What is the most common cause of big projects over running on their estimated budget? For example, I recently learned that the HS2 train line in the UK will be nearly £75bn over the estimated budget! How was the estimate so wrong?
In: Engineering
When a job is bid and an estimate is given, that’s all it is, it is an estimate on material and labor and some wiggle room for profit and mishaps, not much though. The bigger the job the more problems can arise and bigger the problems can be, for example, you can look at a topographical map to plot the train line but maybe the map hasn’t been updated in awhile so you throw a good number at it and turns out someone threw a house right where you want your line, or what is more than likely the case as it happens most often here in the US, they plan on buying the owned property along where they want the line and the owners of said property refuse, so they keep offering more and more until either they sell or the company decides to just go around, both are very expensive as they cost both time and labor.
I’ve had a $20,000 job that tanked to $500,000 job, and the company just had to eat that loss, it’s not often a big loss like that happens but it’s rough when it does.
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