Passage Summary: You would think builders who get paid more when they spend more would have the most budget blowouts. Surprisingly, the builders who get a flat fee regardless of cost are the ones who go over budget more often.

Reasoning: Contractors with 'percentage-of-cost' contracts make more money when costs go up, yet overruns are actually more frequent in 'fixed-profit' contracts where there is no such incentive.

Analysis: We have a classic conflict between economic incentives and observed reality. We need a reason why the fixed-profit group ends up with more overruns despite lacking the direct profit motive to inflate costs. Perhaps the fixed-profit contracts are used for riskier, more unpredictable projects, or maybe the percentage-of-cost contractors are more carefully vetted. Look for an answer that explains a hidden factor affecting the fixed-profit group's costs.