The Risks and Consequences of Underbidding in Construction Projects

Underbidding refers to the practice of submitting a bid that is lower than one's true cost or intended profit margin, with the intention of winning the contract and then increasing the price later. This can be done for various reasons, such as to gain market share, to build market presence, or to simply win the business.

Underbidding can be risky, as it can lead to financial losses if the bidder is unable to deliver the project at the low price promised. It can also damage the bidder's reputation and relationships with clients and suppliers.

To avoid underbidding, contractors should carefully consider their costs and profit margins when preparing bids, and be transparent about any contingencies or assumptions that may affect the final cost of the project. They should also be prepared to walk away from a bid if they feel that it is not profitable or sustainable.