Cost overruns create a significant financial risk to both contractors and owners. However, in spite of the risks involved, the history of the construction industry is full of Projects that were completed with significant cost overruns. Contractors used to be able to Cover their cost overburdens with their markups. However, with diminishing markups, even Marginal cost overburdens can easily wipe out their profits and even lead to a financial Overburden. Therefore, contractors need to identify major risk sources causing cost overbur- Dens in advance to be proactive in managing them.
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