In the procurement phase of a construction project, the “Bottom Line” number on a subcontractor’s bid is the least important data point until the underlying scope is verified.
Many General Contractors make the mistake of entering the lowest received bid into their client budget without performing a “normalization” of the data. This leads to “Scope Gaps”—unaccounted-for costs that inevitably resurface as change orders, eroding the GC’s fee.
A scope gap occurs when a task required by the plans is not included in any subcontractor’s quote.
Consider three electrical bids:
On the surface, Sub C appears to be the most competitive. However, a clinical review reveals that Sub C excluded the temporary power pole and the low-voltage wiring for the security system—items that Subs A and B included. Once these items are added back in, Sub C actually becomes the most expensive option.
To protect your margin, you must “level” the bids. This involves three specific steps:
Do not look at the total price. Look at the line items. If a subcontractor provides a “Lump Sum” bid, ask for a breakdown. You cannot compare bids if you don’t know what makes up the total.
Every professional quote has a section for exclusions. If you are managing bids in your inbox, these exclusions are often buried on page three of a PDF. You must extract these exclusions and compare them side-by-side. If one sub excludes “Haul-off,” you must add a “plug number” to their bid to make it comparable to a sub who included it.
Ensure every subcontractor is bidding on the latest version of the plans. A “low” bid is often simply a bid based on an obsolete, less-complex plan set.
While the most common risk is a scope gap, there is also the risk of a scope overlap. This occurs when two different trades both include the same work in their proposals, leading to an artificially inflated budget.
A classic example is the “Gravel Base” for a slab. The Excavator might include it as part of their site prep, while the Concrete sub might include it as part of their slab prep. If you aren’t leveling the bids and simply adding up the totals, you are “double-paying” for the same material.
Standardizing your bid review allows you to identify these overlaps and ask one of the subs to remove the item from their quote. This “Value Engineering” ensures your client gets the most competitive price possible without you sacrificing your management fee.
Manual bid leveling—copying data from PDFs into a spreadsheet—is slow and prone to transcription errors.
Bid Bench automates this clinical analysis.
Stop guessing and start leveling.
Expose the hidden costs in your subcontractor quotes with Bid Bench. Start your free trial at app.bidbench.com/signup.