Many construction projects run over budget. This is a common cause of disputes between construction companies and their clients.
Ideally, things should be planned out and budgeted appropriately at the beginning, but even if they are, the project can overshoot those estimates. Below are a few reasons why this may happen.
Inflation and rising costs
To begin with, due to inflation and the rising costs of parts and materials, original estimates may not apply. If the cost of materials goes up 30% over the year, for instance, it dramatically increases the cost of the project on the whole, even if that project itself is identical.
Downtime and scheduling costs
Scheduling issues can also create increased costs, especially when they lead to downtime. For instance, drywallers may be hired to work on the interior of a project after electrical work has been done. But if the electrical project runs behind schedule, the drywallers arrive on the site and have downtime waiting until they can actually start. This can increase the costs and the time it takes to complete the project.
Costs that were not originally planned
Finally, projects sometimes run into costs that were not even factored into the original estimate. Say that a construction company is hired to renovate a building. While preparing the space, they discover asbestos. It will now take weeks and tens of thousands of dollars to remediate the asbestos before the project can move forward.
Financial disputes are certainly common when it comes to construction projects. It is important for those involved to understand what legal steps they can take to seek a resolution.
