The cost overrun contingency ratio compares the value of contingency funds to the actual cost overruns incurred during a property development project. In UK property development finance, it measures how effectively contingency planning has covered unexpected expenses. This ratio is calculated by dividing the contingency amount used for overruns by the total overruns experienced, often expressed as a percentage. A ratio above 100% indicates sufficient contingency provision, while a lower figure signals budget shortfall. It is a valuable tool for post-project evaluation, lender reporting, and improving cost forecasting for future developments.
This sits beneath Contingency Metrics, introducing a more specific variant of the measure without changing its core interpretation. It is commonly considered alongside Cost Escalation Buffer on Enabling Works, as both are closely related measures used to assess similar aspects of performance or risk.
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