How to Tell If a Contractor's Bid Is Padded

This is the question behind almost every call I get. Someone has a bid in hand, the number is bigger than they expected, and they want to know whether they are being taken.

Here is the uncomfortable answer: you usually cannot tell from the bid alone. And that is the actual problem worth solving.

Why comparing bids does not work

Say you call three contractors and two of them get back to you. One says three hundred and ten thousand. One says four hundred and fifteen thousand. You are now supposed to make a six figure decision based on those two numbers.

Except they are not describing the same house. One assumed a slab, the other assumed a crawlspace. One included the septic, the other assumed you were handling it. One priced mid-grade windows and the other priced whatever was on the shelf. Neither bid tells you any of this, because neither bid was written to be compared.

So the spread between them is not a measure of honesty. It is a measure of how differently two people read the same set of drawings.

The fix is upstream of the bid

The only reliable way to compare bids is to write the scope yourself first, hand the same document to everyone, and require them to price that document. It is more work at the front end and it eliminates most of the uncertainty at the back end.

A usable scope of work names the assembly, the grade of the materials, and who is responsible for each piece. It does not have to be an architectural specification. It has to be specific enough that two contractors reading it would buy the same things.

What to actually look for in a bid

Once you have comparable bids, a few things are worth your attention:

• Lump sums that cover several trades at once. A single line reading "framing package" with one number attached is not something you can evaluate.

• Allowances with no basis. If there is a lighting allowance, ask how it was calculated and what it buys.

• No exclusions list. A good bid says what it does not cover. A bid with no exclusions is either incomplete or is hiding the gap until later.

• No schedule. A contractor who cannot tell you roughly when things happen has not thought the job through.

• A payment schedule front-loaded well beyond the work performed.

Ask better questions

The most useful question you can ask a contractor is not about price. It is this: what would make this number go up?

An experienced builder will have an immediate answer, and it will be specific to your site. Rock. Access for a concrete truck. A soils report that comes back worse than expected. Snow load. If they cannot name anything, they have not walked your land carefully enough, and the number is a guess wearing a suit.

A contractor who volunteers the risks before you sign is telling you something important about how they will behave when one of those risks actually shows up.

Want a line-itemed number for your own project? Run the Guesstimator. It is free, it takes about three minutes, and you do not need to hand over an email to see your result.