Estimating & Proposals

What Factors Should Be Considered in a Construction Bid?

Key factors to consider in a construction bid include material costs, labor expenses, equipment needs, project timeline, and overhead. Contractors must also account for profit margin, potential risks, and any project-specific requirements. Accurate bids require thorough takeoffs, supplier quotes, and clear documentation of assumptions and exclusions.

We Get It

Developing a winning bid means juggling unpredictable costs, tight deadlines, and client expectations. We know how hard it is to avoid costly mistakes that can eat into your profit or cause you to lose the job.

Understanding the Details

Main Factors in a Construction Bid

Direct Costs

  • Material costs: Itemize every material, using up-to-date supplier pricing.
  • Labor costs: Calculate crew hours by trade, factoring in overtime and union rates if applicable.
  • Equipment: Include rental fees, fuel, and operator costs for machinery.

Indirect Costs

  • Overhead: Allocate a percentage for insurance, office expenses, and project management.
  • Permits and fees: Add costs for permits, inspections, and compliance requirements.

Other Key Elements

  • Profit margin: Set a clear markup based on your business model and local competition.
  • Contingencies: Include a buffer for unexpected issues like weather delays or change orders.
  • Schedule: Realistically estimate project duration and consider liquidated damages or bonuses.
  • Exclusions/assumptions: Clearly define what is and isn’t included to avoid disputes later.

Practical Steps

How to Build a Solid Construction Bid

  1. Conduct a detailed site visit to verify measurements and uncover hidden challenges.
  2. Request updated pricing from suppliers and subcontractors for all major items.
  3. Break down labor rates by skill level and include all wage burdens (taxes, insurance).
  4. Calculate overhead and profit as separate line items to maintain clarity and transparency.
  5. List every assumption and exclusion on your bid form so clients know what's covered.

Pro Tips

  • Use historical job data to benchmark costs and avoid underbidding.
  • Review every bid with a second set of eyes for missed scope or math errors.

How EZcontractPRO Helps

A platform like EZcontractPRO helps simplify bid creation by organizing costs, managing supplier quotes, and auto-populating common exclusions so you can bid with confidence and accuracy.

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Frequently Asked Questions

What is the most important factor in a construction bid?
The most important factor in a construction bid is the accuracy of your cost estimates, especially for labor and materials. Underestimating these costs leads to lost profit, while overestimating can price you out of the job. Always use current supplier prices and real crew rates when preparing your bid.
How do you account for overhead in a construction bid?
Overhead should be calculated as a percentage of total direct costs or as a fixed amount, based on your business’s actual expenses. This includes insurance, office rent, equipment maintenance, and salaries for non-field staff. Accurately allocating overhead ensures your bid covers your true operating costs.
Why are contingencies included in construction bids?
Contingencies are included to cover unexpected expenses such as weather delays, unforeseen site conditions, or minor scope changes. Adding a contingency line—typically 5-10% of the total bid—helps protect your profit and prevents disputes over extra costs during the project.
What should be listed as exclusions in a construction bid?
Exclusions clarify what work or materials are not included in your bid, such as site utilities, permits, hazardous material removal, or client-supplied items. Listing exclusions up front prevents misunderstandings and change order disputes later in the project.
How can contractors ensure their bids are competitive and profitable?
Contractors ensure competitive and profitable bids by benchmarking against recent projects, analyzing competitors’ pricing, and updating cost data regularly. Reviewing bids for accuracy and factoring in a reasonable profit margin ensures you don’t leave money on the table or lose jobs to underbidding.

Contractor Community Q&A

Real questions from contractors like you, answered by experts and peers.

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Carlos M. Electrician • Phoenix, AZ

What's the best way to handle estimates when I don't know exact material costs until I open up the walls?

31 found helpful 2 answers
EZcontractPRO Team Official

Use allowances! Give a budget range for the unknown portion (e.g., "Electrical rough-in: $800-1,200 allowance, final based on actual conditions"). This sets expectations and protects your margin.

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Maria G.

I always add 15% contingency for remodel work. Clients understand old houses have surprises. Just explain it upfront.

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Mike R. General Contractor • Austin, TX

How detailed should my estimates be for residential remodels? I've been doing simple one-line quotes but wondering if I'm losing jobs because of it.

23 found helpful 2 answers
EZcontractPRO Team Official

Detailed estimates almost always win more jobs. Clients feel more confident when they can see exactly what they're paying for. Try breaking down by room or phase - it also protects you if scope changes mid-project.

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James P.

I switched to itemized estimates last year and my close rate went up about 20%. Takes more time upfront but worth it.

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Sarah K. Kitchen & Bath • Denver, CO

Do you guys include labor as a separate line item or bundle it with materials? Clients keep asking me to break it out.

18 found helpful 1 answers
Construction Coach Expert

I recommend showing labor separately for transparency, but bundle it if you're worried about clients nickel-and-diming your hourly rate. Either way, be consistent across all your estimates.

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