Should a board member be in trouble when project goes beyond budget?

Our board is finishing a big project, and it turns out that the project is about 25% more expensive than originally projected when the board approved the project. Little things came up during the project resulting in the overruns.

Should the board member who is running the project be "in trouble" with the board, or are cost overruns like this pretty typical of board projects, especially since they are volunteer run?

The project turned out nice and no mistakes were made except for underestimating some of the costs.

Everyone makes mistakes, and although this board member have have overseen the project, everyone else had access to the information (or should have) and They could have asked questions.

You say "little things" came up during the project, but didn't say what they were. If additional problems were discovered as the project got underway, there's no way anyone could predict they'd have a big impact. Perhaps not enough attention was paid to the contract - did the board start adding things or switch gears, and the contract DIDN'T address how changes were to be handled? That can also add to the price - and all board members should have reviewed the contract before it was signed.

If you're on the board, and especially if you're the one taking the heat, learn from this. Review everything that came up and consider if it could have been avoided. For all you know, the contractor was the problem. Sure they did a good job, but perhaps they underbid the project. Whether they did that on purpose, who can tell.

Sometimes you do all the due diligence you can and things still don't work out. That's no one's fault because shit happens. Chalk it up to lesson learned - and apply it in the future.

And, further, if a project starts to show signs of increasing cost - ie more than was approved by the Board - then, the Board must either move to stop the activity, or approve additional funds. The Board owns the "money tap."

The validity of a project's cost overruns and subsequent change orders are determined by the HOA project supervisor and ultimately the HOA board. Repair jobs or "handyman" jobs can be spec'd and priced tightly. Large contractor-grade renovations can experience the uncovering of hidden issues not expected.

If homeowners get "mad," they can run the project. I've no problem retiring at this point.

Hats off to you for figuring this out . The only thing I have to add is that, in large projects anywhere (for a city, the federal government, counties, housing developments, HOAs, and so on), cost overruns are common. One does the best one can on a board.

Greg

Why do you feel someone has to be hung out to dry over this? Maybe the whole BOD should be including you if you are on the BOD.

It is typical for most to factor in an "overages" amount of around 25% on large projects. 10 % on smaller projects are not unusual as well. It really depends on the size of the project. There is usually overages. Doesn't make anyone guilty of bad management. You just can not foresee the total of the project.

I would be more upset over lack of planning a built in overages amount than having the actual overages.

It could also be a big ticket reserve item where there was no expert or professional input on the estimated replacement cost. i.e. no reserve study because "we can do it ourselves".

What amount did the Board approve?

Oops, I meant a total of around $93,000 to $95,000 total for all of the renovations.

Thanks for the update, Greg. A 3% overage on an $83,000 reflects good project management in my opinion.