AALL10 · Chapter 10Project Planning & Implementation🏛️ Past Licensure QuestionID: f533954c

In engineering project cost management, what is the standard formula used to compute a 'Cost Overrun'?

Multiple Choice Options

A
$\text{Cost Overrun} = \text{Actual Cost} - \text{Planned Cost (Budget)}$
✓ Correct Option
B
$\text{Cost Overrun} = \left(\frac{\text{Planned Cost}}{\text{Actual Cost}}\right) \times 100$
C
$\text{Cost Overrun} = \text{Planned Cost} + \text{Buffer Cost}$
D
$\text{Cost Overrun} = \text{Total Cost} - \text{Overhead}$

A cost overrun (or budget overrun) is the excess amount by which the actual costs incurred exceed the baseline budgeted/planned cost:

\text{Cost Overrun} = \text{Actual Cost} - \text{Planned Cost}

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Option A (\text{Cost Overrun} = \text{Actual ...): Correct. Standard definition of cost overrun.

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Option B (\text{Cost Overrun} =

\le

ft(\frac{\...): Describes percentage expenditure index, not monetary overrun.

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Option C (\text{Cost Overrun} = \text{Planned...): Total budget contingency, not overrun.

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Option D (\text{Cost Overrun} = \text{Total C...): Direct costs, not overrun.

Reference: Demo2 · Set 2NEC Licensure Syllabus

Multiple Choice Options

\text{Cost Overrun} = \text{Actual Cost} - \text{Planned Cost (Budget)}

✓ Correct Option

\text{Cost Overrun} = \left(\frac{\text{Planned Cost}}{\text{Actual Cost}}\right) \times 100

\text{Cost Overrun} = \text{Planned Cost} + \text{Buffer Cost}

\text{Cost Overrun} = \text{Total Cost} - \text{Overhead}