Reading a Contractor's Bid: The Line Items That Hide Risk

8 min read

Owners usually compare bids by the bottom line. That number is the least informative part of the document. What matters is what is included, what is assumed, and what is deferred.

Start by normalizing scope

Before comparing dollars, build a simple matrix: every major scope on the left, every bidder across the top. Mark included, excluded, or allowance. You will almost always find gaps in site work, utilities, landscaping, appliances, and finish hardware.

A bid that is low because it excludes the driveway is not low.

Allowances are unpriced scope

An allowance is the contractor telling you they do not know the number yet. It is not a discount and it is not a commitment. Watch for:

Flooring, tile, and countertop allowances set below the level shown in renderings
Lighting and plumbing fixture allowances with no fixture schedule
Site work or excavation allowances on a site with no geotech report
"Utility connection" allowances before the utility has responded

Ask what quantity and quality each allowance assumes. If the answer is vague, the exposure is yours.

Unit prices tell you where the pain will come from

Unit prices for rock excavation, unsuitable soil removal, structural fill, and undercut are the contractor pre-negotiating the most likely overrun. Their presence is a signal, not a red flag. The question is whether the unit rate is reasonable and whether the baseline quantity is realistic.

General conditions and general requirements

General conditions cover supervision, temporary facilities, dumpsters, safety, and site management. They are usually a function of duration. That means a longer schedule is a more expensive project even if nothing else changes.

Look for:

General conditions expressed as a monthly rate rather than a lump sum
Whether the rate continues if the schedule extends for owner-caused delay
Whether supervision is full time or shared across projects

Contingency: whose is it?

Contractor contingency inside a GMP is meant for the contractor''s own risk, not for owner scope changes. Owner contingency is separate and should sit outside the contract sum. Contracts that are silent on this reliably produce arguments later.

Clarify in writing:

What events can draw on each contingency
Who approves a draw
What happens to unspent contingency at closeout

Exclusions and clarifications pages

This is the most important page in most proposals and the least read. Common exclusions worth pricing separately:

Permit and impact fees
Testing and special inspections
Builder''s risk insurance
Survey and as-built documentation
Off-hours work, dewatering, temporary power
Escalation beyond a stated date

Schedule as a pricing document

A bid with no schedule is an incomplete bid. Ask for milestone dates, assumed permit duration, assumed long-lead procurement, and what happens if a long-lead item slips. Switchgear, elevators, windows, and custom millwork drive more schedules than framing does.

A practical comparison checklist

Same scope matrix across all bidders
All allowances converted to defined quantity and quality
General conditions shown as duration-based cost
Contingency ownership and draw process stated
Exclusions priced as owner budget lines
Schedule with permit and procurement assumptions
Escalation and price validity date

Next step

Run this once and the gap between two bids usually collapses to something small and explainable. That is when you are actually choosing a builder rather than choosing an incomplete document.