Subcontractor quotes, scope sheets and bid leveling

On a typical building, 70 to 90 % of the general contractor's price is made up of subcontractor and supplier quotes. A general contractor that prices its own work perfectly but carries the wrong subcontract numbers will lose the bid or win a loss. This lesson covers the subcontract side of the bid: building a bidders list, writing scope sheets, receiving and qualifying quotes, leveling them so that they can be compared on an equal basis, choosing which number to carry, and handling packages where no acceptable quote arrives. The buyout of subcontracts after award, with subcontract forms, purchase orders and supply chain management, is the subject of CON-330; insurance, bonding and subcontractor default risk are covered in CON-350.

Building the bidders list

For each package, the estimator invites a list of subcontractors or suppliers to quote. The list balances competition against quality: enough bidders to get a competitive price, but only firms the general contractor would actually hire. Many firms aim for at least three quotes on every significant package and more on the largest ones. Prequalification, either formal (questionnaires, financial statements, safety records, bonding letters) or informal (past performance), should happen before the bid, not after the low number arrives.

On many public projects, state law or the owner requires bidders to list subcontractors above a threshold value on the bid form, and substitution after award is restricted; some states also have separate prime contracting for certain trades. Public owners may also set participation goals for small, minority-owned or disadvantaged businesses, which affects the bidders list and requires documented outreach (Lesson 10).

Writing scope sheets

A scope sheet tells each subcontractor exactly what to include in its price. It is the single most effective tool for reducing scope gaps and overlaps, and it makes leveling much easier because every quote should cover the same work. A good scope sheet lists the specification sections and drawings that apply, then states inclusions and exclusions that the specifications leave ambiguous, especially at the interfaces with other trades (Lessons 5 and 6 listed many of these for mechanical and electrical work).

Scope sheets should be issued early, with the invitation to quote, and updated when addenda change the work. A scope sheet that contradicts the contract documents can create its own disputes, so it should clarify and allocate, not rewrite the specifications.

Receiving and qualifying quotes

Quotes arrive by email, through bid management platforms, by phone and, on bid day, in the last minutes before closing. Each quote should be logged with the time received, the addenda acknowledged, the scope covered and the qualifications attached. Subcontractors often attach long lists of exclusions and conditions: excluded items, assumed working hours, limits on their liability, payment terms, escalation clauses for volatile materials, or reliance on the general contractor for hoisting, power, cleanup or protection.

The estimator's job is to read every qualification and decide what it costs. An exclusion of 'bonds' on a package where bonds are required means the bond cost must be added. An exclusion of 'cleanup' means the general contractor's labor will do it. An assumption that the general contractor will provide a crane for hoisting may be acceptable if a crane is on site, or may add cost if it is not. A quote that conditions its price on a specific schedule or on material prices at the time of order carries escalation risk back to the general contractor (Lesson 9).

Leveling quotes

Leveling (also called bid leveling or scope leveling) is the process of adjusting each quote so that all of them cover the same scope, allowing a fair comparison. The usual tool is a leveling sheet: a grid with the scope items down the left side and the bidders across the top. For each bidder, the sheet records whether each item is included, excluded or unclear, and for excluded items it adds a plug: the estimator's best price for that item, either from another bidder's breakdown or from the estimator's own pricing. Items a bidder includes that are not in the scope are deducted if they can be separated.

# Level four drywall and ceilings quotes (all amounts $)
base = {"Bidder A": 1_184_000, "Bidder B": 1_132_000, "Bidder C": 1_206_000, "Bidder D": 1_098_000}
# scope items: plug value used when a bidder excludes the item
plugs = {"Ceilings": 214_000, "Insulation": 38_000, "Wood backing": 22_000,
         "Firestopping at heads": 31_000, "Bond": 13_500, "Cleanup": 9_000}
excluded = {
    "Bidder A": [],
    "Bidder B": ["Bond", "Firestopping at heads"],
    "Bidder C": [],
    "Bidder D": ["Ceilings", "Wood backing", "Cleanup"],
}
extras = {"Bidder C": -15_000}       # includes painting of bulkheads, not in this package
for b, price in base.items():
    adj = sum(plugs[i] for i in excluded[b]) + extras.get(b, 0)
    print(f"{b}: base {price:>10,}  adjustments {adj:>+9,}  adjusted {price + adj:>10,}")
low = min(base, key=lambda b: base[b] + sum(plugs[i] for i in excluded[b]) + extras.get(b, 0))
print("Lowest after adjustment:", low)

Bidder A: base  1,184,000  adjustments        +0  adjusted  1,184,000
Bidder B: base  1,132,000  adjustments   +44,500  adjusted  1,176,500
Bidder C: base  1,206,000  adjustments   -15,000  adjusted  1,191,000
Bidder D: base  1,098,000  adjustments  +245,000  adjusted  1,343,000
Lowest after adjustment: Bidder B

Bidder D's quote looks lowest by $34,000, but it excludes ceilings, backing and cleanup; after plugs it is the highest. Bidder B becomes the low bidder after adding its bond and firestopping. Without leveling, the estimator would have carried Bidder D's number and been $245,000 short of the full scope on bid day.

Plugs and single quotes

When no acceptable quote arrives for a package, or only one arrives, the estimator must decide what to carry. A plug is an amount the estimator calculates from its own takeoff and unit costs, from historical cost per unit area, or from a budget price obtained from a subcontractor before bid day. A single quote may be carried as received if it is consistent with history, but a single quote that is far above history may be inflated precisely because the subcontractor suspects it is the only one. Carrying it uncritically can lose the bid; carrying a much lower plug can win a loss. The estimator should document the basis for every plug so that the project team knows which packages are exposed at buyout.

Can subcontractors withdraw their quotes?

A subcontractor's quote is an offer. Ordinarily an offer can be withdrawn before it is accepted. The difficulty is that the general contractor relies on the quote when it submits a bid it cannot withdraw. Courts have developed doctrines to deal with this reliance.

In the United States, many courts apply the doctrine of promissory estoppel to hold subcontractors to their bids. In Drennan v. Star Paving Co. (California Supreme Court, 1958), a paving subcontractor that discovered an error after the general contractor had used its bid was held to its price because the general contractor reasonably relied on it. The general contractor, however, is generally not bound to award the subcontract to the bidder it carried unless a listing statute or other rule requires it, which is one reason subcontractors resent bid shopping.

Because these doctrines vary and depend on facts, prudent practice is simple: confirm critical quotes in writing before bid day ends, ask subcontractors to confirm their price and scope after a large gap appears between them and the next bidder, and avoid relying on quotes that are obviously in error.

Bid-day practice for subcontract packages

On bid day, the leveling sheets for the main packages are updated as quotes arrive, often until minutes before closing. Efficient firms prepare the sheets in advance with plugs already filled in, so that each new quote only needs to be entered and its exclusions marked. A bid-day leader makes final carry decisions on the largest packages; others handle the smaller ones. Lesson 10 describes the full bid-day sequence; here the key disciplines are listed.

• Prepare leveling sheets and plugs for every major package before bid day.
• Log every quote with the time, addenda acknowledged and qualifications.
• Call the low bidder on major packages to confirm scope when its price is far below the next bidder.
• Record the bidder carried and the leveled amount on the estimate summary.
• Keep all quotes confidential, during and after the bid.