How to Read a Construction Bid (Without Getting Burned)
Most homeowners and investors compare bids by total price and miss the details that actually determine whether a project succeeds. Here's what to look for.
Getting three bids is good advice. Knowing how to compare them is better advice.
We've seen clients pick the lowest number only to find that the low bidder excluded half the scope. We've also seen clients overbid by $80,000 because they didn't know which line items were inflated. Here's what separates a clean bid from a trap.
First, look at exclusions. Every legitimate bid has an exclusions section. This is where contractors list what they're not including. The most common exclusions on residential renovations: permits, design fees, unforeseen conditions (rot, asbestos, old wiring), appliances, and sometimes even specific trades like electrical or plumbing. A low total number with a long exclusions list is a warning sign.
Second, check for allowances. An allowance is a placeholder number for items you haven't selected yet — tile, fixtures, hardware, countertops. Allowances are realistic or aspirational. A $5 per square foot tile allowance on a master bath is aspirational. Ask the contractor what you actually get at the allowance number, and whether there's a preferred vendor.
Third, review the payment schedule. A front-loaded schedule (50% upfront or more) should give you pause unless you have an established relationship with the contractor. Standard residential payment terms run roughly: deposit at contract signing (10–20%), milestone payments tied to completed work stages, final payment at substantial completion.
Fourth, look at the warranty terms. A contractor who doesn't mention a warranty in their bid either hasn't thought about it or is hoping you won't ask. One year on labor is standard; some contractors offer more on specific items.
Fifth, ask about their subcontractors. On most residential renovations, the general contractor self-performs some work and subs out the rest. Know who will actually be in your home. A reputable GC maintains long-term relationships with vetted subs.
The lowest bid is only the right choice if the scope is truly equivalent. Most of the time, it isn't.
Field Notes is published by 32 Build, a licensed Chicago general contractor with 18+ years of experience in residential renovation, gut rehabs, multifamily repositioning, and commercial construction. Every article is written or reviewed by our field team based on actual project experience — not national averages or general advice.
If you have a project in mind after reading, we offer free on-site estimates for all project types across Chicago and the suburbs. Our team responds within one business day.
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