Last edited 02 Feb 2016

Outturn cost

The term ‘outturn’ or ‘out-turn’ refers to an amount achieved in a certain time, for example, an actual amount produced, or actual sales made. This is in contrast with the amount that might have been predicted or estimated. It is thought to be derived from, or related to, the term ‘turn out’.

The ‘outturn cost’ or ‘out-turn cost’ of a project is its actual construction cost. Generally this refers to the actual, total construction cost calculated at the end of the project, but it may also refer to the cost of a specific contract, or to costs incurred over a defined period. This contrasts with cost estimates, or target costs, which are calculations of the cost that is expected, or the cost that should be achieved.

This meaning of outturn cost is slightly confused by the use of terms such as ‘forecast outturn cost’, ‘estimated outturn cost’ or ‘target outturn cost’ which refer to the cost that is anticipated or should be achieved at the end of the project.

According to the Royal Institution of Chartered Surveyors (RICS), these outturn cost comprises: fixed costs, variable costs, variations, fluctuations and risk allowances.

Fixed costs are costs that have been pre-calculated and agreed to be paid.
Variable costs include; provisional sums, provisional quantities, prime cost sums and daywork allowances.
Variations are alterations in the form of additions, substitutions or omissions from the original scope of works.
Fluctuations are a way of dealing with inflation on large projects that may last for several years. The contractor is asked to tender based on current prices (prices at an agreed base date) and they are then reimbursed for price changes to specified items over the duration of the project (a fluctuating price).
Risk allowances are financial allowances for works or services that are unknown in terms of quantity and specification, and are the client’s risk.