prints or revisions

Misinterpreted prints or revisions that aren’t communicated can lead to delays across all phases of a project. When a print is misinterpreted or revised without changes properly communicated, materials might be under or over-ordered. 

If contractors act on misinterpreted or incorrect plans, they will have to undo the incorrect work and make adjustments accordingly. 

4. Inclement weather

Weather is an important factor in project planning and timelines. A bad storm can set back or even halt a project, causing overruns. When material or equipment is left unprotected on the job site, it can be damaged in inclement weather, it must be replaced.

What leads to cost escalation in construction projects?

Outside of labor tied to extended project timelines, one of the most common factors driving cost escalation is associated with materials ordered incorrectly or damaged on the job site.

Additionally, while tooling is factored into job costs, unforeseen issues or tool failures could lead to increased costs to replace or repair damaged equipment. Of course, if equipment is difficult to find or backordered, this can drive further delays and expenses.

In any project, product selection is critical to the process. Installing the wrong fastener or using the wrong material could lead to rework or warranty repairs before the project is complete.

How can contractors create more accurate project budgets and timelines? 

Project underestimation can be caused by human error and miscommunication between estimators and engineers. Good communication and revision control can both prevent this issue. Improve team communication by:

• Working with familiar subcontractors you trust. 

• Leveraging knowledgeable suppliers with proven track records of delivering on time.

• Establishing a chain of communication. Ensure you have a plan for communicating changes to all subcontractors when revisions occur.

• Defining communication channels and sharing contact information for all parties. 

Additionally, anticipating potential roadblocks, like keeping an eye on the weather or planning for the season will help in creating a realistic timeline. For more ideas on how to optimize construction site processes to prevent overruns, read 10 ways to improve efficiency on commercial construction sites. 

What needs to be considered in an accurate building construction budget?

• Tooling and equipment costs — Are the tools owned and in working condition? Will equipment need to be serviced or rented? 

• Labor — How many hours from which subcontractors are required to complete the project? Consider adding a buffer to account for additional hours.

• Materials — What materials are required and how much will it cost to acquire enough? Our ConnectSuite digital tools offer a budget calculator and tools simplify material sourcing.

• Potential unforeseen events — How could bad weather, broken equipment, or other roadblocks impact the budget?

How can contractors better anticipate and overcome these challenges?

Many contractors have experience to rely on when planning their projects. It is important that they remain informed throughout the process and communicate with estimators, engineers, subcontractors, and anyone on the site to have the best chance of an accurate timeline and budget.

No plan is perfect. The best way to anticipate a challenge is to account for the potential delays when creating a timeline and budget. In most scenarios, it’s better to overestimate than to underestimate.

SFS: Your partner for smoother projects

SFS cares about more than being your standard supplier. Our customer service and commitment to getting customers their materials on time sets us apart from other options in the industry. We’re proud to have won several awards for our customer service, quality, and delivery performance, including the "Supplier of the Year Award" in 2022, 2020, and 2013 and "Partner of the Year" in 2015 from Morton Buildings.

In a recent survey, SFS Group received overwhelmingly positive feedback on their dependability. Out of 40 respondents, an impressive 37 customers gave the company a remarkable rating of 9 or higher on a scale of 1 to 10 for dependability.

We’ll always work with you to develop innovative solutions to any challenges you face. Find the right materials for your project and build an accurate budget with our ConnectSuite digital tools.