What to Do When Your Actual Costs Come In Higher Than the Quote
The quote was right when it went out. Now the material orders are coming in higher and the job is heading off margin. This guide covers how to assess the gap, decide what to absorb, have the client conversation early, and document whatever is agreed before a manageable shortfall becomes a write-off.
The quote went out at the right price. Work started. Then the material order came back significantly higher than the supplier's indicative price, or the sub-contractor added a prelim that wasn't in your allowance, and the job you priced to a reasonable margin is now tracking somewhere you didn't plan for. This happens. A 2026 survey of UK construction professionals found material costs were expected to rise 7.5% over the year - and that kind of movement between quoting and ordering is enough to turn a profitable job into a problem. What matters is what you do in the next few hours after you notice the gap.
Work Out the Number Before You Do Anything Else
Before you make any decision - including whether to call the client - you need to know the actual size of the gap. Not an approximation. An itemized comparison of your quote cost plan versus where you now stand.
Go through the job line by line. Which cost categories have moved? Materials, labour, sub-contractor rates, delivery charges? Is the overrun confined to one area or spread across several? Once you have a real number, you have a choice to make - and that choice is easier to make from a position of clarity.
Also check: has anything in the original scope changed since the quote was issued? A 2024 Chartered Institute of Building study found that poor scope definition contributed to cost overruns in 67% of UK construction projects that went over budget. If the customer has added to or changed the work - even informally - that element is a variation order and should be priced separately from any genuine cost increase. Conflating the two makes every conversation harder.
Split the cost gap into two buckets
changes to scope (chargeable as a variation) and changes to your underlying costs (your commercial problem to solve or raise). Keeping them separate makes the client conversation shorter and cleaner.
Decide What You Can Absorb and What You Cannot
Not every cost overrun needs a client conversation. If the gap is small and the job has contingency elsewhere - materials came in under on another section, labour was more efficient than estimated - absorbing it may be the right commercial decision. Document it anyway: record the decision internally against the job record so the cost is visible when you review the job at the end.
If the gap is material - as a rough guide, anything above 5% of the job value starts to affect margin in a way that should at minimum be reviewed - you need to weigh up what absorbing it will actually cost you against the risk of the client conversation.
The worst outcome is to say nothing, absorb the full overrun, and then never find out why it happened. That is how pricing stays wrong on the next similar job.
Have the Conversation Early
If you need to raise additional costs with a client, early is almost always better than late. A client who hears about a cost issue mid-job has time to consider options. A client who gets the news on the final invoice has no options at all - and will resent being given none.
Be specific when you have the conversation. "Our steel supplier quoted X at tender; the actual order confirmation came back at Y" is a conversation. "Costs have gone up" is a complaint. Bring documentation: the original supplier price, the revised confirmation, and the calculation of the impact.
Where possible, give the client options. Can the spec be adjusted to reduce cost elsewhere? Can the additional cost be spread across a revised payment schedule? Clients respond better when they are presented with a decision to make rather than a demand to meet.
Under UK contract law, if a customer accepted a fixed quotation for work with no variation clause, they are not automatically required to pay additional costs that arise simply because your costs changed. Raising it properly - with documentation and in good time - is your best protection if the conversation becomes difficult. If the additional cost stems from a genuine scope change on the client's side, see how to price a change request without losing the customer for a framework that keeps the relationship intact.
> [WARNING] Never agree to absorb a cost overrun verbally and then invoice the additional amount anyway. If you decide to absorb it, record that internally. If you agree an additional charge with the client, issue a written variation note immediately.
Close It Out Properly
Whatever you agree with the client, document it the same day. If costs are being absorbed, update the job record to show the revised margin. If a variation has been agreed, raise the note and attach it to the job before the next payment stage. If nothing was agreed and the conversation is ongoing, record the date you raised it and what was discussed.
The gap between quoting and delivering is where job costing either earns its keep or gets ignored. The businesses that catch cost variances early and act on them - rather than discovering the damage at the final account - are the ones that price the next similar job correctly.
Sources
- Construction Overruns: Why Projects Go Over Budget?LiveCosts · accessed 2026-09-03
- How to Prevent Cost Overruns on Construction Projects [2026]FORGE Command · accessed 2026-09-03
Related pages
Ready to run your business
on one platform?
Book a free demo and see how Zigaflow fits your team.