Without seeing the exact text it looks like a safety factor.
Sizing it at 1.00x may cause an overload half the time.
Sizing it at 1.25x causes an overload 5% (or 1%?) of the time.
Sizing it at 2.00x causes, dunno', an overload 0.1% of the time.
I'd hope that this 1.25x factor is based on historical data and statistical analysis rather than just a WAG, because the customer's money is riding on this gamble.
E.g., HVAC equip. is sized on the Outside Design Temperature, which is exceeded only 1% of the time, depending on who you talk to.
It's based on historical data.
You can have 0.1% (99.9% certainty) too, but it will cost you.
While I have your attention, what's your WAG on the cost difference in your case between sizing for 1.00x and sizing for 1.25x?