{"id":1104,"date":"2017-07-12T10:48:36","date_gmt":"2017-07-12T18:48:36","guid":{"rendered":"http:\/\/smartermanager.com\/blog\/?p=1104"},"modified":"2019-10-22T08:15:59","modified_gmt":"2019-10-22T15:15:59","slug":"3-common-causes-cost-overrun-manufacturing","status":"publish","type":"post","link":"https:\/\/www.smartermanager.com\/blog\/3-common-causes-cost-overrun-manufacturing\/","title":{"rendered":"3 Common Causes of Cost Overrun in Manufacturing\u00a0"},"content":{"rendered":"<p><a href=\"https:\/\/i0.wp.com\/www.smartermanager.com\/blog\/wp-content\/uploads\/2017\/07\/shutterstock_553635514.jpg?ssl=1\"><img decoding=\"async\" loading=\"lazy\" class=\"aligncenter size-full wp-image-1105\" src=\"https:\/\/i0.wp.com\/www.smartermanager.com\/blog\/wp-content\/uploads\/2017\/07\/shutterstock_553635514.jpg?resize=1000%2C667&#038;ssl=1\" alt=\"3 Common Causes of Cost Overrun in Manufacturing\u00a0\" width=\"1000\" height=\"667\" srcset=\"https:\/\/i0.wp.com\/www.smartermanager.com\/blog\/wp-content\/uploads\/2017\/07\/shutterstock_553635514.jpg?w=1000&amp;ssl=1 1000w, https:\/\/i0.wp.com\/www.smartermanager.com\/blog\/wp-content\/uploads\/2017\/07\/shutterstock_553635514.jpg?resize=300%2C200&amp;ssl=1 300w, https:\/\/i0.wp.com\/www.smartermanager.com\/blog\/wp-content\/uploads\/2017\/07\/shutterstock_553635514.jpg?resize=768%2C512&amp;ssl=1 768w\" sizes=\"(max-width: 1000px) 100vw, 1000px\" data-recalc-dims=\"1\" \/><\/a><\/p>\n<p>Common causes of Cost Overrun, known more colloquially as \u201cgoing over budget,\u201d is a big problem in the manufacturing industry. Spending lots of money is harmful enough to businesses &#8212; spending money that you didn\u2019t plan on spending can be downright disastrous. In this article, we will discuss a few of the most common causes of <a href=\"https:\/\/smartermanager.com\/real-time-shop-floor-tracking-data-collection\/\" target=\"_blank\" rel=\"noopener noreferrer\">cost overrun<\/a>; which will hopefully give you the insight you need\u00a0to avoid this unfortunate phenomenon in the future.\u00a0\u00a0<\/p>\n<p>\u00a0<\/p>\n<ul>\n<li><b>Technical.\u00a0<\/b>Cost overrun oftentimes occurs due to imperfect techniques in cost prediction. Perhaps the cost estimation technology you are using simply isn\u2019t up to par, for example &#8212; or maybe the data that you based your <a href=\"https:\/\/smartermanager.com\/estimating-software-for-manufacturing\/\" target=\"_blank\" rel=\"noopener noreferrer\">estimations<\/a> on was erroneous.\u00a0<\/li>\n<\/ul>\n<p>\u00a0<\/p>\n<ul>\n<li><b>Psychological.\u00a0<\/b>People aren\u2019t perfect and one mistake that we are psychologically inclined toward making is that of optimism bias. When looking at a project \u201con paper,\u201d it is easy to feel confident that everything will go exactly as planned. It is only in\u00a0real life, once commitments have been made and materials purchased, that we reality sets in. Scope creep, which refers to the gradual \u201cballooning\u201d of project commitments, is another common psychological cause of <a href=\"https:\/\/project-management.com\/6-ways-to-prevent-cost-overruns\/\" target=\"_blank\" rel=\"noopener noreferrer\">cost overrun<\/a>.\u00a0\u00a0<\/li>\n<\/ul>\n<p>\u00a0<\/p>\n<ul>\n<li><b>Political\/Economic.\u00a0<\/b>This category covers any changes in project expenses that are related to \u201cbig picture\u201d factors that lie outside of your control. For example, a manufacturer that frequently uses steel could be affected adversely if a new tax was placed on steel and\/or if global demand for steel suddenly skyrocketed, as both factors would lead to\u00a0increased steel expenses.\u00a0\u00a0<\/li>\n<\/ul>\n<p>\u00a0<\/p>\n<p>Quoting a job correctly from the get-go is a crucial aspect of protecting your profits and keeping customers happy with the services and prices that you offer. That\u2019s why investing in your ability to make accurate cost estimations is a no-brainer. Visit\u00a0SMe\u00a0Software online today to learn more about our\u00a0<a href=\"http:\/\/smartermanager.com\/estimating-software-for-manufacturing\/\">Manufacturing Estimate Software<\/a>.\u00a0\u00a0<\/p>\n\n<div class=\"wp-block-jetpack-contact-form\"><a href=\"https:\/\/www.smartermanager.com\/blog\/3-common-causes-cost-overrun-manufacturing\/\" target=\"_blank\" rel=\"noopener noreferrer\">Submit a form.<\/a><\/div>","protected":false},"excerpt":{"rendered":"<p>Common causes of Cost Overrun, known more colloquially as \u201cgoing over budget,\u201d is a big problem in the manufacturing industry. Spending lots of money is harmful enough to businesses &#8212; spending money that you didn\u2019t plan on spending can be &hellip; <a href=\"https:\/\/www.smartermanager.com\/blog\/3-common-causes-cost-overrun-manufacturing\/\">Continued<\/a><\/p>\n","protected":false},"author":4,"featured_media":1105,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"kt_blocks_editor_width":"","jetpack_post_was_ever_published":false,"jetpack_publicize_message":"","jetpack_is_tweetstorm":false,"jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":[]},"categories":[14,3,4,11,177],"tags":[122,138,32,88,91],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/www.smartermanager.com\/blog\/wp-content\/uploads\/2017\/07\/shutterstock_553635514.jpg?fit=1000%2C667&ssl=1","jetpack_shortlink":"https:\/\/wp.me\/p9f7Kr-hO","_links":{"self":[{"href":"https:\/\/www.smartermanager.com\/blog\/wp-json\/wp\/v2\/posts\/1104"}],"collection":[{"href":"https:\/\/www.smartermanager.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.smartermanager.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.smartermanager.com\/blog\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.smartermanager.com\/blog\/wp-json\/wp\/v2\/comments?post=1104"}],"version-history":[{"count":2,"href":"https:\/\/www.smartermanager.com\/blog\/wp-json\/wp\/v2\/posts\/1104\/revisions"}],"predecessor-version":[{"id":1348,"href":"https:\/\/www.smartermanager.com\/blog\/wp-json\/wp\/v2\/posts\/1104\/revisions\/1348"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.smartermanager.com\/blog\/wp-json\/wp\/v2\/media\/1105"}],"wp:attachment":[{"href":"https:\/\/www.smartermanager.com\/blog\/wp-json\/wp\/v2\/media?parent=1104"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.smartermanager.com\/blog\/wp-json\/wp\/v2\/categories?post=1104"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.smartermanager.com\/blog\/wp-json\/wp\/v2\/tags?post=1104"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}