The Art of Bid Leveling: How to Compare Contractor Bids
Dec 21, 2025
Here’s the scenario. You’ve received two, three, or more bids for your project. The walkthroughs, emails and budgets are all behind you, and now it’s time to select your contractor. But as you’re going over each bid, you realize how different the budgets are in each one, and they’re each structured so differently that it’s seems impossible to compare apples to apples.
How can you determine which bid will best meet your needs and budget? This guide is here to teach you the basics of bid leveling—comparing bids accurately before you make your decision, so you can be sure you’re getting the best contractor for your project.
First, a True Story
I’d just emailed a potential client a bid proposal for a 2 million dollar high-end addition to their home. This was in Bellevue, an affluent city just east of Seattle. The homeowner was very surprised at the number and said he has a competing bid that’s more than half a million dollars lower. I knew something must be off for someone to say they could do the same for that much less, so I said I’d be happy to provide a comparison of the two proposals.
I put all their budgets into my schedule of values. Their bid was organized differently than how I do mine, but nearly everything found its place. Once I had it all organized, I was struck by a huge omission: they were missing all exterior siding. There was no budget at all for anything on the exterior. I couldn’t believe they had that big of a miss!
We were dead on in many of the basic elements like framing, demo, and roofing. But they were missing a lot of the finishes that the owner had requested, such as high-end tile and expensive custom doors. I could tell they hadn’t accounted for those things because of how cheap their door budget was.
With all those issues, it was very easy to explain the difference in cost. I offered to remove over 400k in optional finishes, and jokingly said I had to keep in the siding. The next day, I had a signed contract in my inbox.
It was clear the much cheaper bid was worthless, as it didn’t include the scope for the project he was looking for as well as a major error in missed scope.
As owners, you cannot just assume that a contractor has provided you a complete bid proposal. In fact, I think this is often a big source of frustration for both parties. Homeowners think the contractor had something included that wasn’t. This leads to change orders that can enrage a client when it was thought to already be accounted for.
“Thanks for that touching tale Mark, but how do I understand if two or more proposals are truly comparable?” -You
Don’t worry: I’ve got you.
Bid Leveling
First and foremost, you need to be engaged with your project and fully understand all the details you’re asking for. Are your soffits stained or painted? Speaking of paint, do you have one color and sheen for everything or one color for the body, one for the trim, and one accent?
Those are large budget differences, so when a contractor has a line that says “Paint” you’ll need to understand what that means if it’s not clearly written out. Otherwise, you will get hammered (construction pun intended) with change orders.
The best process for comparing bids is:
Create a standardized budget. This is commonly called a schedule of values. You can use the simple excel sheet below as a starting point.
Create a bid level for understanding large discrepancies. A bid level is simply the schedule of values (SOV) with columns for comparing other contractors budgets.
*A bid level is a document that “levels” multiple bids by breaking them all down into standardized categories. A bid summary is summarizing a single bid.
This bid leveling is the same thing a general contractor does to compare sub-contractor bids on multifamily apartment and condo projects. Here’s an example:
The key to a good bid level is understanding the degree of detail, or “scope,” to which each item should be broken down. Let’s continue with our paint example.
Example 1: Paint
In the above bid level, the paint line has huge discrepancies. For almost any discrepancy like this, there are 3 possible reasons:
Bid too low (contractor knowingly or unknowingly misbid)
Scope not inclusive of spec or desired finish
Bid too high (contractor knowingly or unknowingly misbid)
Bid leveling is meant to determine which of these applies. If there is no scope of work document, that’s something to ask a contractor. A phone call or email asking to clarify scope is a great way to get the answers you are looking for. I might email something like this:
Hi Contractor, I’m in the process of comparing budgets. I’m hoping you can confirm your paint budget includes the 4 different paint colors we want on interior walls, the ceiling color/sheen, the stained doors and all exterior paint, per plans?
You get the idea. You can paint a house for much cheaper if you’re using all one color and one sheen, which you may not want. If the contractor doesn’t have this listed out it’s important to get some clarity. I would suggest going through the whole bid and gathering all of your questions so as not to bombard your contractor with multiple emails, and it’ll be easier to update your bid level when you get all the details at the same time too.
Example 2: Drywall
Let’s say you get a bid from Contractor 1 for 50k and Contractor 2 for 30k. Your first thought is that Contractor 1 seems expensive. But let’s dig in a little more. Is one of these contractors doing a smooth wall and the other a textured wall? Are they drywalling (wrapping) windows? Is it all ½” drywall or are ceilings 5/8”?
This can lead to future frustration because you’ve assumed the drywall will be smooth to match but it’s not. This is why having a specification sheet is important, so all contractors will quote on the same finishes.
Tying it all Together
Here’s another interesting recent project. When I combined all the scope into my bid level, it showed that we and the other contractor were within 0% - 10% or so on nearly every single scope item. So where was the discrepancy?
Turns out, the difference was essentially management. The competing bidder was a one-man operation. We have over 100 employees. It costs money to have a good process, and the bid leveling exercise gave the homeowner the option to pay less and knowingly have a longer schedule and tougher process or pay more and have a better process. (Ultimately, they ended up scrapping the project all together and doing something much more scaled down.)
In this case, bid leveling brought to light that the two construction companies being considered had very different business models. It’s a good reminder that along with project scope, it’s important to do a bit of research into the contractors you are requesting a bid from. You’re more likely to get competitive bids from contractors with similarly-sized operations.
Finally, sometimes you’ll find a contractor is just expensive, or doesn’t want to explain the scope in more detail. That in itself is an answer: they’re just throwing out a high bid to see if you’d take it and doesn’t actually want to engage further.
Hopefully this helps you understand how to compare contractors. In my experience, low bids are always what I focus on, because they tend to be less inclusive and have the highest risk of quality control issues. A low number means nothing in the construction industry unless you understand it.
Yes, bid leveling does takes work. I think the amount of work you put in is all related to the cost of your project. I’d definitely recommend doing bid levels for projects that are 100k or more. I assure you with every essence of my being, you’ll wish you put in this type of work before the project started if you find yourself drowning in completely avoidable change orders.