How large are construction cost overruns on average?

It depends on the work. Flyvbjerg found average cost escalation of about 44.7 percent for rail, 33.8 percent for bridges and tunnels, and 20.4 percent for roads. For billion-dollar megaprojects, McKinsey reports that about 98 percent overrun by more than 30 percent and 77 percent finish at least 40 percent late.

Why do construction projects run over budget?

The research points to two recurring causes: optimism bias, an honest tendency to underestimate cost and duration, and strategic misrepresentation, where costs are understated to get a project approved. Scope growth, unforeseen site conditions, design changes, and material escalation then compound an already-thin estimate.

How do I protect a project against overruns?

Size contingency from the actual risks rather than a flat percentage (probability times impact, summed to an expected-value floor), cross-check it against the AACE band for your estimate class, and track cost performance continuously with earned value so a slip surfaces while there is still budget to protect. A forecast at completion updated each period turns a year-end surprise into an early warning.

What is a realistic contingency percentage?

It narrows as the design firms up. AACE estimate-class guidance runs roughly 30 to 50 percent at concept (Class 5), down to single digits at a near-complete Class 1 estimate. The right number for a specific job comes from its own risk register, not a rule of thumb, which is why a risk-weighted build beats a flat percentage.

Construction cost data

Construction cost overruns: the data.

Nine out of ten large projects run over budget. Here is how common overruns are, how large they get, why they happen, and the numbers you can cite, with the calculators to price your own risk.

Cost overruns are closer to the rule than the exception in large construction. In Bent Flyvbjerg's study of 258 transport-infrastructure projects, roughly 90 percent ran over budget. McKinsey reports that large projects across asset classes typically run up to 80 percent over budget and about 20 percent longer than planned. The causes are consistent, and so are the defenses.

How large the overruns get

Flyvbjerg, Holm and Buhl studied 258 transport-infrastructure projects across 20 nations. Average cost escalation by project type:

Project type	Average cost overrun
Rail	44.7%
Bridges & tunnels	33.8%
Roads	20.4%

Source: Flyvbjerg, Holm & Buhl, "Underestimating Costs in Public Works Projects: Error or Lie?" (JAPA, 2002); "How common and how large are cost overruns in transport infrastructure projects?" (Transport Reviews, 2003). ~9 in 10 projects overran.

Megaprojects are worse

Finding	Figure
Typical cost overrun, large projects	up to 80%
Typical schedule slip	~20% longer
Megaprojects over budget by >30%	98%
Megaprojects at least 40% late	77%

Source: McKinsey Global Institute, "Reinventing Construction: A Route to Higher Productivity" (February 2017).

Why projects run over

Optimism bias

An honest tendency to underestimate cost and duration and to assume the best case. It is the most common driver in the research.

Strategic misrepresentation

Costs understated to get a project approved. Once approved, scope growth, site unknowns, and escalation compound an already-thin estimate.

Price your own overrun risk

Cost overrun risk

Weight your risks and see the exposure against your reserve.

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Contingency builder

Size contingency from probability times impact, cross-checked to AACE bands.

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Estimate at completion

Forecast final cost from where the project stands today.

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Questions & answers

Very. In Bent Flyvbjerg’s study of 258 large transport-infrastructure projects worldwide, roughly nine out of ten ran over budget. McKinsey’s Global Institute reports that large projects across asset classes typically run up to 80 percent over budget and take about 20 percent longer than scheduled. Overrun is closer to the rule than the exception.

Sources

Flyvbjerg, Holm & Buhl (2002), "Underestimating Costs in Public Works Projects: Error or Lie?" Journal of the American Planning Association.
Flyvbjerg, Holm & Buhl (2003), "How common and how large are cost overruns in transport infrastructure projects?" Transport Reviews.
McKinsey Global Institute (February 2017), "Reinventing Construction: A Route to Higher Productivity." mckinsey.com
AACE International Recommended Practices 40R-08, 44R-08, 17R-97, 18R-97 (contingency & estimate classification).

Catch the overrun while there is still budget.

POD reads the cost and change data your team already records and keeps an overrun-risk view current across the whole job, so the warning arrives early, not at closeout.

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Last updated: July 2026