Cost Overrun Disputes in Georgia

Cost Overrun Disputes

Who bears the risk of a cost-estimate overrun?

By default the contractor: in case of a significant overrun it may claim only the agreed remuneration; the exception is where prior contemplation of the excess was impossible.

What must the contractor do on an unforeseeable increase?

It must notify the customer without delay of an increase whose contemplation at the conclusion of the contract was impossible.

What happens if the customer terminates due to the increase?

It must compensate the work performed according to the approximate cost estimate.

How is the work valued if the remuneration is undetermined?

Where a tariff exists the tariff rate applies, where none — the ordinary remuneration; remuneration is deemed agreed even tacitly where work is expected only against it.

Can the contract be adapted to changed circumstances?

Yes — on an evident change of circumstances adaptation may be demanded; the parties must first attempt it, and on impossibility or disagreement the injured party may withdraw.

4 min·9 Jan 2026

Cost Overrun Disputes: Where the Problem Arises

The most frequent subject of dispute in construction and manufacturing projects is the overrun of the cost estimate: the customer believes the work should fit within the agreed price, while the contractor believes the circumstances required additional expenditure. Georgian civil legislation answers this conflict with clear rules, and knowing them shapes both parties' positions in advance.

The starting rule is this: where the contractor significantly exceeds the approximate cost estimate, it may claim only the agreed remuneration, except where prior contemplation of the excess expenditure was impossible. In other words, by default the risk lies on the contractor: exceeding the approximate value does not increase the remuneration.

Cost Overrun Disputes

Who bears the risk of a cost-estimate overrun?

By default the contractor: in case of a significant overrun it may claim only the agreed remuneration; the exception is where prior contemplation of the excess was impossible.

What must the contractor do on an unforeseeable increase?

It must notify the customer without delay of an increase whose contemplation at the conclusion of the contract was impossible.

What happens if the customer terminates due to the increase?

It must compensate the work performed according to the approximate cost estimate.

How is the work valued if the remuneration is undetermined?

Where a tariff exists the tariff rate applies, where none — the ordinary remuneration; remuneration is deemed agreed even tacitly where work is expected only against it.

Can the contract be adapted to changed circumstances?

Yes — on an evident change of circumstances adaptation may be demanded; the parties must first attempt it, and on impossibility or disagreement the injured party may withdraw.

4 min·9 Jan 2026

Cost Overrun Disputes: Where the Problem Arises