A $51,300 Pricing Error Discovered Two Days After Bid Opening
You are chief estimator for a 60-person masonry contractor. On a $2.85 million public school bid, your company is low at $2,847,000; the second bidder is $2,912,000 and the engineer's estimate is $2,930,000. Two days after opening, while assembling contract documents, you discover that the unit price for 8 in. CMU was keyed into the pricing spreadsheet as $1.28 per block instead of the $1.82 in the supplier quote. The quantity, 95,000 block, is correct. The error is $51,300. Corrected, your bid is $2,898,300 - still low, but your margin is nearly zero and the job goes cash-negative in months three and four. The owner's representative says, 'A bid is a bid - you're stuck with it,' then adds that there is a $6 million middle school coming in the spring 'if you handle this the right way.' Your president asks whether you can 'just find a cheaper block supplier and make it work.' Nothing has been signed yet.
1. What do you do in the first 48 hours, and what options are realistically available?
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Notify in writing, immediately, and before anyone signs: tell the owner's representative and the CM that you have found a clerical error, identify it precisely, attach the supplier quote and the pricing sheet, and state the corrected number. Do not sign the contract while asserting the error, and do not let it sit - prompt notice is the factor that most often decides these cases.
Then weigh options honestly. The error is $51,300, about 1.8% of the bid, and even corrected you are still low, so a claim that the bid is unconscionable is weak. Relief for a unilateral mistake typically requires a clerical rather than judgmental error, materiality, prompt notice, and no prejudice to the other party. Against that, refusing to sign puts the 5% bid security - about $142,000 - at risk, far more than the error itself.
Realistic paths: perform at the corrected price and manage margin and cash flow, or ask the owner voluntarily to accept the corrected figure or release you. Asking is legitimate. Misstating the numbers is not.
2. How do you respond to the 'middle school in the spring' comment?
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Decline it, politely, in writing. The suggestion trades a present loss for a speculative future award, and it is ethically compromised: it invites you to accept a contract you know is underwater in exchange for a favor, and it places the owner in a position to extract concessions with implied future work.
Nothing about that arrangement is enforceable. The future school is not a contract, and if it is publicly bid, award must go to the lowest responsible bidder, not to whoever absorbed a loss on the last one. It is also a performance risk on the current job: a contractor working at zero margin cuts supervision, staffing and quality, and those failures damage prequalification standing far more than losing a $2.8 million bid.
State your position plainly: you will perform the work you bid, at the price you bid, to the specified quality, and you will resolve the error through the proper process - written notification and negotiation - not through an informal trade of favors.
3. How do you answer the president's suggestion to find a cheaper block supplier?
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Answer it directly: substituting material to recover an estimating error is not cost control, it is a change to the work.
A different block is acceptable only if it is equal or better and approved by the architect: same specified compressive strength with ASTM C90 verification, same fire-resistance rating and equivalent thickness, same moisture content limits, and available in the quantities and delivery window required. Unapproved substitution, cutting grout or reinforcement, or shaving supervision to recover $51,300 shifts risk to the owner and creates a defect you will be back to fix at your own cost.
The legitimate levers are commercial: renegotiate the block and brick quotes, review crew size and productivity assumptions, negotiate a payment schedule that solves the months three and four cash problem, or propose value engineering openly with a change order. Then fix the cause internally - a second-person review of every unit price at bid close, a check of the ten largest cost items, and a bid-closing cutoff 24 hours before the deadline.