What Is a Budget Overrun? And Why 43% of Projects Experience One
The independent reference for project budget overruns. Real data, cited sources, a working EVM calculator, and no vendor agenda.
What is a budget overrun?
A budget overrun is the amount by which a project's actual cost exceeds its approved budget, measured as Actual Cost minus Budget at Completion, or as a percentage of the original budget. Overruns are common: 43% of projects finish over their initial budget (PMI's 2018 survey found 57% finished within it), rising to almost 9 in 10 for transport infrastructure (Flyvbjerg, Holm & Buhl 2002) and 98% of megaprojects overrunning by more than 30% (McKinsey 2015). Each figure on this page links to the document that states it, with the date we read it.
Definition
A budget overrun occurs when the actual cost of a project exceeds the approved budget. It is measured as the difference between Actual Cost (AC) and Budget at Completion (BAC), expressed as an absolute figure or a percentage of the original budget.
Budget overrun vs cost escalation: These are commonly confused. A budget overrun is unexpected: the project costs more than planned due to poor estimation, scope changes, or execution failures. Cost escalation refers to anticipated cost growth, such as inflation adjustments written into contracts. Most overruns combine elements of both, but the distinction matters for contract law and accountability.
For a deeper treatment of what causes overruns, see causes of budget overruns. For EVM-based forecasting, see the EVM guide.
Quick EVM Check
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Industry Overrun Rates at a Glance
| Industry | % Projects Overrun | Avg Overrun % | Source (document, date read) |
|---|---|---|---|
| Transportation infrastructure | 86% (almost 9 in 10) | 28% | Flyvbjerg, Holm & Buhl 2002, read 8 October 2026 |
| IT / Software | 71% challenged or failed | 45% (large IT) | Standish CHAOS 2015, read 8 October 2026 / McKinsey-Oxford 2012, read 8 October 2026 |
| Government IT (public sector) | nearly 1 in 2 | ~3x private sector | McKinsey 2022, read 8 October 2026 |
| Megaprojects (>$1B; mining, oil and gas, infrastructure) | 98% (overrun above 30%) | 80% | McKinsey 2015, read 8 October 2026 |
| All project types (16,000+ projects) | 91.5% miss budget or schedule | 52% miss budget | Flyvbjerg & Gardner 2023 (book; figure as quoted, not checked against the page) |
Full statistics by sector and project size, each linked to its source document
Famous Budget Overruns
James Webb Space Telescope
Sydney Opera House
Boston Big Dig
Full list of 12 historic overruns, each traced to an audit report or official document
Explore the Reference Library
EVM Calculator
CPI, EAC, VAC, TCPI, SPI. Full Earned Value toolkit.
Cost Overrun Formula
Calculate overrun in dollars and percent, plus which baseline to use.
Statistics Hub
Comprehensive overrun data by industry, project size, and region.
Construction
9 in 10 infrastructure projects overrun. Phase-by-phase risk and contract types.
IT Projects
Large IT projects: 45% over budget. Cloud cost overruns, agile EVM.
Government
Why public projects so often cost more. HS2, Crossrail, US federal IT.
Prevention
12 proven strategies from reference class forecasting to EVM monitoring.
Recovery Playbook
Already over budget? 7 steps to measure, forecast, and recover with EVM.
Legal Consequences
Who pays when projects overrun. Contract types, variation claims, disputes.
Free Templates
Budget tracker, EVM status report, change order log. No signup.
Source-Cited Reference Pages
The landmark studies
All studies, compared ›Standish CHAOS Report
71% challenged or failed (2015); 69% (2020, as reported)
Agile vs Waterfall Success Rate
CHAOS 2015: 39% agile vs 11% waterfall
Success Rate by Project Size
CHAOS 2015: 61% small vs 6% grand
McKinsey-Oxford 2012
45% over budget, 56% less value
PMI Pulse of the Profession
57% within initial budget, so 43% over (2018)
Flyvbjerg Project Database
Only 0.5% of 16,000+ projects deliver in full
McKinsey Megaproject Overruns
Source for '98% of megaprojects overrun'; 80% average
Flyvbjerg, Holm & Buhl 2002
258 transport projects: rail +44.7%, 9 in 10 over budget
Flyvbjerg & Budzier: IT Black Swans
27% average IT overrun, but 1 in 6 is a 200% Black Swan
Iron Law of Megaprojects
Over budget, over time, over and over again
NASA Requirements Curve
5-10% vs 20% effort effect on overrun
GAO Weapon Systems Assessment
GAO-25-107569: $49.3bn one-year defense cost rise
"53,000 tech projects, 63%"
Source trace: the viral stat with no study behind it
By industry
Defense projects
GAO MDAP data: F-35, Sentinel, Columbia
Healthcare IT
EHR rollouts: NHS NPfIT, VA Cerner
Olympic Games
23 of 23 Games since 1960 over budget, 159% on average
Movie productions
Hollywood overruns: Cleopatra to Marvels
Infrastructure megaprojects
Per-mode rail, road, bridge, tunnel data
Energy projects
Nuclear, oil & gas, solar, wind overrun rates
Aerospace projects
NASA missions: JWST, SLS, Mars Sample Return
Methods to prevent overruns
The planning fallacy
The optimism bias behind every overrun, and the outside-view fix
Reference class forecasting calculator
Apply Green Book optimism-bias uplifts to your estimate
Three-point estimation (PERT)
O / M / P formula with worked example
Monte Carlo simulation
P50, P80, P95 cost-risk modelling
Contingency calculator
Type-A vs type-B contingency sizing
Cone of Uncertainty
Boehm's original curve, narrowed
Cost-of-Change Curve
Does a bug cost 100x more late? The real figure vs the unsourced 1:10:100 chart
Case studies
HS2
London-Birmingham alone now £87.7-102.7B (DfT, May 2026)
Channel Tunnel
80% over budget in real terms, revenues half of forecast
Berlin Brandenburg Airport
9 years late, EUR 5.9B against a EUR 2B budget
Crossrail (Elizabeth Line)
3.5 years late, 28% over the 2010 budget (NAO)
Big Dig Boston
$2.6B to $14.8B, +469% (nominal)
California HSR
$33B (2008) to a $126B scaled-back plan; $231B for the original scope
Sydney Opera House
1,357% over original AUD 7M estimate
Sentinel ICBM
$140.9B after an 81% unit-cost breach (DoD, 2024)
Frequently Asked Questions
What is a budget overrun?
A budget overrun occurs when the actual cost of a project exceeds the approved budget. It is measured as the difference between actual cost (AC) and the original budget (BAC). Unlike cost escalation, which refers to anticipated increases such as inflation, a budget overrun is unexpected and indicates the project is performing below plan.
What percentage of projects go over budget?
PMI's Pulse of the Profession 2018 survey of 4,455 practitioners found that 57% of projects finished within their initial budgets, so 43% did not. Rates vary by sector: costs were underestimated in almost 9 out of 10 transport infrastructure projects (Flyvbjerg, Holm and Buhl 2002, 258 projects), 98% of megaprojects overrun by more than 30% (McKinsey 2015), and the Standish Group's CHAOS 2015 report counts 71% of software projects as challenged or failed.
What is the difference between cost overrun and cost escalation?
A cost overrun is unexpected: the project costs more than planned due to poor estimation, scope creep, or execution problems. Cost escalation is anticipated growth in cost, such as known inflation adjustments or agreed scope additions. In contracts, escalation clauses may allow cost adjustments for inflation; overruns beyond those clauses are the contractor's or project's problem.
How do you calculate budget overrun?
Simple calculation: Budget Overrun = Actual Cost (AC) minus Budget at Completion (BAC). As a percentage: Overrun % = (AC - BAC) / BAC x 100. For a forward-looking forecast using Earned Value Management: EAC = BAC / CPI, where CPI = Earned Value / Actual Cost. A CPI below 1.0 means you are over budget for the value delivered.
See the cost overrun formula with worked examples, or use our free EVM calculator.
What is earned value management (EVM)?
Earned Value Management (EVM) is a project performance measurement method that integrates scope, schedule, and cost. The three core values are Planned Value (PV: work scheduled to be done), Earned Value (EV: work actually completed, valued at the budget rate), and Actual Cost (AC: what you spent). From these, you calculate CPI, SPI, EAC, VAC, and TCPI.
See our complete EVM guide for formulas and worked examples.