This is the most common conversation we have with homeowners who call us after getting multiple bids: the spread is enormous and they do not know how to interpret it. The instinct is to distrust the highest number and consider the lowest. That instinct is almost always backwards.
Bids vary for four main reasons. First, scope ambiguity — the same drawing or description is interpreted differently by different estimators. One GC prices custom cabinets; another prices stock. One includes a structural engineer; another assumes you will hire one separately. One includes permit fees; another lists them as an allowance. When you line up the bids, you are often not looking at the same project.
The low bid is not a deal
The lowest bid is most often the result of one or more of the following: assumptions that conditions are favorable (no sistering, no hidden electrical, no surprises), exclusions buried in the fine print, below-market sub pricing that depends on subs who may not show up, or a deliberately low number to win the contract with the plan to recover margin through change orders. In Philadelphia renovation, the average project has 12% to 18% in change orders. On a $60,000 bid that becomes $70,000 to $71,000 — after the surprises that a more thorough estimator already priced in.
The highest bid, if it comes from an experienced GC with a real team, typically reflects what the project actually costs when done correctly: real sub quotes, real contingency, real overhead to manage the job. The cost of a project manager who shows up every day, handles L&I, and manages six subs is real — and it is in the price of a quality GC.
How to evaluate competing bids
Ask for a line-item breakdown. Ask whether the bid includes permits, engineering, and demolition disposal. Ask what the change order process is. Ask for three references on jobs of similar scope and call them. Ask where the contingency is in the bid. A GC who cannot answer these questions clearly is telling you something about how they will manage your project when the first joist turns out to be rotten.
We have lost bids to lower numbers, and some of those clients have called us back six months later with a project in trouble. We do not say this to frighten anyone — we say it because the most expensive renovation you can do is one you have to pay twice.