Comparing construction bids shouldn’t be rocket science, but it sure feels like it sometimes! Not only can it be challenging to decipher what various line items might mean for your project’s outcome, but doing this exercise as you compare multiple bids is even more complex.

Because construction contractors frequently offer their bids in different formats or have different systems for determining cost estimates, an apples-to-apples comparison often feels more like apples-to-bananas. Below we offer some tips to help you hone in on what really matters when evaluating competitive bid estimates.

The Basics When Comparing Bids

There are several important things to look for as you compare bids – it’s not just the final number at the end that matters (more on that to come). Here are some basic principles to keep in mind as you evaluate bids – and remember, don’t hesitate to ask a construction consultant to take the lead on this process for you. These are the kinds of documents they eat, sleep, and breathe day in and day out.

• Compare a minimum of 3 bids – Having only two bidders isn’t enough to offer significant confidence in the bids. Three gives you the minimum you need to see any discrepancies across bids. You can therefore go back to each contractor and make sure that no detail is left unturned and ensure you’re truly getting the apples-to-apples bids that you’re looking for.

• The lowest bid is not necessarily the best bid – If a price is too good to be true, it probably is. But it doesn’t hurt to ask pointed questions to make sure. If one bid has an item that is significantly lower than the other bidders, ask them why they can do it so much cheaper than the rest or compare the scope of work on that item in relation to the other bidders. If they have a good answer, you can rest assured that they won’t have to revise the budget once construction starts.

• Fees may vary – Fees associated with a bid – from administrative expenses and company overhead to permits and insurance – can fluctuate from company to company and may not be specifically identified in a contractor’s bid. Keep this in mind when comparing bids to identify this variation, and again, don’t necessarily assume the lowest one is the best one.

More Than the Bottom-Line Number

When contractors put together their bid proposals, they make certain assumptions based on the construction documents they receive from you. They are making educated guesses about how the project will unfold as they price out their bid and are generally building out their bids with less than the full view of the project. Their estimates are a reflection of these assumptions, so you need to take the bottom-line number with a grain of salt, especially if the bid includes a qualification statement.

What is a Qualification Statement?

When you send out your proposal to various contractors, they respond with what they believe it will take to complete the job. But sometimes there are essential components missing from the proposal that will need to take place in order for the work to be completed as proposed.

For example, if the project owner doesn’t have a geotechnical report and wants to construct a deep swimming pool in South Florida, we would respond with a qualification statement that includes something such as “We have not included any soil engineer recommendations such as de-watering in the estimate.”

Our qualification statement would call out additional requirements to do the job as proposed. These additional requirements are not included in the bid, but they alert the project owner to important factors they will need to consider as they evaluate their project and the other bids they receive.

Why Qualification Statements are Important to Your Bid Selection Process

An essential part of selecting a contractor for your project is hiring a transparent and trustworthy team. If you receive a qualification statement as part of a bid, consider it a good sign that your contractor is being forthcoming about potential hurdles to your project and follow up with questions.

At Seacoast Consulting Group and Seacoast Construction, we recognize how imperative open lines of communication are to the success of a build. If you have questions about a bid you received from another contractor or need help understanding a qualification statement, don’t hesitate to come talk to us. We’ve worked in the South Florida market for more than 25 years and will help you understand the differences among bids and what those differences could mean for your project’s outcome. Contact us today with any questions.