overrun adj : (often followed by `with' or used in combination) troubled by or encroached upon in large numbers; "waters infested with sharks"; "shark-infested waters"; "the locust-overrun countryside"; "drug-plagued streets" [syn: infested, plagued] n : too much production or more than expected [syn: overproduction]
1 invade in great numbers; "the roaches infested our kitchen" [syn: infest]
2 occupy in large numbers or live on a host; "the Kudzu plant infests much of the South and is spreading to the North" [syn: invade, infest]
4 seize the position of and defeat; "the Crusaders overran much of the Holy Land"
Cost overrun is defined as excess of actual cost over budget. Cost overrun is also sometimes called "cost escalation," "cost increase," or "budget overrun." However, cost escalation and increases do not necessarily result in cost overruns if cost escalation is included in the budget.
Cost overrun is common in infrastructure, building, and technology projects. One of the most comprehensive studies http://flyvbjerg.plan.aau.dk/JAPAASPUBLISHED.pdf of cost overrun that exists found that 9 out of 10 projects had overrun, overruns of 50 to 100 percent were common, overrun was found in each of 20 nations and five continents covered by the study, and overrun had been constant for the 70 years for which data were available. For IT projects, an industry study by the Standish Group (2004) found that average cost overrun was 43 percent, 71 percent of projects were over budget, over time, and under scope, and total waste was estimated at US$55 billion per year in the US alone.
Spectacular examples of cost overrun are the Sydney Opera House with 1,400 percent, and the Concorde supersonic aeroplane with 1,100 percent. The cost overrun of Boston's Big Dig was 275 percent, or US$11 billion. The cost overrun for the Channel tunnel between the UK and France was 80 percent for construction costs and 140 percent for financing costs.
Three types of explanation of cost overrun exist: technical, psychological, and political-economic. Technical explanations account for cost overrun in terms of imperfect forecasting techniques, inadequate data, etc. Psychological explanations account for overrun in terms of optimism bias with forecasters. Finally, political-economic explanations see overrun as the result of strategic misrepresentation of scope and/or budgets.
All of the explanations above can be considered a form of risk. A project's budgeted costs should always include cost contingency funds to cover risks (other than scope changes imposed on the project). As has been shown in cost engineering research , poor risk analysis and contingency estimating practices account for many project cost overruns. Numerous studies have found that the greatest cause of cost growth was poorly defined scope at the time that the budget was established. The cost growth (overrun of budget before cost contingency is added) can be predicted by rating the extent of scope definition, even on complex projects with new technology.
Cost overrun is typically calculated in one of two ways. Either as a percentage, namely actual cost minus budgeted cost, in percent of budgeted cost. Or as a ratio, viz. actual cost divided by budgeted cost. For example, if the budget for building a new bridge was $100 million and the actual cost was $150 million then the cost overrun may be expressed as 50 percent or by the ratio 1.5.
List of projects with large cost overruns
- flagicon United States Big Dig
- flagicon UKflagicon France Channel Tunnel
- flagicon UKflagicon France Concorde
- flagicon UKflagicon Germanyflagicon Italyflagicon Spain Eurofighter
- flagicon United States F-22 Raptor
- flagicon UK National Programme for IT
- flagicon Panama Panama Canal
- flagicon Egypt Suez Canal
- flagicon Australia Sydney Opera House
- flagicon UK TAURUS (share trading)
- flagicon UKflagicon Franceflagicon Germanyflagicon Spain Airbus A380
- flagicon UK Scottish Parliament Building
- flagicon Canada Montreal Olympic Stadium
- flagicon Canada Rogers Centre (formerly SkyDome)
- flagicon Canada Pickering Nuclear Generating Station
- flagicon UK Millennium Dome
- flagicon UK Humber Bridge
- flagicon Swedenflagicon Denmark Oresund Bridge
- flagicon Denmark Great Belt railway tunnel
- flagicon Australia Sydney Olympic Park
- flagicon Japan Joetsu Shinkansen high-speed rail line
- flagicon Malaysia Pergau Dam
- flagicon United States V-22 Osprey
- flagicon United States Denver International Airport
- flagicon United States San Francisco-Oakland Bay Bridge (Eastern span replacement)
- Flyvbjerg, Bent, Nils Bruzelius, and Werner Rothengatter, Megaprojects and Risk: An Anatomy of Ambition (Cambridge University Press, 2003).
- Flyvbjerg, Bent, Mette K. Skamris Holm, and Søren L. Buhl, 2002, "Underestimating Costs in Public Works Projects: Error or Lie?" Journal of the American Planning Association, vol. 68, no. 3, 279-295.
- Standish Group, 2004. CHAOS Report (West Yarmouth, MA: Author)
- UK Department for Transport, 2004. Procedures for Dealing with Optimism Bias in Transport Planning: Guidance Document (London).
- Lev Virine and Michael Trumper. Project Decisions: The Art and Science, Vienna, VA: Management Concepts, 2008. ISBN 978-1567262179
overrun in Swedish: Budgetöverdrag
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