Failure to Count the Cost in Building Projects
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Apparently many people don't know how to count the cost for their building projects. That's why cost overruns, which stem from "an underestimation of the actual cost during budgeting," are notoriously common. Here are some famous cost overruns:
- The Suez Canal cost 20 times as much as the earliest estimates.
- The Sydney Opera House cost 15 times more than was originally projected.
- The Concorde supersonic airplane cost 12 times more than predicted.
- When Boston's "Big Dig" tunnel construction project was completed, the project was 275 percent ($11 billion) over budget.
- The Channel Tunnel between the UK and France had a construction cost overrun of 80 percent, and a 140-percent financing cost overrun.
A study of cost overruns published in the Journal of the American Planning Association found that 9 out of ten construction projects had underestimated costs. Overruns of 50 to one hundred percent were also common. Another group studied IT projects and also found that the average cost overrun was 43 percent. This study also found that 70 percent of the projects were over budget, exceeded time estimates, and had estimated too narrow a scope.