The vendor's blue suit is a dead giveaway! My company has just outsourced much of its work to IBM, because they couldn't justify the cost of using experienced employees. I have seen IBM come into other companies too, low-balling, then costing much more, and finally blaming the ex-employees for the cost overruns because they failed to properly transfer their knowledge.
This is the same way that it works with US Government procurements, and the contractors are not the only guilty party. The way our procurement system works, if a company tells the truth it will never get the contract. Thus we encourage proposals to be super optimistic on the cost. We assign large teams of engineers to evaluate the proposals, but their recommendations are usually ignored in favor of the unrealistic cost and schedule provided by the contractor.
Our local municipality in Mumbai (formerly Bombay) ends up making extra-budgetary funding for almost 75% of its road and other projects because the vendors have run into cost over-runs. The major difference here being that more than the vendors, it is the municipality middleman who corner all the money :D
This happens all the time in construction surveying.
Usually clients write the bid requests with provisions for staking each part of the job once.
Surveyors bid on that basis, then write the contract so that any time that stakes are destroyed, replacing them requires extra payments on a time and materials basis.
I can't count the number of times that I have spent a week setting stakes, only to have the client pile his materials right on top of them before he even starts working.
Oh well, their stupidity is my job security.
when i worked construction my boss generally underbid and managed to come in barely *under* budget.. with extra supplies to pocket.. course it tended to take him twice as long as predicted, with a skeleton crew.. but who's perfect?