When the estimator is out of the ballpark high on a bid the question, “Was my bid the right number?” needs to be answered. A double check of how the estimate was put together is in order.
One item that needs to be looked at is checking to ensure the addition/multiplication of the estimate is correct throughout the entire bid. Even though spreadsheets are great, mistakes can or will crop up.
Direct costs such as quantities, labor rates, and material pricing need to be checked for inaccuracies. Vendor quoted items and subcontractor proposals should be re-examined and verified the low numbers was used at bid time with no overlapping of scope.
Indirect dollars and costs like overhead, profit, contingency, and escalation needs to be reviewed to ensure these items were in line with the project scope. If everything appears to be correct, then the problem can exist outside the company and estimator’s control.
Having good relationships in the construction industry can be a key in solving the mystery of why you were high. Rumors can spread faster than a wild fire, but there may be some truth to what you hear. The other contractors may have tried to buy a job or beat down the subcontractor prices, both of which cause problems for everyone involved at bid time and then during construction.
You may have the “right number” to do the work and make a profit which is what every contractor is in business for. I was high 40% high on a bid a few years ago against two other contractors. There was a crazy bar bet between the owners of the other two companies I bid against that they would be low so they tried to buy the job. Both bid the job below my cost.
