Completion Default Exposure Calculator

Construction projects can stall near completion. This calculator sizes completion default exposure.

Remaining cost to complete

Remaining loan proceeds

Sponsor guaranty

Est. overrun %

Completion exposure

$320,000

Cost w/ overrun

$9,520,000

Total sources

$9,200,000

How the math works

Exposure = (cost to complete × (1 + overrun)) − (remaining loan + guaranty).

Model exposure monthly during construction. Rising exposure triggers early conversation with lender or contractor. Waiting until completion milestone is too late.

How to Use

Enter remaining cost to complete.
Enter remaining loan proceeds.
Enter sponsor completion guaranty.
Enter estimated overrun %.
Read completion exposure.

Frequently Asked Questions

Completion guaranty?

Sponsor-signed guaranty requiring completion of project regardless of cost. Triggered if loan proceeds insufficient. Full recourse to sponsor — one of the stronger sponsor obligations on construction deals.

Overrun sources?

Material cost inflation, labor shortage, weather delays, scope creep, change orders, subcontractor failures. Modern construction routinely sees 8-15% overruns from contingency base.

Exposure management?

Maintain 10-15% construction contingency. Build contingency into budget. Lock prices with contractor for materials 60+ days out. Performance/payment bonds on major trades.

Who owns this risk — sponsor or lender?

Construction risks are typically shared: hard-cost overrun owned by sponsor (via completion guaranty), soft-cost and delay risks shared per contract, force-majeure excused but bears owner carry cost. Document risk ownership in the loan agreement and GC contract before closing. Disputes get expensive when roles are unclear. Institutional deals spell out every allocation in writing.