How do you level subcontractor bids?
Short answer
List every scope item the trade should include, give each a plug value you estimate yourself, and mark each subcontractor's bid Included, Excluded or Qualified for every item. Add the full plug value for each exclusion and a share of it for each qualification to the base bid. The lowest leveled bid, not the lowest base bid, is the fair comparison.
Subcontractors rarely bid the same scope. One includes temporary power, another leaves out permits, a third qualifies the fire alarm. Leveling puts the bids on an equal footing before you compare prices.
How does the leveling calculation work?
For each scope item, you decide a plug value: your own estimate of what the item costs if the subcontractor left it out. Then, for each bid and each item:
- Included adds nothing.
- Excluded adds the full plug value.
- Qualified adds the plug value × a qualified factor, such as 50%, that reflects how much of the item the qualification leaves you to cover.
Leveled bid = base bid + the sum of those adjustments. Rank the leveled bids, lowest first.
What does a worked example look like?
Three electrical subcontractors bid. Your plug values are fire alarm 18,000, temporary power 6,500, permit fees 4,000 and trenching 9,000.
| Subcontractor | Base bid | Exclusions and qualifications | Adjustment | Leveled bid |
|---|---|---|---|---|
| A | 412,000 | None | 0 | 412,000 |
| B | 398,500 | Fire alarm excluded; temporary power qualified | 18,000 + 6,500 × 50% = 21,250 | 419,750 |
| C | 421,000 | Permit fees excluded | 4,000 | 425,000 |
Subcontractor B has the lowest base bid and the second-lowest leveled bid. After leveling, A is 7,750 below B and 13,000 below C. The ranking changes because B left out work that you would otherwise have to pay for.
Where do the plug values and the factor come from?
They are your estimates, not market quotes. Price each missing item from your own historical costs or a quick quote, and set the qualified factor to match how you price a qualification. The factor is an assumption, not a rule.
What does leveling not check?
Leveling covers only the scope items on your list. It does not test a subcontractor's qualifications, schedule, insurance or bonding, so review those separately before awarding.
The subcontractor bid leveling sheet holds an 18-item scope checklist for four subcontractors. To compare general contractors' bids on unit prices instead, see the bid tabulation sheet.