Reading a Final Construction Bid

A construction bid is the most important document you'll sign other than the contract itself. Most clients glance at the bottom number and miss the structural detail that determines what their project will actually cost, when it will finish, and where the painful surprises will land.

Here's how to read one properly.

Start with the structure

Every credible construction bid has the same structural elements:

• Title page with project name, address, date, builder, version
• Scope summary (what's included)
• Exclusions list (what's NOT included — critical)
• Schedule of values (line-item breakdown by trade)
• Allowance items list (with allowance amounts)
• Owner-provided items (work or materials the owner is providing)
• Contingency line
• Builder fee (overhead and profit)
• Total contract sum
• Schedule (start date, milestone dates, target completion)
• Terms and conditions reference

If your bid is missing any of these sections, it's not a complete bid — it's a price estimate. Ask for the full version before you go further.

Read the exclusions list first

The exclusions list is the most underread section of any bid and the source of most post-signing surprises. It's where the builder lists everything that's NOT part of their scope — meaning you'll pay separately.

Common exclusions to watch for:

• Landscape design and installation
• Window treatments and motorized shades
• Final cleaning beyond construction clean
• Pool, spa, outdoor kitchen
• Audio/video equipment beyond pre-wire
• Specialty appliances (wine refrigeration, espresso, ice maker)
• Furniture, art, accessories
• Property tax during construction
• Insurance during construction (sometimes)
• Utility deposits and connection fees

Each of these can be tens of thousands of dollars. A bid that excludes landscape on a 1-acre lot is hiding $50K-$150K from your headline number. Read carefully.

Allowance items — the most-abused line

Allowances are placeholder budgets for items not yet specified. They're necessary — you don't always know the exact countertop you'll pick at bid time — but they're also the easiest way for a builder to make a bid look cheaper than it really is.

For each allowance, ask: is this allowance reasonable for the spec we'll actually pick? Use real numbers:

• Cabinets: budget $400-$1,200/linear foot installed. A $60K cabinet allowance on a kitchen with 65 LF of cabinets allows for $920/LF — reasonable for mid-luxury
• Tile: budget $20-$80/sf installed for typical luxury
• Plumbing fixtures: budget $400-$2,000+ per fixture
• Light fixtures: budget $50K-$200K for a 5,000 sf custom
• Appliances: budget $30K-$150K depending on brand level
• Hardware: budget $5K-$15K
• Landscape: budget $50K-$300K depending on scope

If allowances are below these ranges, you'll exceed them. Plan accordingly — or push the builder to increase the allowance now so the headline number reflects reality.

An allowance that's too low isn't a savings. It's a deferred bill the builder is letting you ignore until contract day.

Owner-provided items

"OFCI" (owner-furnished, contractor-installed) and "OFOI" (owner-furnished, owner-installed) line items are work the builder isn't pricing because you're handling it.

Common: appliances, certain plumbing fixtures, electronics. The risk: if the OFCI item arrives late or damaged, the builder's schedule is affected and you may eat the delay costs. Specify clearly what's OFCI vs. CFCI (contractor-furnished, contractor-installed).

The contingency line

Should be 5-10% of construction cost for new construction, 10-15% for renovation. Higher is fine. The contingency line is your insurance against unknowns — soil surprises, weather delays, material supply issues, scope changes.

How the contingency is managed matters as much as its size. Ask:

• Does the contingency require your sign-off before each use?
• If unused, is it returned to you or retained by the builder?
• How is it reported on monthly draws?

The schedule of values

The line-item breakdown by trade and phase. This is the document the bank inspector will use to verify draws. Look for:

• Reasonable distribution across trades (no single trade more than 25% of the total)
• Specific descriptions, not vague categories ("HVAC equipment and installation, including Trane XR16 5-ton system with 3 zones, ductwork, controls")
• Line item costs that match your independent gut check from other quotes
• Builder fee (overhead and profit) explicitly listed, typically 15-20% of construction cost

Red flags that should give you pause

• Bid is 20%+ lower than other bids on the same project
• Allowances above 20% of total contract value
• Vague language: "builder's standard," "per industry norm," "to match existing"
• No contingency line, or contingency below 5%
• Builder fee buried inside line items rather than broken out
• No exclusions list (means everything is "included" until they discover it isn't)
• Schedule with no specific dates or milestones
• Lien waiver process not described

A great bid is a contract before the contract. Read it like one. Walk every line, ask every question, get every clarification in writing. The hours you spend reading the bid save the months you'd otherwise spend disputing the construction.

— Margaret Larsen, COO. Eighteen years guiding clients from first conversation through groundbreaking — budgets, contracts, permits, financing. Get the free Ultimate Home Building Checklist for the field-tested list we walk every Angel home through.