The Lowest Bid Can Be the Most Expensive

CONTRACTOR INSIGHT OF THE MONTH

The Lowest Bid Can Be the Most Expensive Job You Ever Win

Winning the bid is important.

Winning a profitable bid is what keeps a contractor in business.

Many contractors believe they need to be the lowest bidder to win commercial work. In reality, the most successful contractors focus on understanding their true costs before they submit a bid.

Too often, estimates include only labor and materials while overlooking expenses that quietly reduce profit.

Some of the most commonly missed costs include:

• Mobilization and demobilization

• Equipment transportation and fuel

• Temporary facilities and jobsite utilities

• Project management and supervision

• Storage and laydown areas

• Insurance and workers' compensation

• Prevailing wage impacts

• Certified payroll administration

• Retainage

• Contingency

• General overhead

Every one of these costs comes directly out of your profit if it isn't included in your estimate.

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REAL-WORLD EXAMPLE

A plumbing subcontractor estimated a commercial renovation project at:

Labor: $55,000

Materials: $42,000

Estimated Bid: $111,550

After accounting for labor burden, prevailing wage, mobilization, project management, temporary facilities, overhead, contingency, and profit, the true bid became:

$159,603

Difference: $48,053

That isn't the difference between being competitive and expensive.

It's the difference between earning a profit and unknowingly financing the project yourself.

Want the complete estimating guide?

Download our Commercial Estimating & Profitability Guide for a detailed plumbing subcontractor case study, a step-by-step commercial estimating walkthrough, and a checklist of the hidden costs that contractors often miss when bidding projects.