The Six Root Causes of Overruns

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Hello, and welcome. This is Super Structures General Contractors — a national general contractor headquartered in Powhatan, Virginia — here to help you and your clients build something that lasts. We're glad you're with us, and we look forward to connecting with you.

Here's one that matters more than its name lets on — The Six Root Causes of Overruns. If you remember one thing, make it this: Nearly every overrun traces back to one of six causes, and most of them show warning signs before the job ever starts. Do this right and you'll stop fixing symptoms and start fixing the thing that keeps happening.

A framing contractor's job ran five weeks late. The PM's report said "framing took longer than planned." Ask why: one crew ran the job instead of two. Why? The second crew was still finishing the last job. Why was that job late? Same answer, one job earlier. The real cause was not slow framing. The company scheduled labor it did not have, job after job, and every job inherited the previous job's delay. Until someone asked why three times, every fix went to the wrong problem: a new foreman, a pep talk, a Saturday shift. None of it touched the cause.

Cause 1: Poor planning and estimation

An estimate built under bid-day pressure, without production history or a site visit, produces a budget and schedule the job can never hit. The job is over budget before the first truck arrives; it just takes months to find out.

• Signals: unit costs that do not match your last three jobs; a schedule with no float; a bid assembled the night before; "we'll figure it out in the field."
• Where it shows up: labor-heavy, self-performed scopes, because that is where a production-rate guess does the most damage.

Cause 2: Unforeseen circumstances

Weather beyond the historical norm, a code or permit change mid-project, or differing site conditions: rock, water, unmarked utilities, contamination, a slab that is six inches thicker than the as-builts said.

• Signals: no weather days in the schedule; no differing-site-conditions clause reviewed before signing; no contingency line; a geotech report with two borings on a four-acre site.
• The honest version: truly unforeseeable events are rarer than contractors admit. Most "surprises" had a signal somebody could have read.

Cause 3: Scope creep

Work added by the owner, the architect, or your own crew without a priced and approved change order. The classic phrase is "while you're here, could you..."

• Signals: field changes on a handshake; change orders priced weeks after the work; superintendents who do not know what is in the contract; a punch list that includes items that were never in the scope.
• Why it is so expensive: the work gets done at full cost, the money never follows, and when you finally ask for it the owner says, truthfully, "I never agreed to that price."

Cause 4: Labor shortages

Not enough qualified people. Production drops, overtime climbs, quality slips, rework follows, and crews get pulled between jobs so that every job runs a little short.

• Signals: overtime above 10 percent of hours for more than a few weeks; punch lists growing faster than they close; the same crew on two schedules; apprentices working alone.

Cause 5: Material price volatility

Lumber, steel, copper, concrete, drywall, and fuel move between bid and purchase. Long jobs on fixed prices carry the most exposure, and so do jobs where the buyout was left until the material was needed.

• Signals: no escalation clause; quotes that expired before award; no early buyout of long-lead items; a supplier quote that says "price at time of shipment."

Cause 6: Inefficient communication

Information that does not reach the people who need it in time: an RFI that waits two weeks, a drawing revision that never gets to the field, a decision with no owner, a sub who heard about the schedule change from another sub.

• Signals: RFI turnaround over ten days; crews working from superseded drawings; rework that "nobody told us" about; three different "current" schedules.

Symptom versus root cause

"The job is behind" is a symptom. So are "we lost money on concrete" and "the owner is unhappy." Ask why at least three times until you land on something you can change on the next job:

• The job is behind. Why? Framing took five weeks instead of three. Why? One crew instead of two. Why? The second crew was still on the last job. Root cause: labor scheduled that the company did not have.
• Concrete lost money. Why? Twice the finishing hours. Why? Pours were small and frequent. Why? The schedule never sequenced the slab with the underground. Root cause: planning. Notice that the root cause is almost never the crew that was closest to the problem.

Going Deeper (Intermediate)

Sort each root cause by how much control you have over it. High control: estimating, scope discipline, communication, labor scheduling. Medium control: labor supply, material buyout timing, sub performance. Low control: weather, regulation, true differing site conditions. Spend prevention effort where control is high. Most companies do the opposite: they shrug at scope creep, which they fully control, and complain about weather, which they do not.

Then look at interaction. Causes rarely arrive alone. A labor shortage on the framing crew turns a two-day weather delay into a two-week one, because the make-up days have no crew. An estimate with no float means a single late submittal becomes a schedule overrun instead of an absorbed slip. When you review a job, write down the cause that started it and the cause that made it worse. The second one is usually the one you can fix.

Advanced / Pro-Level

Pros keep a post-job review file. Every closed job gets a one-page write-up: final margin versus bid margin, the top three variances by cost code, and the root cause of each in one of the six buckets, with a sentence on the earliest signal that was visible. After ten jobs the pattern is obvious, and it is almost never the one the estimator or the superintendent would have guessed. That file feeds next year's estimates (unit costs by code), the risk register template (the risks that actually happened), and the training plan (the habits that would have caught them).

They also run the causes forward at bid time. For each of the six, they ask: what is the signal on this job, and what is our response? Two borings on four acres is a signal; the response is more borings or a rock unit price. A 14-week switchgear lead time on a 20-week schedule is a signal; the response is early release or a schedule change. Done at bid time, this is a 30-minute meeting. Done in week nine, it is a claim.

Practice Challenge

A remodel ran $14,000 over. The PM lists three reasons: the owner changed the tile twice, the plumber showed up a week late, and the cabinets cost more than quoted because the quote had expired. Assign each to a root cause, rate your control, and name the earliest signal. (Answer: tile changes are scope creep, high control, signal was the first unpriced change; the late plumber is a communication or labor-scheduling failure, high control, signal was no written confirmation a week out; the expired quote is material price volatility, medium control, signal was a quote expiration date before award; all three were preventable and the fixes are a change-order form, written sub confirmations, and buyout at award.)

In Practice

The contractor who asks why three times finds out the company has a labor-scheduling problem that spans every job. The contractor who stops at "framing was slow" fires a good foreman and has the same overrun on the next job.

Common Mistakes to Avoid

• Fixing the symptom and leaving the root cause in place
• Blaming low-control causes like weather for high-control failures like scope discipline
• Never writing down why a job missed, so the lesson is lost by the next bid
• Assuming the cause is the same on every job without checking the cost codes
• Looking for the cause in the crew closest to the problem instead of in the plan

Takeaway: Nearly every overrun traces back to one of six causes, and most of them show warning signs before the job ever starts.

Educational content — not legal, financial, or contractual advice. Every project and contract is different; follow your contract documents, your company's procedures, and the advice of your attorney, CPA, and surety.