Which of the following is a TRUE statement about estimating?

The true statement about estimating that resonates here is that both overestimating and underestimating costs could have disastrous consequences. This highlights the critical nature of accuracy in project estimates within the commercial contracting field.

Overestimating can lead to losing competitive edge, as higher project bids may scare away potential clients, leading to fewer contracts or losing out to competitors. It can also create budgetary constraints and limit available funds for other needed investments.

On the other hand, underestimating costs can result in significant financial strain, as projects may run over budget, leading to reduced profitability or even loss. Contractors might find themselves unable to cover necessary expenses, which can jeopardize the completion of the project.

Thus, accurate cost estimation is vital because it ensures that projects remain within budget, contractors maintain competitive pricing, and financial resources are managed effectively. This understanding of costs directly impacts project success and the company’s sustainability in the long term.