What is a potential risk of "buying-in" for contractors?

"Buying-in" refers to the practice where contractors submit bids that are intentionally lower than their expected costs, in order to win a contract. This strategy can be appealing to contractors looking to secure jobs in a competitive market, but it carries significant risks, particularly underbidding and incurring losses.

When a contractor underbids, they set a price that may not accurately reflect the true cost of completing the project, failing to account for potential challenges, changes in material costs, or unexpected labor expenses. If costs exceed what was anticipated, the contractor may find themselves facing financial difficulties, forced to absorb losses, or needing to cut corners to fulfill the contract. This can damage their reputation, lead to disputes, and affect their capacity to take on future work.

The other options do not directly capture the essence of the risks associated with buying-in. For example, overpricing products does not relate to the buying-in strategy, as it focuses on inflating bid amounts rather than reducing them. Unauthorized contract modifications pertain to changes that occur during the contract execution without proper approval, which is separate from pricing strategies. Similarly, exceeding project timelines, while a valid concern in project management, does not specifically stem from the risks tied to buying-in practices.

Thus,