A major purpose of tracking costs is because what can indicate a possible problem?

Tracking costs is essential in project management, particularly in the context of construction and contracting, as it provides insights into the financial health of a project. One of the key indicators that can suggest potential problems is cost overruns.

When costs exceed the budgeted amounts, it can signal issues such as poor planning, unexpected expenses, inefficiencies, or resource mismanagement. Overruns often lead to financial strain on the project, causing delays, reducing profit margins, or requiring additional funding. Thus, by closely monitoring costs, contractors can identify when expenses are climbing too high and take corrective actions before the situation worsens. This proactive approach helps in maintaining the overall viability of a project and ensuring it stays on track financially.

While under runs, profit, and cutting corners are important considerations, they do not directly indicate potential problems in the same way that cost overruns do. Understanding the implications of each of these factors is crucial for effective project oversight and corrective actions.