🔍 Why do projects exceed budget?

🏷Let’s break it down with a real case!

📌 🔸Case Study: if let see just an example🙏

⏺A 4 km urban road project was initially estimated to cost 25 million ETB. Midway through execution, the cost escalated to 34 million ETB a 36% budget overrun.
Why?

☘Incomplete BOQ during planning

☘Inflation not accounted for

☘Scope changes not managed

☘Inefficient procurement and material waste


📊 Key Lessons:

1️⃣ Accurate Quantity Take-Offs (QTO):
➤ Use updated drawings and software like AutoCAD & Excel or CostX
➤ Cross-verify QTO with field data

2️⃣ Rate Analysis:
➤ Include materials, labor, equipment, and overhead
➤ Use local market rates (e.g., from recent supplier quotes)

3️⃣ Contingency Planning:
➤ Add 5–10% contingency for risks like price hikes, delays, etc.
➤ Recalculate budget if major scope changes occur

4️⃣ Budget Monitoring Tools:
➤ Implement Earned Value Management (EVM)
➤ Compare Planned Value (PV), Actual Cost (AC), and Earned Value (EV)

5️⃣ Regular Financial Reviews:
➤ Monthly cost reports and cash flow updates
➤ Involve client & accountant in major budget revisions

📘 Pro Tip:
“Cost estimation is not just math it’s strategic foresight!”

@etconp