Comparing Commercial Construction Bids: Why Three GCs Gave You Three Different Numbers
Comparing Commercial Construction Bids: Why Three GCs Gave You Three Different Numbers
You sent the same drawings to three general contractors. You got back three numbers that aren't close. It's tempting to decide somebody is padding and somebody is desperate. Usually the truth is duller and far more useful: they scoped it differently. Comparing commercial construction bids well means reading past the total to the assumptions underneath it. Do that and the spread stops being a mystery. It becomes the most valuable information you have before you sign anything.
The short version
- Three different numbers on the same drawings almost always means three different scopes, not three different profit margins.
- Where drawings are silent, each contractor fills the gap with an assumption. The low bid usually assumed the best case on every gap.
- An allowance is a placeholder dollar amount for scope that isn't decided yet. An exclusion is scope the contractor is not doing at all.
- Exclusions are where the low bid hides. That scope doesn't disappear — it comes back as a change order after you've signed.
- Subcontractor coverage matters. A bid built on three plumbing quotes prices differently than one built on a single quote from a busy shop.
- Contractors who self-perform interior trades price differently than contractors marking up four separate subs. Neither is automatically cheaper.
- Compare bids line by line on a single sheet before you compare totals.
- The slightly higher number with nothing hidden in the exclusions is usually the cheaper job.
Why the same drawings produce three different bids
Drawings are never complete. Even a good permit set leaves dozens of decisions unresolved, and every contractor pricing the job has to decide what to assume. That's the spread.
Assumptions about the unknowns
Say the drawings for a restaurant buildout show a Type I hood over the cook line but say nothing about makeup air, the gas line size, or who cores the roof. One contractor assumes the existing gas service is adequate and prices nothing. Another assumes it isn't and carries a new run from the meter. Same drawings, two very different numbers, and only one of them will be right.
Multiply that by twenty open questions — electrical service capacity, existing subfloor condition, ceiling height above the grid, whether the fire sprinkler heads need to move — and you can produce a spread of tens of thousands of dollars without anyone doing anything dishonest.
Allowances and exclusions
An allowance is an honest admission that a decision hasn't been made. Light fixtures aren't selected, so the bid carries a dollar figure per fixture and you true it up later. That's fine, as long as the allowance is realistic and you know it's there.
An exclusion is different. It says the contractor is not doing that work. If "data cabling and low voltage" sits in the exclusions on one bid and inside the base scope on another, the first bid will look better by exactly the cost of the cabling. You will still pay for it.
Subcontractor coverage
A general contractor's number is mostly the sum of subcontractor quotes. How many quotes they got, and from whom, changes the total. A contractor who collected three electrical quotes for your office renovation has a market price. A contractor who got one quote from a shop that's already booked out has a padded price — and that padding sits in the total, not in the margin.
Who self-performs what
Some contractors self-perform interior trades — framing, drywall, trim, sometimes flooring — with their own employees. Others subcontract everything and add a markup on each trade. Self-performing can remove a layer of markup, but it also means less competitive tension on that scope. Ask which model you're buying. It explains a lot about why one number for the same flooring and interior trades scope is well below the others.
Read the exclusions, not just the total
Flip past the cover page. Find the list that starts with "This proposal excludes" and read all of it, slowly.
The most expensive bid is often the low one, because the gap between its number and the real cost shows up as change orders after you've already signed.
Common exclusions that turn into real money on a tenant improvement:
- Permit fees and expediting
- Fire alarm modifications and monitoring
- Sprinkler head relocation and the associated permit
- Structural work discovered after demolition
- Data, security, and AV rough-in
- Owner-furnished equipment receiving, storage, and installation
- Anything described as "by others" without naming who
If you're staring at three proposals right now and can't tell which one is actually complete, call us at (404) 724-8709 and we'll read the exclusions with you.
How to compare commercial construction bids line by line
Build one sheet. Put every scope item down the left side, one column per contractor, and mark each cell In, Allowance, or Excluded. Do not look at the totals until the sheet is full. It usually takes an hour and it changes the decision.
Here's what that looks like on a typical tenant improvement:
| Scope item | Contractor A | Contractor B | Contractor C |
|---|---|---|---|
| Demolition and haul-off | In | In | In |
| Electrical service upgrade | Excluded | In | Allowance |
| Light fixtures | Allowance | Allowance | In (spec'd) |
| Sprinkler head relocation | Excluded | In | Excluded |
| Data and low voltage | Excluded | Excluded | In |
| Permit fees | Excluded | In | Excluded |
| Final cleaning | In | In | Excluded |
| Total | Lowest | Middle | Highest |
Contractor A looks cheapest until you notice they excluded four items the others carried. Once you add those back at market cost, A may land above B. That's the whole exercise.
And know the difference between the three states in that table:
| Term | What it means | What it does to your final cost |
|---|---|---|
| Included | Priced, in the contract, contractor owns it | No change unless you change the scope |
| Allowance | Placeholder dollar figure, selection pending | Goes up or down when you pick the actual product |
| Excluded | Not in the contract at all | Full cost lands on you later, usually as a change order |
What a good bid spells out
At this project size the contract is normally a lump-sum proposal with a scope letter — one fixed price, with a written description of exactly what's in it. A scope letter worth trusting names things. Not "paint," but the number of coats and the surfaces. Not "HVAC," but how many units, whether ductwork is new or reused, and who provides the thermostats.
It should also tell you the schedule assumptions: when the contractor expects to start, how long the work takes, and what the price assumes about permit review time. A price built on a two-week review and a price built on a six-week review are not the same price.
Ask for a written allowance schedule too, so you know exactly which dollars are placeholders.
Where this goes wrong
You compare totals first. Once a number is in your head, you spend the rest of the review defending it. Build the scope sheet before you look at price.
You send incomplete drawings and expect comparable bids. If the drawings don't show the electrical panel schedule, you are asking three contractors to guess. Spend the money on pre-construction and a complete set first. It's cheaper than the guessing.
You treat allowances as fixed. An allowance is not a price. If the lighting allowance is low and you have expensive taste, that gap is coming.
You never ask why the low bid is low. Ask directly. A good contractor will tell you what they assumed. If the answer is vague, that's your answer.
You pick on price and manage on hope. A warehouse conversion with an unclear scope and a tight number will generate change orders from week one, and every one of them costs you schedule as well as money.
FAQ
Why are contractor bids so different for the same job?
Because the drawings leave gaps and every contractor fills them differently. Some assume the existing electrical service is adequate; some price an upgrade. Some include permit fees; some exclude them. Add different subcontractor coverage and different markup structures and a wide spread is normal, not suspicious.
Should I always take the lowest construction bid?
No. Check what the low bid excluded first. If it left out permit fees, sprinkler work, and low voltage, add those back at market cost and re-rank the bids. A low number with a long exclusion list is a down payment, not a price.
What's the difference between an allowance and an exclusion?
An allowance is money set aside for scope that's included but not yet selected — light fixtures, flooring, door hardware. An exclusion is work the contractor won't do at all. Allowances adjust up or down at true-up. Exclusions land on you in full, usually later, usually as a change order.
How many contractors should I get bids from?
Three is the usual number and it's enough. More than that and you're spending weeks managing a process instead of building. Send all three the identical drawing set, the same scope narrative, and the same due date, or you won't be comparing anything.
How do I stop change orders from wrecking my budget?
Most change orders come from scope that was never priced. Push for a detailed scope letter, a written allowance schedule, and a short exclusion list before you sign. Then carry a contingency for the genuine unknowns behind walls.
What should I ask a GC before signing?
Ask what they assumed about the items the drawings don't show. Ask how many subcontractor quotes are behind each trade. Ask what happens if the permit review runs long. Ask who your day-to-day contact is. The quality of those four answers tells you more than the total does.
Talk it through before you sign
If you have bids in hand, don't decide off the totals. Get the exclusions side by side first, because every item on those lists is money that hasn't gone away — it's just waiting.
Call (404) 724-8709. In about 20 minutes we'll go through your drawings and your proposals, tell you which scope items look unpriced, and explain what a complete scope letter should say for your job. If it turns out you want a number from us, we'll tell you what we'd need to give you one you can hand to your owner and trust.