Oregon Construction Contractors (CCB) Practice Test

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What occurs when budgeted amounts in an estimate are exceeded?

Overruns
Cost overruns
Deficits
Shortfalls

The correct answer is: Cost overruns

When budgeted amounts in an estimate are exceeded, this situation is commonly referred to as cost overruns. Cost overruns occur when the actual costs of a project exceed the planned or budgeted costs. This can happen for various reasons, including unexpected complications during construction, price increases in materials and labor, or underestimations in the initial budgeting process. Recognizing cost overruns is crucial for project managers and contractors, as it directly impacts project profitability and requires adjustments to project management strategies to control further expenses. Other terms, while they might seem applicable in broader financial contexts, do not specifically encapsulate the situation of exceeding budgeted estimates.