A.G.
I have no personal experience with this, however my best quess is they estimated the umbilical cord length be ultrasound and based on the location of the placenta, calculated that the birth process could cause the placenta to start pulling away from the uterine wall prior to the completion of the birth process - a real emergency because where the placenta pulls away, blood leaks into the uterus. something that happens during labor is that the dimensions of the uterus change because it is composed of muscles that press on the baby during contractions so the uterus becomes "smaller" as the baby moves more and more down into the birth canal. therefore what appears to be a too short umbilical cord can maintain a proper connection to the placenta during the birth process. It depends on the position of placental attatchment, whether the cord is wrapped around the baby in any way, and other factores.
this is a risk assessment decision based on the possibility of getting sued if something does not go well, and taking into consideration the well being and safety of the mother and baby - doctors make these tough calls all the time. they are going to recommend the safer option. A.