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Information about Budget Overrun

Cost overrun is defined as excess of actual cost over budget. Cost overrun is also sometimes called "cost escalation," "cost increase," or "budget overrun."

Cost overrun is common in infrastructure, building, and technology projects. One of the most comprehensive studies [1] 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 Suez Canal with 1,900 percent, 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 budgets.

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

See also

Sources and further readings

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).

External links

Journal of the American Planning Association: [2]

UK Department for Transport: [3]

UK Treasury: [4]

Dictionary: [5]

Dictionary: [6]
cost is the value of money that has been used up to produce something, and hence is not available for use anymore. In business, the cost may be one of acquisition, in which case the amount of money expended to acquire it is counted as cost.
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For the rental car company, see .


Budget (from french bougette) generally refers to a list of all planned expenses and revenues. A budget is an important concept in microeconomics, which uses a budget line to illustrate the trade-offs
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Infrastructure is generally structural elements that provide the framework supporting an entire structure. The term has diverse meanings in different fields, but is perhaps most widely understood to refer to roads, airports, and utilities.
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building may refer to one of the following:
  1. Any man-made structure used or intended for supporting or sheltering any use or continuous occupancy, or
  2. An act of construction.

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If you are prevented from editing this page, and you wish to make a change, please discuss changes on the talk page, request unprotection, log in, or .
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project is a temporary endeavour undertaken to create a product or service[1].

Origin

The word project comes from the Latin word projectum from projicere, "to throw something forwards" which in turn comes from pro-
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Information technology (IT), as defined by the Information Technology Association of America (ITAA), is "the study, design, development, implementation, support or management of computer-based information systems, particularly software applications and computer hardware.
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Scope may refer to:
  • Scope (programming), the range in which a variable can be referenced
  • SCOPE (software), name used for several 1960s-era operating systems for the Control Data Corporation 60-bit 6000 series and the CDC 7600 mainframe computers

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Suez Canal (Arabic: قناة السويس, transliteration: Qanā al-Suways
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Sydney Opera House

Building

Type Arts complex
Architectural Style Expressionist
Structural System Concrete frame & precast concrete ribbed roof
Location Sydney, Australia

Construction

Completed 1973
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Type Supersonic airliner
Manufacturers Sud Aviation (now EADS) - BAC (now BAE Systems)
Maiden flight 2 March 1969
Introduction 21 January 1976
Retired 26 November 2003
Primary users British Airways
Air France

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Big Dig is the unofficial name of the Central Artery/Tunnel Project (CA/T), a megaproject that rerouted the Central Artery (Interstate 93), the chief controlled-access highway through the heart of Boston, Massachusetts, into a 3.5 mile (5.6km) tunnel under the city.
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Channel Tunnel
Le tunnel sous la Manche

Map of the Channel Tunnel.
Info

Location Beneath the English Channel
(Strait of Dover)
Coordinates Coordinates:
Status
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construction is the building or assembly of any infrastructure on a site or sites. Although this may not be thought of as a single activity, in fact construction is a feat of multitasking.
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Finance studies and addresses the ways in which individuals, businesses, and organizations raise, allocate, and use monetary resources over time, taking into account the risks entailed in their projects.
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An explanation is a statement which points to causes, , and consequences of some object, process, state of affairs, etc., together with rules or laws that link these to the object. Some of these of the explanation may be implicit.
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Technical may refer to:
  • The use of technology in a specific or precise way
  • Vocational education, often known as "technical education"
  • Technical (fighting vehicle), an improvised fighting vehicle often used in civil conflict

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Psychology (from Greek: Literally "talk about the soul" (from logos)) is both an academic and applied discipline involving the scientific study of mental processes and behavior.
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Politics is the process by which groups of people make decisions. Although the term is generally applied to behavior within civil governments, politics is observed in all human group interactions, including corporate, academic, and religious
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economy is the system of human activities related to the production, distribution, exchange, and consumption of goods and services of a country or other area.

The composition of a given economy is inseparable from technological evolution, civilization's history and social
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Forecasting is the process of estimation in unknown situations. Prediction is a similar, but more general term, and usually refers to estimation of time series, cross-sectional or longitudinal data.
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Optimism bias is the demonstrated systematic tendency for people to be over-optimistic about the outcome of planned actions. People tend to see the future through "rose-colored glasses," as the saying goes. Optimism bias applies to professionals and laypeople alike.
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Contract Law
Part of the common law series
Contract
Contract formation
Offer and acceptance  · Mailbox rule
Mirror image rule  · Invitation to treat
Firm offer  · Consideration
Defenses against formation
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In mathematics, a percentage is a way of expressing a number as a fraction of 100 (per cent meaning "per hundred"). It is often denoted using the percent sign, "%". For example, 45 % (read as "forty-five percent") is equal to 45 / 100, or 0.45.
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Please help recruit one or [ improve this article] yourself. See the talk page for details.
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Big Dig is the unofficial name of the Central Artery/Tunnel Project (CA/T), a megaproject that rerouted the Central Artery (Interstate 93), the chief controlled-access highway through the heart of Boston, Massachusetts, into a 3.5 mile (5.6km) tunnel under the city.
..... Click the link for more information.
Channel Tunnel
Le tunnel sous la Manche

Map of the Channel Tunnel.
Info

Location Beneath the English Channel
(Strait of Dover)
Coordinates Coordinates:
Status
..... Click the link for more information.
Type Supersonic airliner
Manufacturers Sud Aviation (now EADS) - BAC (now BAE Systems)
Maiden flight 2 March 1969
Introduction 21 January 1976
Retired 26 November 2003
Primary users British Airways
Air France

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Type Multirole fighter
Manufacturer Eurofighter GmbH
Maiden flight 27 March 1994
Introduced 2003
Status Operational
Primary users Royal Air Force
Luftwaffe
Aeronautica Militare Italiana
Ejército del Aire

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Type Fighter aircraft
Manufacturers Lockheed Martin Aeronautics
Boeing Integrated Defense Systems
Maiden flight YF-22: 29 September 1990 F-22: 7 September 1997
Introduction 15 December 2005
Status
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