Talk:Cost overrun/Archives/2013

Innacurately described or just poorly worded?

In the "Causes" section, the following stood out to me as being potentially innacurate or at the very least poorly worded:

Cost overrun is typically calculated in one of two ways: either as a percentage, namely actual cost minus budgeted cost, in percent of budgeted cost; or as a ratio of actual cost divided by budgeted cost. For example, if the budget for building a new bridge was $100 million, and the actual cost was $150 million, then the cost overrun may be expressed by the ratio 1.5, or as 50 percent.

It seems to me that these sentences are not conveying the information clearly, given that the first has no example and the second seems to misrepresent how percentages could be described. I'm going to replace those sentences with the following:

Cost overrun can be described in multiple ways.

• As a percentage of the total expenditure
• As a total percentage including and above the original budget
• As a percentage of the cost overruns to original budget

For example, consider a bridge with a construction budget of $100 million where the actual cost was $150 million. This scenario could be truthfully represented by the following statements.

• The cost overruns constituted 33% of the total expense.
• The budget for the bridge increased to 150%.
• The cost overruns exceeded the original budget by 50%.

The final example is the most commonly utilized, but in any case care should be taken to accurately describe what is meant by the chosen percentage so as to avoid ambiguity.

...but since neither an an accountant nor a mathematician I be, feel free to insert your own clarifications. DotHectate (talk) 11:44, 27 January 2013 (UTC)