Budget Overrun Rates by Industry

How does your project compare? Industry-by-industry benchmarks from PMI, McKinsey, Oxford Said Business School, and GAO research.

Government: 53%IT / Software: 45%Healthcare: 32%Construction: 28%Manufacturing: 18%

Government

Worst

Average budget overrun

53%

Government projects are the worst offenders. Procurement regulations, scope creep from political pressures, multi-year timescales, and contractor incentive misalignment all contribute. A 2021 GAO report found 78% of major US government IT projects experienced cost growth.

Key Drivers

  • Fixed-price contracts with scope change mechanisms
  • Political scope expansion mid-project
  • Long timescales increase uncertainty
  • Lack of commercial urgency

Notable Examples

F-35 Lightning II Fighter

$183B over original estimate

2001–present

UK NHS National Programme for IT

£10B (abandoned)

2003–2011

US Census Bureau FDCA

490% overrun, $3B total

2006–2010

IT / Software

High Risk

Average budget overrun

45%

IT projects are notoriously difficult to estimate. Invisible complexity, changing requirements, technical debt, and integration challenges all drive overruns. McKinsey found that large IT projects (>$15M) run 45% over budget on average, and 7% go over by more than 200%.

Key Drivers

  • Requirements volatility and scope creep
  • Underestimated integration complexity
  • Technical debt from legacy systems
  • Over-optimistic initial estimates

Notable Examples

Healthcare.gov

$840M over budget

2013

Queensland Health Payroll System

AUD $1.25B total (12x budget)

2010

Lidl SAP Implementation

€500M written off

2018

Healthcare

Elevated

Average budget overrun

32%

Healthcare projects face unique regulatory, safety, and stakeholder complexity. Hospital construction and IT system rollouts are particularly prone to overruns due to infection control requirements, specialist equipment, and clinical workflow change management.

Key Drivers

  • Clinical workflow complexity underestimated
  • Regulatory change during development
  • Stakeholder fragmentation (clinicians vs IT vs management)
  • Patient safety constraints drive expensive rework

Notable Examples

UK NHS Electronic Patient Records

£7B over budget

2003–2011

VA Electronic Health Records Modernisation

$2.6B over estimate

2018–present

New Royal Adelaide Hospital

AUD $640M over budget

2011–2017

Construction

Moderate

Average budget overrun

28%

Construction has millennia of project management heritage, yet still averages 28% overruns. Ground conditions, weather, supply chain disruption, and design changes are the main culprits. The Oxford Said Business School study of 258 large projects found 86% exceeded their budget.

Key Drivers

  • Ground condition surprises
  • Design changes during construction
  • Supply chain inflation (steel, concrete)
  • Weather and environmental events

Notable Examples

Sydney Opera House

1,400% — from AU$7M to AU$102M

1957–1973

Berlin Brandenburg Airport

€4.7B over budget (opened 9 years late)

2006–2020

Crossrail (Elizabeth Line)

£4B over budget

2009–2022

Manufacturing

Best in Class

Average budget overrun

18%

Manufacturing projects benefit from physical prototyping, established engineering processes, and clearer acceptance criteria. While still averaging 18% overruns, they outperform every other sector. Lean manufacturing principles and stage-gate processes contribute to better cost control.

Key Drivers

  • Novel materials and manufacturing processes
  • Global supply chain coordination
  • Regulatory certification complexity
  • Design freeze delays

Notable Examples

Boeing 787 Dreamliner

$12B over original budget

2004–2011

Airbus A380

€4.9B over budget

2000–2007

Ford GT Development

Estimated $10M per car vs $500K target (cancelled)

2005

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