An optional scope reduction priced separately so the owner can cut it from the project if needed to save money.
A deductive alternate is a separately priced bid item representing a scope reduction that the owner may remove from the base bid to reduce project cost. Bidders price the deduction independently so the owner can evaluate cost savings from scope reductions. Deductive alternates are used when the budget may be insufficient to fund the full base scope.
Deductive alternates let owners keep a project within budget by removing scope after seeing real bid numbers, and how a contractor prices them can decide award outcomes. Estimators must price the deduction at true cost savings, including lost overhead and any inefficiency from removing the work, not just the bare scope value. Aggressive or sloppy deductive pricing can swing the apparent low bid and create margin problems if accepted.
Facing a tight budget, an owner takes a deductive alternate removing the site's decorative paving, and the estimator prices the deduct to reflect not just the paving cost but the overhead and mobilization that no longer apply.
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