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Cost Overrun Calculator
Cost overruns are the norm on rehab and construction projects. This calculator sizes the overrun impact against reserved contingency, flagging how much would come out of pocket and how it affects flip margins against ARV.
Projected actual cost
$201,250
Dollar overrun
$26,250
Beyond contingency (out-of-pocket)
$8,750
Profit eroded
$8,750
Margin vs ARV
53.20%
How the math works
Cost overrun is the norm, not the exception. Cosmetic flips typically run 5-10% over, medium rehabs 10-20%, heavy rehabs and new builds 15-30%+. A reserved contingency that equals the typical range keeps the project from bleeding into savings.
Drivers of overrun: scope creep, hidden damage behind walls, material price increases, permit delays extending carry cost. Lock scope tightly at contract signing. Don't add "while we're at it" items mid-project without formal change orders.
How to Use
- Enter base budget (original contract price).
- Enter assumed overrun percentage based on scope.
- Enter contingency already reserved.
- Enter ARV or exit value for margin check.
Frequently Asked Questions
How much contingency should I reserve?
Cosmetic: 10%. Medium rehab: 15-20%. Heavy rehab: 20-30%. New construction: 15-20%. Increase contingency for projects with unknown conditions (historic homes, homes with water damage, older mechanical systems).
What drives overrun the most?
Scope creep and hidden damage. Plumbing behind walls, electrical surprises, and structural issues often add 15-25% to the base budget. Lock scope tightly and keep contractors on strict change-order discipline.
Should I build cost overrun into offer price?
Yes — experienced flippers back into max offer from ARV - rehab × 1.15 (or higher) - profit target - holding costs. Pricing with optimistic budgets leads to negative flips when reality kicks in.
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