What is the importance of cost overruns in government contracts?

Government contracts are agreements entered into between the government and a contractor to purchase goods, services or products in exchange for payment. Cost overruns are an important aspect of government contracts because they determine the amount of money that the government will pay for a project. Cost overruns occur when the actual costs of a project exceed the estimated costs. Cost overruns are important because they help to ensure that the government is getting the best value for the money they are spending. It ensures that contractors are not taking advantage of the government by overcharging them for services or supplies. By having cost overruns in place, the government can ensure that a project is completed within the estimated budget. Cost overruns also help to prevent cost cutting measures that could ultimately lead to a less than satisfactory result. When cost overruns are taken into consideration, contractors will be more likely to provide better quality work or materials for the same price. This helps to ensure that projects are completed according to the terms and conditions in the contract. In conclusion, cost overruns are important in government contracts because they help to ensure that the government is receiving the best value for their money, while also helping to prevent cost cutting measures that could prove detrimental to the project. Cost overruns also help to ensure that contracts are being fulfilled according to the terms and conditions set out in the contract.

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What is the importance of cost overruns in government contracts?

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