Which of the following is NOT a reason for listing assumptions in a cost estimate?

• A. To identify potential risks and uncertainties
• B. To facilitate future revisions and updates to the estimate
• C. To clarify the basis on which the estimate is prepared
• D. To ensure that all costs are understated for competitive advantage

Answer: (D)

Verified step by step guidance

1. Understand the purpose of listing assumptions in a cost estimate. Assumptions are included to provide clarity and transparency about the basis of the estimate, helping stakeholders understand the context and limitations.
2. Review the options provided in the question. Each option represents a potential reason for listing assumptions in a cost estimate. Analyze each option carefully to determine its validity.
3. Option 1: 'To identify potential risks and uncertainties' - This is a valid reason because assumptions help highlight areas where risks or uncertainties may exist, allowing for better risk management.
4. Option 2: 'To facilitate future revisions and updates to the estimate' - This is also valid because assumptions provide a framework that can be revisited and adjusted as new information becomes available.
5. Option 3: 'To ensure that all costs are understated for competitive advantage' - This is NOT a valid reason. Understating costs intentionally is unethical and does not align with the purpose of listing assumptions, which is to ensure transparency and accuracy in the estimate.