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Why do construction jobs go over budget?

One of the most common reasons for a construction dispute is simple: The project runs over budget. The homeowner doesn't want to pay any more, but he or she also doesn't want the company to stop before the job is done. At the same time, the company doesn't want to just eat those costs.

A project can run over budget for a number of reasons; a few examples are below:

1. Prices go up.

If there is a long delay between the start and completion of a job, the prices of materials could simply change. This means that an accurate quote a few months before the project is far off by the time purchases are made.

2. Costs are left out.

In some cases, estimates don't take everything into account. For instance, the quote could include the labor and materials, but it could leave out the cost of permits. The quote wasn't inaccurate, but it simply didn't cover everything it was supposed to cover.

3. Allowances are too small.

The general contractor may work with subcontractors on the job, allotting them a certain amount for materials. The subcontractor may then come in and spend too much, saying he or she couldn't possibly do the job the right way with the money that was in the budget.

4. Unforeseen issues.

Construction projects are notorious for unpredictable issues that have to be addressed. This is especially true when renovating older homes.

Budget disputes can get ugly in a hurry, with neither side wanting to give an inch. If the case ends up in court, it's incredibly important to know your legal options, especially since projects can stall out until the dispute is resolved.

Source: Building Advisor, "Why Jobs Go Over Budget," accessed May 10, 2017

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