Bid-Day Scope Gaps and Contingency Pressure
A general contractor is preparing a lump-sum bid for a 6,000-square-foot tenant fit-out in a leased strip mall. The bid is due Friday at 5 p.m. On Thursday the estimator finds that the mechanical subcontractor’s quote excludes roof curbs and crane rental for two rooftop units, and the electrical quote excludes fire-alarm modifications required by the landlord’s base-building specifications. The GC’s own takeoff also missed 1,800 square feet of gypsum board shown only on the reflected ceiling plan. The GC has a $35,000 contingency and a 90-day bid-validity requirement. The owner’s representative calls and asks for a “best and final” number by the deadline, saying the low bidder will be selected that night. The GC’s owner wants to submit the low number and “make it up in change orders,” but the estimator is uneasy.
1. Should the GC use the $35,000 contingency to absorb the missing scope? Explain your reasoning.
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No. The $35,000 contingency is for unknown conditions or owner-directed changes, not for scope the estimator can now identify. The missing roof curbs, crane rental, fire-alarm modifications, and 1,800 square feet of gypsum board are definable base-scope gaps. Using contingency to absorb them hides the true bid price and consumes the risk reserve. The GC should price those items explicitly or qualify the bid. If it submits the low number and plans to “make it up in change orders,” it is betting that the owner will pay later; the owner may refuse, and the GC may have to perform at a loss or default. The contingency should remain available for unforeseen field conditions, not used to cover known estimating errors.
2. What bid-day actions and written qualifications should the estimator take?
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Bid-day actions:
- Send written RFIs to the mechanical and electrical subs and get revised quotes or written exclusions.
- Add the 1,800 square feet of gypsum board to the takeoff and confirm the ceiling bulkhead detail.
- Price roof curbs and crane rental as a separate line or alternate; clarify whether the landlord or tenant owns fire-alarm modifications.
- Submit a written qualifications page listing assumptions and exclusions, even in a best-and-final request.
- If the owner will not accept qualifications, request a short extension or decline to bid rather than submit an unqualified low number. The estimator should document every assumption. A low bid that depends on post-award change orders is not a complete bid.
3. If the GC wins with the low bid and later seeks change orders for these items, what risks arise?
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Post-award risk: If the GC wins with the low number and later seeks change orders, the owner may reject them as included scope. The GC then faces a choice between performing at a loss, filing a claim, or stopping work. The owner may also argue the GC breached its duty to bid accurately. Public owners may be stricter and may treat qualifications as nonresponsive. The better course is to resolve the gaps before submission or price them. If the GC already submitted, it should raise the issues immediately in writing, provide backup, and negotiate a written change order before performing the extra work. Silence and later claims weaken the position.