Which of the following is a TRUE statement about estimating?

Which of the following is a TRUE statement about estimating?

• A. Overestimating costs always leads to winning bids.
• B. Both overestimating and underestimating costs could have disastrous consequences.
• C. Estimating accuracy doesn't matter.
• D. Underestimating costs guarantees higher profits.

Answer: (B)

Estimating is about predicting costs accurately because errors in either direction can cause serious problems for a project. When costs are overestimated, you price yourself out of competitive bids—clients compare numbers from different bidders, and an inflated estimate lowers your chances of winning the job. Even if you win, the bid may be unprofitable if the estimate was too high. On the other hand, underestimating costs creates a real danger of cost overruns, missed deadlines, and disputes. If actual expenses exceed the estimate, profits shrink or turn into losses, and cash flow and reputation can suffer. That’s why the true statement is that both overestimating and underestimating costs could have disastrous consequences. Accurate, well-supported estimates help maintain competitiveness while protecting profitability and project viability. The other options miss this balance: overestimating costs does not guarantee winning bids; estimating accuracy absolutely matters; and underestimating costs does not guarantee higher profits and often leads to financial trouble.

Estimating is about predicting costs accurately because errors in either direction can cause serious problems for a project. When costs are overestimated, you price yourself out of competitive bids—clients compare numbers from different bidders, and an inflated estimate lowers your chances of winning the job. Even if you win, the bid may be unprofitable if the estimate was too high. On the other hand, underestimating costs creates a real danger of cost overruns, missed deadlines, and disputes. If actual expenses exceed the estimate, profits shrink or turn into losses, and cash flow and reputation can suffer.

That’s why the true statement is that both overestimating and underestimating costs could have disastrous consequences. Accurate, well-supported estimates help maintain competitiveness while protecting profitability and project viability.

The other options miss this balance: overestimating costs does not guarantee winning bids; estimating accuracy absolutely matters; and underestimating costs does not guarantee higher profits and often leads to financial trouble.