Which of the following is NOT considered the cause of cost overrun?

Which of the following is NOT considered the cause of cost overrun?

• A. Underestimation of cost and length of delays
• B. Safety and Environmental Risk
• C. Overestimating
• D. Lack of managerial strategies

Answer: (C)

The thing being tested is what tends to push a project’s costs above the planned budget. When you underestimate cost and the length of delays, you don’t build enough contingency for time and expenses, so actual spending can easily outrun the budget. Safety and environmental risk introduces hidden costs—unforeseen permits, cleanup, fines, or mandatory redesigns—that spike expenditures beyond what was planned. A lack of managerial strategies means weak controls, poor scheduling, and inefficient procurement, all of which can drive costs up through wasted resources and change orders. Overestimating, however, sets a higher budget than might be needed, creating a cushion that makes overruns less likely; in practice, this tends to prevent cost overruns rather than cause them.

The thing being tested is what tends to push a project’s costs above the planned budget. When you underestimate cost and the length of delays, you don’t build enough contingency for time and expenses, so actual spending can easily outrun the budget. Safety and environmental risk introduces hidden costs—unforeseen permits, cleanup, fines, or mandatory redesigns—that spike expenditures beyond what was planned. A lack of managerial strategies means weak controls, poor scheduling, and inefficient procurement, all of which can drive costs up through wasted resources and change orders. Overestimating, however, sets a higher budget than might be needed, creating a cushion that makes overruns less likely; in practice, this tends to prevent cost overruns rather than cause them.