Which factor is most associated with underbidding in construction contracts?

Pressure to win bids is closely associated with underbidding in construction contracts. When contractors feel intense competition for a project, they may drastically reduce their bid amounts in an attempt to secure the job. This competitive environment can lead firms to overlook or underestimate actual project costs, resulting in unsustainable bid prices that may not cover future expenses.

Underbidding can endanger project quality, delay completion, and lead to disputes, as contractors attempt to cut corners to stay within the budget they initially proposed. This scenario often occurs in markets where multiple contractors are vying for the same contract, putting immense pressure on them to present the lowest possible bid to attract the owner’s attention.

The other factors mentioned—high experience levels, accurate cost estimation, and clear communication—are less related to underbidding. Experienced contractors are typically more aware of true project costs and the importance of submitting competitive yet realistic bids, while accurate estimations typically foster reasonable bids rather than underbidding. Clear communication with stakeholders tends to create alignment in expectations and can mitigate the tendency to undercut bid prices, ensuring that all parties are on the same page concerning project requirements and costs.