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What is a Contractor Bid?

Diane Goettel
Updated May 16, 2024
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Before a construction job begins, whether it is a small job on a residence or a very large job on a commercial building, it goes out to bid. This means that contractors have the opportunity to review the job and give an estimate of what they would charge to complete the work. This is called a contractor bid. In most cases, individuals or companies interested in hiring a contractor for a job will review multiple bids before hiring anyone.

A contractor bid is based on many factors. The first and most basic factor is the kind of work that is out for bid. Repair work on a residence with two floors and a small attic is much different than the new construction of an office building with fifteen floors. This basic factor will define many others such as the type of equipment that will be necessary to complete the job, how many people will need to be hired to do all of the work, and how many working hours the project will take to complete. If the job is unusually complex, a contractor might have to rent or purchase equipment that the company does not already own. All of these factors must be considered when a contractor is developing a bid.

Furthermore, a contractor must consider the materials that will be required from the beginning of the job until the end. In most cases, it is the job of the contractor to purchase those materials. It is important, when requesting a contractor bid, to be specific about the required materials as their price must be factored into the bid.

It is important to note that it is not always best to go with the lowest contractor bid. In fact, sometimes the lowest of the bids can be a risky choice. For example, it might be low because the contractor has underestimated the number of workers he will need on his construction crew. Also, a slightly more expensive bid might come from a contractor who insists on meticulous workmanship and therefore plans for a higher than average number of working hours.

In some cases, contractors will use materials other than those that are specified in the bid in order to reduce costs. This can leave the consumer with a product that is of lower quality than anticipated. This is not to say that all contractors are untrustworthy. However, it is very important, when considering bids, to look into the reputation and record of the people behind each contractor bid.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Diane Goettel
By Diane Goettel , Former Writer
"Diane Goettel has a BA from Sarah Lawrence College and an MA in English from Brooklyn College. Diane lives in Mount Vernon, New York with her husband, Noah. They are the proud parents of a Doberman Pinscher named Spoon. Specialties: book editing, book marketing, book publishing, freelance writing, magazine publishing, magazine writing, copywriting,"

Discussion Comments

By leeannejulia — On Dec 20, 2012

My brother is building a house and he got a contractor who put in a bid of $50,000.00. So, I was wondering if my brother has to pay any taxes or extra cost, such as putting on the siding?

By Monika — On Oct 11, 2011

A friend of mine just had some work done on her house, and she had a really hard time choosing a contractor. She's a big people pleaser, so it was hard for her to let down the contractors she didn't choose.

However, she really did her homework and I think she chose a great contractor in the end. The work ended up being affordable and very well done.

By starrynight — On Oct 10, 2011

@Azuza - Undercutting by other contractors sounds really frustrating. I think the whole bidding process in general sounds really frustrating.

My stepfather was in the Coast Guard for quite awhile. He was in charge of doing some pretty big projects, and he told me sometimes it took a year just to plan the project. So if you were a contractor, and you put a bid in, you might have to wait for months and months or even a year to hear if you got the project!

I think this makes it really hard for a contractor to plan. For example, what if you bid on a bunch of projects and you get them all and you're not able to actually do them all at the same time? But then if you don't bid on enough you won't have work? This whole system sounds kind of flawed.

By Azuza — On Oct 09, 2011

I've never bid on a project as a construction contractor, but I have a friend that has done so as a writer. She tells me it can be a very frustrating experience.

It seems that when bidding takes place, there is always someone willing to undercut the "normal" rate for the service. But in the end, the customer is the one that suffers. As the article said, for a construction contractor, there are a few shady reasons why they might be able to get their bid down so low.

I think that if you're going to hire a construction contractor, it would make sense to go with someone who's bid is right in the middle. But as the article said, checking someone reputation is also of great importance.

Diane Goettel

Diane Goettel

Former Writer

"Diane Goettel has a BA from Sarah Lawrence College and an MA in English from Brooklyn College. Diane lives in Mount...
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