Here's the moment of truth: three bids on your desk, numbers all over the map, and everyone's waiting for your decision. The low bidder is 20% under the others, but something feels off. Welcome to the art and science of bid analysis.

You've managed a clean bidding process, and now you're staring at submissions that somehow interpret the same project three different ways. One contractor's electrical number is $150K, another's is $75K. Either someone's made a huge mistake, or they're pricing a completely different scope. Time to put on your detective hat.

Smart bid analysis isn't about picking the lowest number—it's about understanding what you're actually buying and identifying the risks before they become expensive surprises.

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The Line-by-Line Comparison

Organize for Analysis

First step: get all bids into the same format so you can actually compare them. This means breaking everything down by CSI divisions or trade categories.

Standard Analysis Categories:

• Site work and utilities (excavation, utilities, paving)
• Building shell (foundation, structure, envelope)
• Interior construction (framing, drywall, flooring)
• Mechanical systems (HVAC, plumbing, fire protection)
• Electrical systems (power, lighting, low voltage)
• General conditions (supervision, temp facilities, cleanup)

The Spreadsheet Reality: You can spend hours building comparison spreadsheets, or use a platform like Outbidd that automatically organizes bids for side-by-side analysis. Either way, the goal is seeing variances quickly.

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Identifying Scope Gaps

When Numbers Don't Match, Find Out Why

Significant variances usually mean different scope interpretations, not just pricing differences.

Red Flag Variances to Investigate:

• One trade 30%+ different from others
• Missing line items in one or more bids
• Round number pricing (usually indicates allowances or SF numbers based on other jobs)

The Investigation Process:

1. List specific questions for each major variance
2. Call contractors directly for clarification
3. Document all responses for fair comparison
4. Adjust bids to reflect true scope (or note exclusions)

Common Scope Gap Examples:

• Fire alarm system included vs. excluded in electrical
• Site lighting in electrical vs. site work
• Temporary facilities in general conditions vs. separate
• Testing and commissioning included vs. owner responsibility

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Allowance Analysis

Understanding What's Really Included

Allowances are where scope interpretation gets murky. Two contractors with identical allowance amounts might include completely different work.

Standard Allowance Items:

• Lighting fixtures
• Plumbing fixtures
• Flooring materials
• Hardware and specialties
• Fire Alarm

The Allowance Deep Dive Questions:

• Is labor included in the allowance?
• What quality level is assumed?
• Are required vendors parts and smarts included (i.e. Seimen’s Devices)
• Are electrical connections included with lighting allowances?
• Does plumbing allowance include rough-in or fixtures only?

Pro Tip: Normalize allowances to the same amount for fair pricing comparison, then evaluate the differences separately. Modern bid analysis tools like Outbidd can do this automatically instead of you rebuilding spreadsheets.

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Unit Price Reality Checks

Sanity Test the Numbers

Know typical unit costs for your area and project type. When numbers fall outside normal ranges, dig deeper.

When Unit Prices Don't Make Sense:

• Too low: Missing scope or unsustainable pricing
• Too high: Excessive contingencies or premium pricing
• Inconsistent: Different interpretations of project requirements

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Change Order Risk Assessment

Predicting Future Problems

Some bids look cheap upfront but cost more through change orders. Look for warning signs during analysis.

High Change Order Risk Indicators:

• Unusually low pricing without clear explanation
• Minimal general conditions (inadequate supervision budget)
• No contingencies built into pricing
• Vague scope descriptions in contractor submissions
• First-time project types for the contractor

Questions That Reveal Risk:

• How did you price items without full specifications?
• What's included in your general conditions?
• How do you handle unforeseen conditions?
• What's your typical change order percentage on similar projects?

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Reference and Experience Verification

Past Performance Predicts Future Results

Don't just check references—ask the right questions to understand what you're getting.

Reference Check Questions That Matter:

• Did they complete on time and on budget?
• How did they handle change orders and unforeseen issues?
• Was their project team responsive during construction?
• Would you hire them again for a similar project?
• What was their approach to problem-solving?
• Did they come back to fix punch list or warranty items even after opening.

Red Flag References:

• Only owner references (no architect or CM references)
• All references from 2+ years ago
• Reluctance to provide specific project contacts
• Similar projects but much smaller scale

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Financial Capacity Analysis

Can They Actually Build Your Project?

Low bidders sometimes can't financially handle project execution, leading to problems during construction.

Financial Red Flags:

• Unusually aggressive payment terms
• Bonding capacity just barely covers your project
• Multiple large projects starting simultaneously
• Recent rapid growth without operational infrastructure

The Cash Flow Reality: Contractors need working capital to buy materials and pay subs before you pay them. Undercapitalized contractors create project risks.

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Making the Final Decision

Total Value Analysis

Consider factors beyond initial price when making your award decision.

Decision Matrix Factors:

• Adjusted price (after scope normalization): 50-60%
• Schedule confidence (can they deliver on time): 20-25%
• Experience relevance (similar successful projects): 10-15%
• Team quality (PM and superintendent track record): 10-15%

The 10% Rule: If a contractor is within 10% of the low bid but offers significantly better qualifications, experience, or approach, they're often worth the premium in total project value.

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Documentation and Award

Protect Your Decision

Document your analysis process and decision rationale for future reference and potential disputes.

Analysis Documentation:

• Scope adjustments made for fair comparison
• Reference check results and feedback
• Risk assessment for each contractor
• Decision matrix with weighted factors

Award Communication:

• Notify selected contractor immediately with clear next steps
• Debrief unsuccessful bidders professionally (builds relationships for future projects)
• Schedule contract negotiation and kick-off meetings

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The Analysis Reality

Good bid analysis takes time and attention to detail, but it's the difference between smooth projects and expensive disasters. The goal isn't finding the cheapest contractor—it's finding the best value for your specific project needs.

The Modern Advantage: While you can do all this analysis manually with spreadsheets and phone calls, smart project managers use platforms like Outbidd. Outbidd includes features like AI bid analysis, automatic scope gap and variance detection, organized comparisons and bid rounds, and allows you to manipulate the data with line item leveling and what-if analysis tools.

Remember: the bidding process doesn't end when you pick a contractor. It ends when the project is successfully completed. Invest the time in analysis upfront, and you'll save multiples of that time during construction.

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Ready to analyze bids like a pro without the spreadsheet headaches? See how automated bid analysis can spot variances and risks instantly at outbidd.com

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P.S. - Yes, that contractor who was 30% lower probably did forget to include something important. Trust your instincts.