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Consider another variant of Kastoroff. Kastoroff began work, spent $50,000, and then noticed the mistake. Letting Kastoroff out the contract would most likely have the following consequence:

The school district would incur the additional expense of holding a new round of bids. If the result were be hiring a different contractor, who will draw up new and different plans, hire different subcontractors, and so on. This would mean that a lot of the $50,000 spent by Kastoroff would be wasted.

The district and the contractor will negotiate a new contract at a higher price. This would mean delay in construction and the additional expense of further negotiation.

Either of the answers is correct.