Why Are Contractor Bids for the Same Project So Different?
Even when builders are working from the same plans, their proposals can differ based on what they include, what they assume, and how they price the project.
The most common reasons include:
- Different scope: One builder may include site preparation, utility connections, drainage, and landscaping while another does not.
- Different allowances: Contractors may budget different amounts for flooring, cabinets, fixtures, appliances, and other selections.
- Estimate vs. fixed price: An estimate is a projection that can change, while a fixed-price proposal provides a defined price based on an agreed-upon scope.
- Different contingencies: Some builders account for potential unknowns while others address those costs later.
- Different levels of service: Project management, supervision, communication, insurance, warranties, and other services all have real costs.
The important question isn’t simply “Which builder is cheaper?”
It’s “What am I getting for the price?”
What Is an Allowance in Construction?
A construction allowance is a budget amount included in a proposal for an item that hasn’t been selected yet.
For example, if you haven’t chosen your kitchen faucet or flooring, your builder may include an allowance for those items.
Allowances are normal, even necessary, particularly early in the design and construction process. The important thing is whether they are realistic.
A proposal with unusually low allowances can make the total price look attractive, but if your actual selections cost more, the difference will eventually show up in your final cost.
When comparing bids, ask each builder for their allowance schedule and compare the amounts—not just the total project price.
What Should Be Included in a Builder’s Quote?
A detailed builder proposal should clearly explain the scope of work, what is included and excluded, allowances, project costs, scheduling, payment terms, change orders, and warranty responsibilities.
When comparing bids, run each one against this checklist:
- A written scope of work describing what’s included and what isn’t
- An allowance schedule with a dollar figure against each undecided item
- Permits and fees, stated as included or excluded
- Site costs: excavation, drainage, utility connections, access
- A project schedule with start and completion targets
- A payment schedule tied to stages of work
- The change order process — how variations get priced and approved
- Warranty terms and what happens after handover
- Proof of license, bond, and insurance
If two quotes are significantly different, go through these items carefully. The gap is almost always sitting in three or four of these lines, not in the builder’s margin.
