Bid alternates are a standard feature of construction procurement that add complexity to both pricing and evaluation. Understanding how alternates work—and how to price them strategically—can improve your competitive position and win rate.
What Are Bid Alternates
Definition
A bid alternate is a separately priced option that allows the owner to adjust project scope based on budget or priorities. The owner may accept or reject alternates after receiving bids, within parameters defined in bid documents.
Purpose
For Owners
- Budget flexibility
- Scope prioritization
- Value engineering options
- Contingency planning
For Contractors
- Show pricing flexibility
- Demonstrate value
- Competitive differentiation
- Scope clarification
Types of Bid Alternates
Additive Alternates
Definition: Additional scope priced separately from base bid
Examples
- Add rooftop HVAC units
- Include parking lot repaving
- Add fourth floor buildout
- Include furniture/fixtures
Characteristics
- Base bid is complete project minimum
- Alternates add to total cost
- Owner may accept any combination
- Usually ordered by priority
Deductive Alternates
Definition: Scope reductions that lower base bid price
Examples
- Delete landscaping
- Substitute materials (VE)
- Reduce finish quality
- Eliminate optional spaces
Characteristics
- Base bid includes full scope
- Alternates reduce scope/cost
- Helps owners meet budget constraints
- Value engineering opportunity
Unit Price Alternates
Definition: Pricing for quantity variations or undefined items
Examples
- Rock excavation per cubic yard
- Additional conduit per linear foot
- Extra outlet locations each
- Contaminated soil per ton
Characteristics
- Addresses quantity uncertainty
- Risk allocation mechanism
- Fair pricing for unknowns
- Common in site work
Time-Based Alternates
Definition: Pricing for schedule variations
Examples
- Accelerated schedule cost
- Extended duration adjustment
- Phasing alternatives
- Seasonal work premiums
Characteristics
- Captures schedule value
- Risk pricing for time
- Resource allocation impact
- Less common than scope alternates
Reading Alternate Requirements
Bid Document Analysis
Key Information to Find
- Alternate descriptions and scope
- Acceptance deadline
- Evaluation methodology
- Relationship to base bid
Common Structures
Sequential Acceptance "Owner will consider alternates in order listed."
Independent Alternates "Owner may accept any combination of alternates."
Budget-Based "Owner will add alternates until budget is exhausted."
Conditional "Alternate 2 only if Alternate 1 accepted."
Scope Definition
Well-Defined Alternates
- Clear scope boundaries
- Specific drawings/specs
- Material/system identification
- Interface clarification
Poorly-Defined Alternates
- Vague scope description
- Missing details
- Ambiguous interfaces
- Unclear exclusions
When scope is unclear, submit RFIs before pricing.
Pricing Strategy
Base Bid Relationship
Strategic Considerations
- Alternates affect total price perception
- Evaluation methodology impacts strategy
- Competitor behavior prediction
- Award priority sequence
Additive Alternate Pricing
Standard Approach
- Price alternate scope at normal margins
- Include all direct costs
- Allocate appropriate overhead
- Account for risk
Strategic Adjustments
- High-probability alternates: competitive pricing
- Low-probability alternates: higher margins acceptable
- Relationship to base bid strategy
- Competitor positioning
Deductive Alternate Pricing
Common Mistake Pricing deductives at full cost, making them proportionally expensive and reducing award likelihood.
Better Approach
- Calculate true cost reduction
- Consider retained overhead
- Account for efficiency loss from deletions
- Price to make deductive attractive if it helps overall
Balancing Considerations
When Base Bid Is Strong
- Alternates can be priced at market rates
- Don't risk base position with aggressive alternates
When Base Bid Needs Help
- Aggressive alternate pricing may not save you
- Focus on base bid competitiveness
Evaluation Methods
Low Base Bid
How It Works
- Ranking based on base bid only
- Alternates priced but not used for ranking
- Owner adds alternates after determining low bidder
- Most common method
Strategy Implications
- Base bid is everything
- Alternate prices relatively less critical
- Don't sacrifice base bid for alternate positioning
Low Total Including Alternates
How It Works
- All mandatory alternates included in evaluation
- Lowest total of base + alternates wins
- Less common approach
- More complex evaluation
Strategy Implications
- Price base and alternates together
- Unbalancing between base/alternates possible
- Consider total competitive position
Best Value with Alternates
How It Works
- Qualitative factors considered
- Alternate pricing informs value assessment
- Owner discretion in acceptance
- Negotiation possible
Strategy Implications
- Total value proposition matters
- Alternate creativity valued
- Relationship building opportunity
Common Alternate Scenarios
Alternate 1 Likely Accepted
Situation: Alternate obviously funded and wanted
Strategy: Price competitively—it will affect project award
Approach: Essentially treat as part of base bid evaluation
Alternate Unlikely to Be Accepted
Situation: "Wish list" item, budget uncertain
Strategy: Price at comfortable margin—less competition impact
Approach: Don't overthink; fair market pricing
Alternates Determine Winner
Situation: Close base bids, alternates decide
Strategy: Anticipate evaluation methodology
Approach: Price alternates to optimize total competitive position
Multiple Competing Alternates
Situation: Several deductives, owner picks best value
Strategy: Make your deductives attractive
Approach: Price to show real savings while protecting margin
Documentation Requirements
Alternate-Specific Documentation
Required Elements
- Clear scope statement per alternate
- Inclusions and exclusions
- Duration impact (if any)
- Assumptions and qualifications
Best Practices
- Reference bid document alternate numbers
- State compliance or clarifications
- Document pricing basis
- Note any dependencies
Subcontractor Coordination
Getting Alternate Prices
- Request alternate pricing separately
- Clear scope communication
- Deadline for alternate submissions
- Confirmation process
Managing Uncertainty
- Subcontractors may not price all alternates
- Have backup pricing strategies
- Communication about acceptance likelihood
- Commitment timing
Alternate Acceptance Process
Post-Bid Period
What to Expect
- Evaluation period (defined in documents)
- Potential questions from owner/engineer
- Alternate acceptance decisions
- Contract negotiation
Contractor Obligations
- Hold prices for specified period
- Respond to clarification requests
- Provide additional information
- Prepare for negotiation
After Award
Contract Incorporation
- Accepted alternates become contract scope
- Clear documentation essential
- Interface resolution
- Schedule adjustment (if needed)
Rejected Alternates
- Not part of contract
- May be future change orders
- Pricing may or may not apply
- Document understanding
Special Situations
VE Alternates vs. Deductives
Value Engineering Alternates
- Contractor-proposed alternatives
- Different approach, similar result
- May save owner money
- Shows innovation
Standard Deductives
- Owner-defined scope reductions
- Simply deleting scope
- No contractor creativity
- Straightforward pricing
Time-Price Trade-offs
Acceleration Alternates
- Premium for faster delivery
- Resource and risk implications
- Clear schedule commitment
- Substantial pricing difference typical
Extension Alternates
- Reduced price for more time
- Resource efficiency potential
- Cash flow implications
- Rarely offered
Contingent Alternates
If-Then Relationships
- "If Alternate 1, then Alternate 2"
- Pricing dependencies
- Clear documentation essential
- Evaluation complexity
Conclusion
Bid alternates add complexity but also opportunity. Understanding the type of alternate, the evaluation method, and the likely acceptance scenario helps you price strategically rather than mechanically.
For most projects, the base bid remains paramount. Price alternates appropriately, but don't let alternate strategy distract from competitive base bid pricing. When alternates factor heavily into evaluation, treat them with the same rigor as your base bid.
Clear documentation, good subcontractor coordination, and strategic thinking about owner priorities will help you use alternates to strengthen rather than complicate your competitive position.
ConstructionBids.ai shows alternate requirements in bid opportunities, helping you evaluate complexity before committing estimating resources.
