Construction Management Practice Exam 2025 – Complete Study Guide

When significant commitments are made in a construction project, such as signing contracts or purchasing materials, project costs tend to increase significantly. This increase is often a result of several factors.

Firstly, once commitments are established, the project is usually in a firm contractual obligation to proceed. As a result, any changes in the scope, schedule, or unforeseen circumstances can lead to additional costs that were not originally accounted for. For example, if unexpected site conditions arise after significant commitments have been made, the costs associated with mitigating those issues can drive the overall project cost up.

Secondly, the nature of construction contracts often includes clauses that can lead to increased costs as the project progresses. For example, escalation clauses may trigger price increases for labor and materials over time, especially in a volatile market. Thus, when the project is underway and more irreversible decisions have been made, it can become challenging to contain costs.

Moreover, once major resources have been allocated, including labor and equipment, there may be little flexibility to adjust to changing market conditions or project needs, making the costs rise further. Additionally, the psychological and organizational commitment to the project can lead to ‘sunk cost’ fallacies, where teams push forward with plans that may not be as cost-effective as initially anticipated,