DEMITONResearch / Cost drift statistics
Cost drift: what it costs a construction contractor
The job costing more than it was priced at, and how much of that the contractor carries.
The record holds 6 figures on cost drift from 6 sources. Queensland: 1 figure, including 13.8% of the year's capital budget (Queensland Government capital spending against budget, 2023-24).
Updated 2026-09-25 · release data-latest-4-g72a88f5 · all five diseases
Money at stake · Australia · moderate confidence
Contractor loss · Australia · moderate confidence
Dashed line: planned gross margin on Australian civil and transport work (9.89%)
Steel: money the contractor loses. Grey: money at stake, which is not necessarily lost.
Every figure
| Figure | Of | What it measures | Where | Confidence | Source |
|---|---|---|---|---|---|
| 13.8% | of the year's capital budget | Queensland Government capital spending against budget, 2023-24 | QLD | moderate | Queensland Audit Office (2025) |
| 23% | of contract value | Mean overrun from contract award, 16 Australian rail projects | Australia | moderate | Love, Zhou, Edwards, Irani & Sing (2017) |
| 7% | of contract value | Final loss on 28 completed Australian infrastructure megaprojects, largest contractors | Australia | moderate | Ryan & Duffield (2017) |
| 24% | of the first promised cost | Final cost over the first promised cost, 836 Australian transport projects | Australia | moderate | Terrill & Danks (Grattan Institute) (2016) |
| 20% | of the budget at the decision to build | Average cost escalation on roads, 258 transport projects in 20 countries | Global | high | Flyvbjerg, Holm & Buhl (2004) |
| 40.5% | of the extra cost of overruns | Contractors' share of the extra cost of overruns, Belgian public infrastructure (expert survey) | Belgium | low | Molinari, Haezendonck, Van Rompay, Mabillard & Dooms (2025) |
Questions and answers
How much do construction projects overrun, and how much does the contractor bear?
Other figures in the record: 13.8% of the year's capital budget (QLD); 23% of contract value (Australia); 7% of contract value (Australia); 24% of the first promised cost (Australia).
Is there Queensland evidence on cost drift?
13.8% of the year's capital budget: Queensland Government capital spending against budget, 2023-24 (Queensland Audit Office, 2025; QLD; moderate confidence).
How reliable is the cost drift figure?
There is no headline figure for this disease yet.
The evidence
13.8%of the year's capital budgetQueensland Government capital spending against budget, 2023-24QLDModerate confidenceOwner's money
What it is. 13.8% of the state's budgeted capital expenditure for the year, all portfolios.
Sample. The whole Queensland Government capital program, compiled by the Queensland Audit Office from state capital statements. 16.4% in 2022-23; about 15% a year on average since.
What it is not. The state's money, not a contractor's, and a spending variance for the year, not the cost growth of any project: spending can run ahead of budget because work is brought forward as well as because it costs more. The QAO restated the 2022-23 figure between reports (14% in 2023, 16.4% in 2024).
Where it came from
- Queensland Audit Office (2025), Major projects 2024 (Report 9: 2024-25) · free copy'Report on a page'; Chapter 2, commentary on Figure 2B, p.5 · source record
23%of contract valueMean overrun from contract award, 16 Australian rail projectsAustraliaModerate confidenceMoney at stake
What it is. 23% of original contract value, final versus original.
Sample. 16 rail projects by a single contractor, AU$0.5b+, mostly WA, 2011-2014. Scope changes accounted for 99% of the cost increase; lump-sum projects that overran averaged 12.83%.
What it is not. Mostly scope variations the owner paid, not contractor losses. Median 12.3% against a mean of 23%, so a few projects dominate. Recorded as money_at_stake for that reason.
Where it came from
- Love, Zhou, Edwards, Irani & Sing (2017), Off the rails: The cost performance of infrastructure rail projectsabstract, p.1 and Table 2 of the open-access preprint · source record
7%of contract valueFinal loss on 28 completed Australian infrastructure megaprojects, largest contractorsAustraliaModerate confidenceContractor loss
What it is. 7% of contract value, final profit at completion: the 9% tendered margin plus a further 7% (a 16-point swing).
Sample. 28 completed mega projects over A$500m, Australia, commenced 2000 to 2015, road, rail, water and social infrastructure, PPP and design-and-construct, from Tier 1 contractors' open-book project data.
What it is not. Megaprojects only: the paper excluded projects under A$500m because most of them made money, so this is not the loss on a typical civil job. The sample is selected for risk (PPP and D&C, alliances excluded). Grattan 2021, which cited it, doubts it: 'The study does not explain why shareholders would tolerate such a pattern of losses.'
Our arithmetic. Table 1, Total row: tendered profit A$3,328m at 9%, so contract value about A$37.0b; final profit A$(2,681)m, about (7.2%). The paper states the same result as "its original 9% profit margin plus a further deterioration of 7%" (abstract). Its "net profit (16%)" is final minus tendered, by its own definition on p.12, so it is not the loss as a share of contract value.
Where it came from
- Ryan & Duffield (2017), Contractor Performance on Mega Projects - Avoiding the Pitfalls · free copyTable 1, Total row (pp.12-13); definition of net profit (p.12); abstract (p.1) · source record
History
- 2026-09-25 Read at source for the first time (previously second-hand via Grattan 2021). The paper gives the final result as a share of contract value, so the figure moves from an unquantified margin swing to a 7% loss; the grade moves from low (second-hand) to moderate (a sample selected for risk).
24%of the first promised costFinal cost over the first promised cost, 836 Australian transport projectsAustraliaModerate confidenceOwner's money
What it is. 24% of the first publicly promised cost, final versus promised.
Sample. 836 Australian transport projects of $20m or more, 2001-2016; $28 billion over in total; 34% of projects went over.
What it is not. Measured from the first promise, mostly before any contractor is signed, and paid by the owner (the taxpayer). The median overrun is 0%: a few projects dominate the mean.
Where it came from
- Terrill & Danks (Grattan Institute) (2016), Cost overruns in transport infrastructurePDF pp.9, 29 · source record
20%of the budget at the decision to buildAverage cost escalation on roads, 258 transport projects in 20 countriesGlobalHigh confidenceOwner's money
What it is. 20% of budget, decision to build versus actual cost, real terms.
Sample. Roads average 20% (N=167, sd=30); all project types average 28% (N=258, sd=39). Rail, bridge, tunnel and road projects across five continents.
What it is not. Measured from the decision to build, so most of it arises BEFORE a contractor is signed, and much of it is paid by the client. This is NOT a figure for what a contractor loses, which is why it is recorded as owner_side and excluded from the headline.
Where it came from
- Flyvbjerg, Holm & Buhl (2004), What Causes Cost Overrun in Transport Infrastructure Projects?p.5 · source record