Cost tolerance

Success Problem

The real project cost often overrun the planned and agreed project price.

Impact

The controversy between project owner and contractor.

Recommendation

Cost tolerance, agreed in the project contract. Cost tolerance is maximum positive or negative deviation, agreed with the project owner for the project cost. If the project cost should overrun the cost tolerance in the result of some project change, it is necessary to agree this change with the project owner or his representative.

Category

• Cost & Finance