What is Budget Overrun?
A budget overrun, also known as a cost overrun, occurs when the actual expenses of a project exceed the amount planned in the original budget. This is one of the most common challenges in project management and can derail profitability, stakeholder trust, and long-term success if not properly managed.
Typical causes include poor initial planning, miscalculated cost estimates, unexpected expenses, scope creep, project delays, or inefficient allocation of resources. Even with strong project execution, unforeseen circumstances can push costs beyond what was approved. Research shows that while many projects succeed in meeting their objectives, a significant number still fail to stay within budget.
Preventing budget overruns requires accurate forecasting, regular monitoring, and early identification of risks or warning signs. Strong communication with stakeholders, careful resource management, and proactive scope control also play a critical role in minimizing overruns and keeping projects financially sustainable.
