Why Cost Overruns Happen (and How to Spot Them Early)

Most overruns don’t happen overnight — they build up quietly. It starts with an unapproved variation, an underestimated material quote, or a scope change that “shouldn’t take long.”

In South Africa, we also face unique challenges — load-shedding delays, material price swings, and unreliable supply chains. But even then, the biggest causes remain poor planning and weak communication.

One project that taught me this was a simple office fit-out where a client added “just a few extra lights.” No one priced it properly, and it ended up costing over R150 000 more. That’s not the client’s fault — that’s a project management failure.

The lesson? Small oversights compound fast. Spot them early and deal with them immediately.

Start Right: Budget for Reality, Not Dreams

Every project starts with enthusiasm — but enthusiasm doesn’t pay invoices. A solid budget is your foundation, and it must be based on reality, not wishful thinking.

Always include a contingency allowance of at least 5–10% for fluctuations in material costs, fuel, or unforeseen site conditions. Get supplier quotes early and confirm their validity periods — especially with volatile imports like steel or cement.

Before work starts, sit with the client and make sure they understand what’s included, what’s not, and what “custom” really means in cost terms. I’ve seen so many budgets derailed because clients assumed “minor changes” were free.

Also plan for cash flow, not just total cost. A project can look profitable on paper but collapse when suppliers stop delivering because payments lag.

Control Variations Like a Pro

Variation orders are one of the most common causes of cost overruns — and one of the easiest to manage if you have a system.

For me, the rule is simple:

“If it’s not written down and signed off, it doesn’t exist.”

Any change — whether it’s a new tile, different fitting, or extra socket — must be documented, priced, and approved before the work starts. It might feel bureaucratic, but that discipline protects both you and your client.

I’ve learned to balance flexibility with firmness. Clients appreciate honesty more than surprise invoices. And when you run a tight process, it builds trust.

Keep Communication Tight

When a project starts going off budget, nine times out of ten it’s because of poor communication.

In my teams, we do daily WhatsApp check-ins and weekly cost meetings. They’re short, but they keep everyone aligned — client, QS, and site foreman. Bad news doesn’t age well. The sooner you raise an issue, the cheaper it is to fix.

“Communication is the cheapest insurance policy on any project.”

Smart Procurement and Solid Supply Chain Management

Procurement is one of the biggest areas where South African projects lose money. Material prices shift fast, stock runs out, and delivery delays can throw your schedule (and your profit) off balance.

That’s why smart SCM is a cornerstone of cost control.

I keep a preferred supplier list with accurate delivery histories and up-to-date pricing. It’s not about finding the cheapest deal — it’s about knowing who delivers on time, every time.

Imports are often cheaper than local products, but only when planned properly. Get your lead times, duties, and forex exposure sorted upfront. A weak rand can turn “cheap” into “painful” very quickly.

Good procurement is proactive, not reactive.

“Every day lost in procurement is a day paid for twice — once in downtime, and again in overtime.”

Track, Review, and Adjust

I live by one rule: If you’re not tracking it, you’re losing it.

You don’t need fancy software — even a simple Excel sheet can help you monitor budget vs actual weekly. The point is to make financial control a habit, not a last-minute panic.

Review your numbers regularly, identify patterns, and act early. If a material cost is creeping, look for alternatives. If a subcontractor is missing deadlines, fix it before it snowballs.

Lead by Example

A project manager sets the tone. If you’re sloppy with paperwork, late with payments, or vague with instructions, expect the same from your team.

But if you’re structured, fair, and transparent, everyone else steps up too. I’ve seen sites transform purely because the PM started taking cost meetings seriously.

“Financial control starts with personal control.”

Closing Thought

Cost overruns don’t just eat profits — they destroy reputations. The best project managers aren’t the ones who build the biggest or the fastest, but the ones who deliver on time, on budget, and with integrity.

Every cent saved through smart management adds to your credibility — and that’s something money can’t buy.