Why the Lowest Bid May Not Result in the Lowest Cost

building plans calculator

At Live Oak Contracting, we understand that cost is a driving factor behind any construction project. When bidding out a project, the lowest bid always seems the most attractive, but it doesn’t always lead to the lowest final costs.

The Low Bid Process Can Lead to Inaccurate Bids

If a contractor knows at the outset that the client is bound to accept the lowest bid presented, then he or she may provide a “bare bones” estimate of the job costs simply to get the contract. This estimate may not include:

  1. an adequate profit margin to ensure that the most experienced personnel are assigned to your project.
  2. an estimate of costs sufficient to complete the project within the projected timeline.
  3. a contingency fund large enough to handle minor problems, errors, or client changes.

Only 56 percent of the projects awarded on a low-bid basis are completed on time, according to a recent industry study. Delays are caused by inexperienced personnel, a continuous stream of change orders for every change or decision made along the way, and the very real possibility that subcontractors may go out of business when profit margins are not high enough to ensure stability.

Additionally, of the projects awarded on a low-bid basis, only 41 percent were on budget, which means the majority of the initial low bids were inaccurate from the start.

The Viable Alternative to Automatically Accepting the Lowest Bid

With the issues associated with automatically accepting the lowest bid, we recommend that clients take a closer look at each bid, examine the content, and question how the contractors arrived at their number. Often bids that are drastically lower than the others can indicate a calculation error, missing items, or incorrect assumptions made on the part of the contractor. Developers should also select a contractor that will deliver the highest quality project on time and within the initial budget. Look for companies with the following:   

  1. long term experienced employees receiving adequate wages resulting in quality construction and minimal errors.
  2. a proven track record of high performance including delivering projects on time and within the initial budget.
  3. state of the art technology in the bidding process to ensure the initial bids are as accurate as possible and complete.

For accurate estimates, contact us at Live Oak Contracting. We are honest, helpful industry experts who specialize in delivering accurate, complete cost estimations for each of our projects. Visit our services page or call our office at 904-497-1500 for more information.

Share this post

Related Posts


About Live Oak Contracting

Live Oak Contracting believes in building long term partnerships based on integrity. From our Clients to our team of professionals, we incorporate a collaborative approach to every project, ensuring the highest quality product delivered on time and in budget.

Sign up for our Newsletter

Although the information below is not required, we would love to know just a little more about you to better tailor our content to your needs.
This field is for validation purposes and should be left unchanged.