What are the two basic laws of construction estimating?

What are the two basic laws of construction estimating?

• A. Low estimates decrease profits and high estimates decrease volume.
• B. Low estimates increase profits and high estimates increase volume.
• C. Estimates do not affect profits.
• D. High estimates maximize market share.

Answer: (A)

In construction estimating, you must balance profitability with winning enough work. If you bid too low, you squeeze margins and profits shrink, even if you land the job. If you bid too high, your price may scare off clients, reducing the number of jobs you win and, therefore, the overall volume of work. The best way to capture these realities is to recognize that underbidding erodes profit, while overbidding reduces volume. So, estimating in a way that avoids both extremes keeps profit reasonable and maintains a healthy workload.

In construction estimating, you must balance profitability with winning enough work. If you bid too low, you squeeze margins and profits shrink, even if you land the job. If you bid too high, your price may scare off clients, reducing the number of jobs you win and, therefore, the overall volume of work. The best way to capture these realities is to recognize that underbidding erodes profit, while overbidding reduces volume. So, estimating in a way that avoids both extremes keeps profit reasonable and maintains a healthy workload.