Dealing With Construction Bid Mistakes
Here’s the scenario, you’ve spent the past two weeks studying the plans and specifications for a commercial construction project. You’ve attended the mandatory pre-bid conference, done all your takeoffs, gotten all your subcontractor and supplier pricing lined up and you’ve checked and double-checked your figures and finally, you seal everything up to be submitted. The bid opening comes around and, good news, you’re the apparent low bidder. The bad news is you’re the apparent low bidder and the second lowest bidder’s amount is 30% higher than your bid. Clearly, mistakes were made. Are you going to be on the hook for providing the work for the erroneously submitted bid amount? Will you be allowed to withdraw your bid or will you have to forfeit your bid bond? What recourse do you have?
The rules and laws that apply to dealing with bid mistakes vary from state to state, locality to locality and can even differ among different agencies within the same state, county or municipality. Typically mistakes of fact on your bid will allow you to withdraw the bid without having to forfeit your bid bond. Mistakes of fact are clerical or mathematical in nature and include things like typographical errors, transposition of numbers and misplaced decimal points.
Other criteria are usually required to be met for a bid to be withdrawn in addition to the clerical error. The mistake in the bid must be the result of a clerical error, the bid has to have been submitted in good faith, there is credible evidence that can prove the clerical error with other paperwork and that the contractor notified the owner of the mistake promptly. Other requirements include it being unconscionable for the owner to enforce the contract due to the clerical error or where reliance on the bid would be detrimental to the owner. The most important thing is to notify the owner of the mistake as promptly as possible.
Ok, so we’ve covered how to handle a clerical mistake after a bid opening. What if you’ve made a mistake of judgment? Mistakes of judgment include things like inaccurately estimating the amount of labor or materials needed for a job or misinterpreting the specifications on a project. If you’ve made an error in judgment and don’t realize it until after the bid opening there is very little recourse to take at this time.
You typically will not be allowed to withdraw your bid at this point due to an error in judgment without some penalty. If you are the low bidder you will probably end up forfeiting your bid bond and could be forced to pay the difference in your erroneous bid and that of the next lowest bidder. In most instances, regardless of whether it’s public work or private work you will be allowed to withdraw or modify your bid prior to the bid date.
Estimating and submitting bids for construction work is stressful enough and no one wants to have to deal with the added stress of having to deal with trying to withdraw due to silly mistakes. The best way to do that is to never make another error on a bid you submit which of course is easier said than done.
There are some simple steps you can take to minimize the chances of making a mistake in the future. Whether it’s your first bid or your 5,000th you should have procedures in place that you follow for each job you estimate. Be sure you read and understand the bidding documents; get clarification from the architect or owner on anything that you are unsure of.
Make sure you give yourself plenty of time to review all subcontractor and supplier pricing by setting a cutoff date far enough ahead for you to review them and ensure their accuracy. Attend pre-bid meetings and site visits regardless of whether they are mandatory or not. Be sure and double check all figures and calculations and have someone else independently check those figures and calculations for you.
Estimating a project is hectic work but by gathering all the necessary information and taking the time to check and double check your bid for mistakes you can greatly decrease the chances you’ll have to deal with bid errors after putting in all those hours of hard work.