Budget overruns in construction projects are most frequently caused by quantity takeoff mistakes before pricing begins. Approximately 85% of all construction projects worldwide are subject to cost overruns. A considerable number of these instances are related to the estimating process, during which inaccuracies may occur in the takeoff.

When material quantities are calculated correctly and thoroughly, in accordance with all project documentation, they prevent costly change orders. Therefore, proper takeoff is one’s best chance to avoid budget overruns.

How Common Are Budget Overruns in Construction Projects Today?

Cost overruns are a normal occurrence in the construction industry. In fact, at least 90% of construction projects are late, over budget, or both. The average percentage of cost overruns is close to 28%. This applies to all types of construction: housing, commercial, and infrastructure developments.

The inaccuracies that occur during the estimating process account for approximately 32% of all reasons for cost overruns (according to the National Cooperative Highway Research Program).

Only 31% of projects completed in the past three years were estimated within 10% of the budget (according to another source, KPMG).

98% of all major construction projects valued at over $1 billion are estimated to exceed the initial budget by more than 30%, with an average overrun of 80%.

What Causes Budget Overruns in Construction Most Often?

Design errors leading to rework constitute the most frequent cause of project delays, according to the majority of industry researchers. Inaccurate quantities stemming from poor construction takeoff services also lead to significant losses.

Common places where project costs can be increased due to mistakes are:

• Out-of-date drawings

• Miscommunication between related documents

• Insufficient quantity takeoffs

The four most common types of errors and omissions that lead to financial losses include:

• Scope omission or oversight

• Drawings not reconciled

• Not including material waste multipliers

• Disregarding procurement considerations

How Does Accuracy in Material Takeoff Prevent Cost Overrun?

Accurate takeoff work is where cost control actually starts. Material takeoff accuracy is essential to ensure that a single price goes on the page. Get that count wrong, and the error multiplies once unit prices apply across large quantities.

AI-assisted takeoff tools are now claiming 95% to 99% accuracy on common construction items. This level of accuracy helps improve construction cost control on a project. The independent quantity check and takeoff from multiple views is a necessary step, even with AI-assisted takeoff.

How Can Cost Overruns Be Prevented In A Project?

Cost overrun prevention works best when the same disciplined approach is applied to every project. Skipping steps under time pressure is what leads to mistakes.

1. Double-check all drawings and specifications prior to taking any quantity.

2. Cross-check quantities with at least 2 different drawing views.

3. Use proper waste factors for all applicable materials.

4. Ensure quoted purchases match final takeoff quantities.

5. Compare actual costs to estimated costs during all phases of the build.

A Hypothetical Scenario: Budget Overruns in Construction on a Mid-Size Build

A rushed manual takeoff missed a late addendum, causing a 6% material shortfall and costly change orders. Cross-referencing the latest drawing set would have caught the gap.

Professionals, such as SMA Estimating LLC, build this exact verification step into every takeoff to eliminate these errors before submission.

Conclusion

Budget overruns in construction are common, but they are not something that cannot be avoided. This is because many overruns stem from takeoff errors that accurate, disciplined takeoff work can prevent. By utilizing cross-checked estimating, a contractor can protect their margins. In other words, their margins stay protected from mistakes that less disciplined competitors are more likely to make.