What is an unbalanced bid and how do you spot one?
Short answer
An unbalanced bid is one whose individual unit prices are far above or below what is reasonable even though the total looks competitive, often to collect money early or to profit from quantity changes. To spot one, compare each unit price with the median of all bidders' prices for that line and flag prices that fall outside a set percentage band around it.
On a unit price contract the owner pays for the quantities actually built, at each bidder's unit prices. A bidder can load high prices onto items that will be done first, such as mobilization, and low prices onto items it expects to be overrun. The total at the bid quantities still looks competitive. That distortion is an unbalanced bid.
How do you test a line for imbalance?
For each line item, take the unit prices from every bidder that priced it and find the median. Choose a threshold, such as 50%. A unit price is flagged when it is:
- above (1 + threshold) × the median, or
- below (1 − threshold) × the median.
The median is used rather than the average because one extreme price pulls an average toward itself and hides itself.
What does a worked example look like?
With a 50% threshold, four bidders priced two lines.
| Line | Unit prices | Median | Acceptable band | Flagged |
|---|---|---|---|---|
| Mobilization (1 lump sum) | 12,000; 14,000; 15,000; 48,000 | 14,500 | 7,250 to 21,750 | 48,000 |
| Asphalt (per ton) | 82; 85; 88; 31 | 83.50 | 41.75 to 125.25 | 31 |
The 48,000 mobilization price is more than three times the median, which suggests front-loading. The 31 per ton asphalt price is well below the others, which suggests the bidder expects that quantity to grow.
What should you do with a flag?
A flag is a question, not a verdict. Ask the bidder to explain the price, compare it with your engineer's estimate, and check whether quantities on the line are likely to change. Many public owners reserve the right to reject a bid they judge materially unbalanced, so read the bid documents. Unit prices normally govern over the stated total when the two disagree, so also check the arithmetic on the bid form.
The bid tabulation sheet extends each line, flags unbalanced prices against the median, and ranks responsive bids on their computed totals. To build your own price from direct cost, use the bid markup calculator.