Comparing Contractor Bids: Do Not Pick the Cheapest Before Reading This

Three bids arrive for the same work with big gaps. The cheapest is tempting, but the difference may come from a missing scope or a forgotten item rather than efficiency. A proper comparison works in three layers: scope first, then price, then conditions.

Layer 1: Normalise the scope

Put all bids in one table with the same items. Look for:

• Missing items, or items marked “to be determined”.
• Exclusions in the conditions (excludes transport, temporary works, testing).
• Specifications or brands that differ from what was asked.
• Different quantities assumed by each contractor when the takeoff is theirs.

Add an estimated cost for the items a bid left out, so everyone stands on the same basis. This is called bid levelling.

Layer 2: Price

• Compare the levelled total and also the big items on their own.
• Unbalanced rates: an item that starts early is priced high to collect a large early payment, and a late item is priced low. Watch for it because it gives you unfair cash flow.
• A bid far below the average calls for a direct question about its basis. It may be an arithmetic error or an intention to claim extra later.

Layer 3: Conditions

• Duration and a realistic programme.
• Payment terms, advance payment and retention.
• Warranty period and performance bond.
• The contractor’s experience on similar projects, resources and workforce.

Weighted scoring

To avoid deciding by impression, set a weight for each criterion before opening the bids. For example: price 60%, quality and experience 25%, duration 10%, payment terms 5%. Then score each bid out of 10, multiply by the weight and add up. Fix the weights in advance so they are not influenced by the bid you prefer.

Document the decision

Keep the comparison table with the reasons for the choice. If someone objects later or a partner changes, the justification is ready.

The ready sheet

Put the bids in the contractor bid comparison sheet and it compares item against item and shows the lowest, the highest and the gap from the average. To sanity-check an item price, analyse it yourself with the unit rate analysis sheet.