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In the world of construction bidding, a change order is an important tool. It refers to a formal adjustment to the original contract. These adjustments can touch on different aspects of the contract, such as the design, the scope of the project, the cost, or the time schedule.

In practical terms, this means that if anything needs to be added, removed, or changed in the construction project, it has to go through a change order. These formal changes are documented and approved by both the contractor and the client.

Change orders can affect the total cost of a project. As changes are documented, they usually lead to extra charges for the client. Hence, while a change order provides flexibility, it can significantly impact the final budget of the project.

A contractor's strategy often includes the method of pricing bids. One common strategy is bidding low, also known as 'low-balling.' When contractors low-ball a bid, their goal is to secure the contract amidst a pool of competitors.

By presenting a lower bid, contractors become more attractive to clients who are budget-conscious or seeking cost-effective options. However, a low-ball bid usually does not cover all the future costs or desired profits. This approach might seem advantageous in the short term because it wins the contract, but it relies heavily on other mechanisms to make a profit later.

Contractors using this strategy depend on change orders as a workaround to recover and boost their earnings throughout the project's duration.

Cost estimation involves predicting the costs to complete a project, which is key for contractors during the bidding process. Accurate cost estimation considers a wide range of factors including material costs, labor, time, and unexpected changes.

A solid cost estimation allows contractors to create realistic bids and ensures that the projects are profitable. However, when contractors intentionally low-ball, they might underestimate some of these costs initially.

The gap created by a low initial bid can later be filled with additional costs from change orders. Hence, effective cost estimation is essential not only for creating bids that reflect the true project costs but also for aligning the client's budget expectations with realistic projections.