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What Happens If a Construction Project Goes Over Budget in Michigan?
- May 4
- 2 min read
Construction projects rarely go exactly as planned. Costs shift, timelines move, and before long, a project can end up well over its original budget.
When that happens, the biggest question becomes: who is responsible for the overrun?
Why Budget Overruns Happen
Unexpected cost overruns are more common than you may expect, and they usually arise from:
Unexpected site conditions
Material costs increases
Design changes mid-project
Delays that increase labor costs
In some cases, it is a combination of several factors, making it much more difficult to determine who should absorb the additional cost overruns.
What the Contract Says Controls
In Michigan, the answer often comes down to the controlling contract provision(s).
Key provisions that impact budget disputes include:
Change order requirements
Allowances and contingencies
Delay and escalation clauses
If these terms are not clearly defined, disputes over payment can escalate quickly.
Change Orders Play a Critical Role
When costs increase due to changes in scope, properly documented change orders are essential.
Without written approval:
Contractors may struggle to recover additional costs
Owners may dispute the validity of the work performed
Clear documentation protects both sides and reduces the likelihood of conflict.
Resolving Cost Disputes
Budget-related disputes are often resolved through:
Negotiation between the parties
Review of contract terms and documentation
Legal action, if necessary
The goal is typically to reach a resolution without stopping the project altogether.
Staying Ahead of the Problem
The best way to handle cost overruns is to plan for them early.
That means:
Using detailed construction contracts
Keeping thorough records
Addressing issues as soon as they arise
When handled proactively, budget issues do not have to derail the project.
If you are dealing with a construction dispute, delayed payment, or contract issue, taking the right steps early can protect your business and your bottom line. Contact Sadecki & Associates at 248.328.1300 to discuss your situation.
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