Anyone who has ever bid a large job knows the insanity that
occurs right before the bid is due: The phone is ringing,
quotes are coming over the fax, you're second-guessing your
labor rates, and the client needs the price now. To some
extent, such last-minute chaos may be unavoidable. But by
developing a systematic approach to bidding, you can prevent
the kinds of mistakes that could cause you to lose money or
stop you from getting the job.
What Is Large?
So, what exactly is a large job? For the purposes of this
article, it's any job that requires input on pricing from more
sources than you can count on one hand. You could be bidding
competitively against other contractors or generating the price
for a job you already have. Either way, many pieces must come
together, so you need to use a format that allows you to track
prices from subs and suppliers, compare them apples-to-apples,
and assemble them into a complete bid.
The example we'll use here is a bid for a large, high-end
kitchen remodel. The same process works for additions, new
homes, commercial buildings, and any other type of
Creating Bid Packages
It's important to be organized when assembling bids, because a
single omission or miscommunication can cost you a lot of
money. Subs and suppliers will give you prices, but those
prices may not represent what you are trying to build. This
could put you out of the running to get the job, or it could
cause you to commit to a price that is too low to make money
The first step in organizing the pricing process is to break
the project into bid packages, logical pieces that are small
enough to be manageable. Some packages will be obvious because
they relate to specific trades. Others could be broken out a
number of ways. You need to ask yourself a series of questions:
Which trades will we sub and which will we do in-house? Which
subs will provide material and labor and which will provide
labor only? Where will we buy the materials? Each one of these
items — in-house labor by trade, subcontractor bids, and
material quotes — will become a separate bid
Figure 1. Each bid package is listed on
the master sheet and will be separately priced and tracked. On
this project, the sub's prices include material and labor.
Since carpentry is being done in-house, there are separate
entries for material and labor for framing and trim.
A place for everything. As soon as I know what
the bid packages will be, I write each one on an individual
sheet of paper, give it a number, and put it in a manila
folder. Keeping them in numerical order, I put each of the
folders into a hanging file in a "bid box." The actual box
could be anything; I like to use a plastic file-storage box
because it's cheap and portable.
I also create a master sheet — a list of all the bid
packages — and place it at the very front of the box (see
Figure 1). The process of creating a bid box may seem
fundamental, but the only way to stay organized while you bid
is to start out that way. When prices come in from subs and
suppliers, there will be ready-made places for all of them to
Developing Scopes of Work
Once the project is broken into bid packages, it's time to
determine the scope of work for each one and to write it on a
"scope sheet" (see "Detailing Your Scope of Work," Business,
3/03). Each scope sheet lists all the items to be included in
or excluded from the price for that package. Items specific to
the trade in the bid package are listed toward the top, while
general items (which apply to all trades) like cleanup,
insurance, and taxes are listed near the bottom (Figure 2, next
What is covered. The scope sheet in Figure 2 is
for the drywall package on a fictional construction project.
Several items are listed that have to do with patching work the
GC wants the drywall sub to include. Maybe these items aren't
clearly shown on the plans, or, in the case of the patching for
electrical home runs, the drywall subs would have no way of
knowing that this work was required. Even though the work is
subbed, the sheet includes our own preliminary estimate
($4,750) for what this work should cost. Each company that bids
on the drywall will receive a copy of the scope sheet minus our
cost estimate and the names of competing bidders.
Figure 2. The scope sheet is an itemized
list of everything the sub or supplier is required to account
for in his price. The checked items are included and the items
marked with an X are excluded.
The goal is to make all the bids contain the same items. If
they don't, it will not be possible to make apples-to-apples
comparisons. You want to avoid missing any items, because the
price you give the customer should be based on the actual cost
to produce the job. The last thing you want is to be partway
through the project and find out that a sub's or supplier's
price did not include everything you thought it did.
Where the cost is covered. On the
scope sheet, under the column labeled "Project Estimate
Amount," there is a check mark or X next to each scope item. A
check mark indicates that this particular item is to be
included in this bid package, while an X means the item should
be excluded. If an item that is part of the job is excluded
from one package, then you need to make sure it is carried
For example, the only item excluded on the scope sheet for
drywall is "Caulk corners prior to painting." According to the
notation, this task is part of the scope for bid package #6,
which on this job is painting. This could have come about
because the drywallers saw caulking on the list of work they
were expected to include and convinced the GC that it would be
better for the painter to do it. The drywallers excluded this
item from their bid and the GC noted it on the drywall scope
sheet. To ensure that the painters know about this, the GC
should go to the scope sheet for painting and make sure the
task is listed there.
Using scope sheets. When bids come in from a sub
or supplier, I write the amount on the appropriate scope sheet.
Although I create the scope sheets in Excel, I fill them out
mostly by hand. It's much easier to keep them up-to-date that
way, especially right before the bid goes in. With a computer,
the formulas needed to sum up the columns can get messy, and
making a lot of check marks and X's can be awkward. It's
quicker and simpler to use a pencil to fill in numbers and
check things off.
Once the scope sheets are complete, you should go over them to
determine if anything was missed or if there is any overlap in
scope. If possible, get someone who did not work on the bid
packages to look at them. He or she will come at the task with
a fresh perspective and may notice things you overlooked.
More Than One Bid-Taker
In larger companies, it's not uncommon for more than one person
to work on a bid. It happens in smaller companies, too, when
there is a tight deadline for submitting a particular bid or
when many bids must be done in the same period of time.
The number of people it takes to produce a bid depends on the
size and complexity of the project. At the company where I
work, employees who are not estimators will sometimes be asked
to handle "easy" items such as material quotes. I say "easy"
because the people collecting pricing will be working from
detailed scope sheets. All they have to do is compare incoming
quotes with the sheets. This allows the estimator to
concentrate on the trickier parts of the job.
Precautions. If more than one person
works on the bid, the master sheet should contain a column to
note who's handling which particular packages. When you assign
the task of handling bid packages, be sure to group them in a
way that makes sense — let one person handle all the
mechanical trades or all the finish trades. If a single person
handles related trades, he or she is more likely to notice the
gaps and overlaps between those bid packages.
For example, if one person handles finish carpentry and
painting, he is more likely to notice when the painter excludes
such prep work as breaking edges and to be in a position to add
this task to the carpenters' scope. Or, say there is going to
be a landing halfway up an oak staircase: The person who is
pricing the stairs needs to be certain that the flooring
contractor knows about the landing and includes strip flooring
for it in his bid.
If you do a poor job creating packages, you will almost
certainly have trouble assembling the final bid.
Material quotes, subcontractor bids, and estimate sheets for
in-house labor will accumulate in the weeks before the bid is
due. As the information comes in, we sort it into the proper
folders. Several days before the bid is due, we pull out each
folder, look at the quotes, and transfer the prices onto the
appropriate scope sheet. The scope sheet has a column for each
bidder; it contains the name, phone number, and contact person
for that company. We take the bidder's pricing and list it
below. Then we call each sub or vendor and verify that his
price includes (or excludes) every item we asked for (Figure
Figure 3. A few days before the bid is
due, the author takes the prices he has received and enters
them on the scope sheets. He then adjusts the prices so that
each bid includes the same items.
What to adjust. When we talk to subs and vendors about what is
and isn't included in their pricing, we keep track of that
information by putting a check mark or an X in their column on
the scope sheet. (Included items get a check mark; excluded
ones get an X.) Next, we review the items line by line and
compare our column ("Project Estimate Amount") with those of
the subs and vendors. If their check marks and X's correspond
to ours, everything is fine. The trouble starts when something
we asked for is not there, because then the price is too low.
If the bid includes something we didn't ask for, the price will
be too high.
We adjust the bidders' pricing according to the following
Deciding how much. So, where do the
adjustments come from? Ideally, the sub can tell me how much to
add or deduct for that item. If he can't, for whatever reason
(lack of time, didn't see the item at the walk-through, and so
on), I try to get one of the other subs to tell me what the
item is worth. When that doesn't work, I'll estimate the cost
and simply plug in a number of my own.
If the adjustment numbers are not from the sub himself, it's a
good idea to indicate on the sheet where the amounts came from.
You could forget and think the number was solid, when it was
actually just a guess.
After I write in the adjustments, I can retotal the columns to
get bottom-line prices that include and exclude all the right
items. With these numbers in hand, it's possible to compare the
bids on an apples-to-apples basis.
In this example, none of the drywall bidders' original prices
were correct for the scope requested. The original "low" bidder
missed so many items, he was actually the most expensive. This
is why it's so important to review the bids carefully. The
original low bid ($4,200) is $600 less than the final low bid
($4,800). Multiply that kind of error by 15 bid packages and
you can see why so many contractors go out of business every
The next step is to take the amount bid by the lowest
responsible bidder and write it in the box on the lower left
side of the scope sheet. This is the amount that we will carry
in our bid for the job.
Once the pricing is adjusted, we put the scope sheets and all
of the paperwork (faxed quotes, proposals, takeoff sheets, and
the like) back in the bid box, creating a neat record of the
Assembling the Final Bid
The final step in the process is to go to each scope sheet,
find the bid amount you plan to use, and transfer it to a
summary sheet (Figure 4). The summary sheet is a table that
contains a description of each bid package, what we expect to
pay for it, and the "supplier" we'll be getting it from. The
price for each bid package comes from the lower left corner of
the corresponding scope sheet.
Figure 4. The author takes the bottom line
from each completed scope sheet and enters it onto a summary
sheet. Completing the bid is simply a matter of totaling the
cost of the bid packages and adding in profit, overhead, and
Ideally, we can complete the scope review a couple
of days before our bid is due to the client. This allows us to
summarize the pricing a day before the bid is due and leaves
time for one final check of the numbers and scope.
Determining our bid price is simply a matter of totaling the
bid-package amounts and adding the cost of items such as
permits and contingencies, plus our markup for profit and
overhead. Whereas the scope sheets are filled out by hand, I'll
do the summary in Excel because it makes it easier to play
"what if" by changing the contingency and markup.
Under this system, if we land the job, it won't be because we
blundered and left something out. And now we have an organized
package of information with which to set up the job, including
a list of materials to order and the items to include in
Bob Kovacs has more than 15 years of
experience managing and estimating residential and commercial
construction projects. He moderates the estimating forum at