Bid leveling is the process of adjusting received bids to enable accurate comparison when bidders have interpreted scope differently or included different items. Without proper leveling, you risk selecting bids that appear low but actually contain scope gaps.
This guide covers bid leveling fundamentals, systematic processes, and best practices for making sound comparisons and award decisions.
Why Bid Leveling Matters
Bids rarely arrive perfectly comparable, even with detailed bid documents.
The Comparison Challenge
Differences arise from:
Scope Interpretation
- Different understanding of requirements
- Varying assumptions about inclusions
- Interpretation of specifications
- Drawing discrepancies
Bidding Practices
- Different exclusion conventions
- Qualification language
- Allowance treatments
- Unit price approaches
Strategic Positioning
- Intentional scope gaps
- Front-loading strategies
- Risk allocation differences
Consequences of Poor Leveling
Inadequate bid leveling leads to:
- Selecting bids with hidden gaps
- Unexpected change orders
- Cost overruns during construction
- Disputes over scope responsibility
- Relationship damage
Benefits of Proper Leveling
Effective leveling enables:
- True cost comparison
- Informed selection decisions
- Reduced change orders
- Better buyout negotiations
- Clearer scope expectations
The Bid Leveling Process
Follow a systematic approach to level bids effectively.
Step 1: Define Complete Scope
Before comparing bids, establish what's required:
Review Documents Thoroughly
- Study all specification sections
- Review all drawings
- Note interface requirements
- Identify scope boundaries
Create Scope Checklist
- List all required items
- Include obvious and subtle requirements
- Note coordination requirements
- Identify owner-furnished items
Step 2: Initial Bid Review
Review each bid systematically:
Check Compliance
- All required forms complete
- Signatures present
- Addenda acknowledged
- Required attachments included
Identify Structure
- How is bid organized?
- What's included in base price?
- What exclusions are stated?
- What qualifications are noted?
Flag Obvious Issues
- Missing items
- Clear exclusions
- Unusual qualifications
- Price anomalies
Step 3: Scope Mapping
Map each bid against your scope checklist:
Create Comparison Matrix
| Scope Item | Bidder A | Bidder B | Bidder C | |-----------|----------|----------|----------| | Item 1 | Included | Included | Excluded | | Item 2 | Included | Allowance | Included | | Item 3 | Qualified | Included | Included | | Item 4 | Excluded | Excluded | Included |
Document Status
- Clearly included
- Included with qualification
- Included as allowance
- Excluded
- Not addressed (ambiguous)
Step 4: Clarification
Address ambiguities before adjusting:
Seek Clarification
- Contact bidders with questions
- Request written responses
- Clarify scope interpretations
- Confirm pricing basis
Document Responses
- Keep written records
- Note clarification dates
- Maintain all communications
- Update comparison matrix
Step 5: Price Normalization
Adjust prices for true comparison:
Add for Missing Scope
- Estimate cost of excluded items
- Add to bid for comparison
- Document adjustment basis
- Consider multiple scenarios
Adjust for Allowances
- Compare allowance amounts
- Adjust to consistent level
- Note remaining risk
Normalize Qualifications
- Evaluate qualification impact
- Estimate added cost if applicable
- Adjust comparison accordingly
Step 6: Comparison Analysis
Analyze normalized results:
Create Leveled Summary
| Bidder | Raw Bid | Adjustments | Leveled Bid | |--------|---------|-------------|-------------| | A | $1,000,000 | +$50,000 | $1,050,000 | | B | $1,050,000 | +$10,000 | $1,060,000 | | C | $1,080,000 | $0 | $1,080,000 |
Analyze Results
- Compare leveled totals
- Consider remaining differences
- Evaluate risk positions
- Assess qualitative factors
Common Leveling Scenarios
Handle typical situations effectively.
Stated Exclusions
When bidders exclude items:
- Identify the excluded scope
- Obtain pricing for excluded item separately if possible
- Estimate cost if pricing not available
- Add to bid for comparison
Allowances
When bidders use allowances:
- Compare allowance amounts
- Evaluate if allowance is adequate
- Adjust to common baseline
- Note remaining risk
Qualifications and Conditions
When bids contain conditions:
- Evaluate the condition's likelihood
- Estimate cost impact
- Consider risk transfer implications
- Adjust or note as appropriate
Different Units or Formats
When bids use different structures:
- Convert to common format
- Ensure equivalent scope covered
- Extend unit prices to totals
- Verify quantities used
Substitutions
When bidders propose substitutions:
- Evaluate substitution acceptability
- Consider performance differences
- Adjust for value differences
- Document comparison basis
Advanced Leveling Techniques
Sophisticated approaches for complex situations.
Risk-Adjusted Comparison
Account for risk differences:
Identify Risk Factors
- Contract terms exceptions
- Schedule assumptions
- Performance qualifications
- Financial conditions
Quantify Risk
- Estimate potential cost impact
- Apply probability weighting
- Calculate risk-adjusted values
Lifecycle Cost Analysis
Consider long-term costs when relevant:
- Operating cost differences
- Maintenance implications
- Durability variations
- Energy efficiency factors
Weighted Factor Analysis
For complex selections:
| Factor | Weight | Bidder A | Bidder B | Bidder C | |--------|--------|----------|----------|----------| | Price (leveled) | 40% | 95 | 90 | 85 | | Scope completeness | 25% | 80 | 95 | 100 | | Experience | 20% | 90 | 85 | 90 | | Risk profile | 15% | 75 | 90 | 95 | | Weighted Total | | 87.75 | 90.25 | 91.25 |
Documentation Requirements
Proper documentation supports decisions.
What to Document
Leveling Process
- Methodology used
- Clarification requests and responses
- Adjustment calculations
- Assumptions made
Comparison Results
- Raw bid amounts
- Adjustments applied
- Leveled comparisons
- Ranking and analysis
Selection Rationale
- Basis for selection
- Factors considered
- Trade-offs evaluated
- Final decision justification
Why Documentation Matters
- Supports selection decision
- Enables review and audit
- Protects against challenges
- Provides historical reference
Common Mistakes to Avoid
Learn from frequent errors.
Insufficient Scope Definition
Mistake: Starting leveling without clear scope understanding.
Prevention: Thoroughly define required scope before comparing bids.
Assuming Completeness
Mistake: Assuming bids are complete without verification.
Prevention: Systematically check each bid against scope checklist.
Ignoring Qualifications
Mistake: Overlooking qualifying language in bids.
Prevention: Carefully review all terms and conditions for qualifications.
Inadequate Clarification
Mistake: Making assumptions instead of seeking clarification.
Prevention: Ask bidders to clarify ambiguities before adjusting.
Single-Factor Focus
Mistake: Leveling only for price without considering other factors.
Prevention: Consider risk, quality, and other relevant factors.
Frequently Asked Questions
How much time should bid leveling take?
Depends on complexity. Simple trades may take 1-2 hours. Complex scopes with multiple bidders may take days. Invest time proportionate to contract value and risk.
Should I level all trades or just large ones?
Focus effort on significant subcontracts. Quick review for small trades, thorough leveling for major scopes. Risk and value should drive effort level.
What if all bids exclude the same item?
Review your bid documents for clarity. If consistently excluded, the requirement may be unclear. Consider whether scope belongs in this trade.
Can I ask bidders to revise their bids after leveling?
Depends on procurement rules. Public competitive bidding typically prohibits post-opening changes. Private and negotiated procurement may allow discussions and revisions.
How do I handle a bidder who won't clarify their scope?
Document your interpretation and assumptions. Consider risk of selecting that bidder. Evaluate whether the uncertainty warrants disqualification or risk adjustment.
Conclusion
Effective bid leveling is essential for making informed selection decisions. By systematically comparing scope coverage, adjusting for differences, and documenting your analysis, you can select bidders who truly offer the best value rather than just the lowest apparent price.
Invest appropriate time in leveling based on contract value and risk. The effort prevents costly surprises during construction and builds foundation for successful project relationships.
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