Three bids for the same build-out can arrive tens of thousands of dollars apart, and the cheapest one can still be the most expensive way to build the project. That is not cynicism. It is arithmetic. A bid is only a price for what it includes, and bids that look comparable on the total line routinely include very different projects. The checklist below is how we would read three competing bids if we were the tenant.
Step One: Compare Scope Before Price
Ignore the totals until you have listed, for each bid, what is confirmed and what is excluded. Confirmed scope is written down with quantities and specifications. Excluded scope hides in three places: the exclusions section, allowance items, and silence, work the bid simply never mentions. Silence is the dangerous one, because unmentioned work does not disappear. It comes back mid-project as a change order, priced without competition, when you have no leverage left.
| Line item | What to confirm in every bid |
|---|---|
| Demolition and haul-off | Included, or excluded and assumed done by others |
| MEP work | Scoped by a real site walk, or carried as an allowance |
| Permits and plan review | Who submits, who pays fees, who responds to comments |
| Code-triggered work | Accessibility, egress, and fire scope named, not assumed away |
| Finishes | Specified products, or allowance numbers per square foot |
| General conditions | Supervision, dumpsters, protection, cleanup stated explicitly |
| Closeout | Inspections, punch list, lien waivers, and warranty terms |
Allowances vs Lump Sums
An allowance in a bid is a placeholder, not a price: the contractor is saying they do not yet know what this costs, so they have penciled in a number. A bid heavy with allowances is cheap to write and easy to win with, because every allowance can be set optimistically. The question to ask is why the number is still unknown. An allowance on finish selections you have not made yet is legitimate. An allowance on the electrical scope of a space the contractor could have walked is a bid that was never really priced, and the gap will surface after demo, as change orders. Prefer the bid with fewer allowances, and ask the low bidder to convert their allowances to committed pricing before you compare totals.
Draw Schedules and Payment Terms
The payment schedule tells you how the project will feel. A reasonable structure ties draws to completed milestones (mobilization, rough-in, inspections passed, substantial completion) with a retainage held to closeout. Be careful with front-loaded schedules that put a large share of the contract price ahead of meaningful work: they remove the contractor's incentive to finish, and they are a classic mark of thin operating cash. Payment terms also need to line up with your TI allowance mechanics, since most landlords reimburse against invoices and lien waivers, a contractor who cannot produce clean draw paperwork slows down your own reimbursement.
Change-Order Pricing Terms
Change orders are where a lowball bid earns its money back, so the pricing terms for changes belong in the comparison, not just the base price. Look for the markup percentage on changed work, whether changes require your written approval before work proceeds, and whether unit prices for likely additions are locked in the contract. A contractor confident in their scope will commit to these terms in writing. One who resists is telling you where they plan to make their margin.
Written Scope
Planning this type of project?
Tell us your space, city, and timeline. We return a written scope with lump-sum pricing, no obligation.
Verify Insurance Before You Sign
- Ask for a current certificate of insurance sent directly from the contractor's agent, not a PDF from the contractor
- Confirm general liability limits that fit the project. We carry $1M GL + $1M Umbrella, and your landlord's work letter will state its own minimums
- Confirm workers compensation coverage, and ask how uninsured subcontractors are handled
- Have your business and your landlord named as additional insureds where the lease requires it
Red Flags of a Lowball Bid
- A total well below the others with no scope explanation for the gap
- A bid produced without walking the space
- Allowances covering scope that was knowable at bid time
- Permits excluded, priced by others, or waved off as unnecessary
- A one-page proposal against competitors' itemized scopes
- Front-loaded payment terms and vague change-order language
- Pressure to sign quickly, before the numbers can be compared properly
None of these alone proves bad faith, but each one shifts risk from the contractor's side of the table to yours, and a bid carrying several of them is not the same product as a complete bid at a higher number. When you level the scopes, convert the allowances, and price the risk, the spread between bids usually shrinks dramatically. What remains is the real comparison.
Free Plan and Bid Review
Deciding between bids, or want a second set of eyes on your drawings before you commit? We review plans and competing scopes for DFW tenants at no charge and tell you plainly what is missing, what is underpriced, and what will come back as change orders. Start with a free plan review or call (469) 721-0146.
Frequently Asked Questions
Common questions about this topic from DFW tenants, landlords, and business owners.
Why are commercial bids for the same project so far apart?
Because they are rarely bids for the same project. Differences in confirmed scope, exclusions, and allowance assumptions mean the totals describe different amounts of work. Level the scopes line by line first, the true spread is usually much smaller than the headline gap.
Are allowances in a bid a bad sign?
Not automatically. Allowances are legitimate for selections you have not made yet. They are a warning sign when they cover scope the contractor could have confirmed with a site walk, because those numbers are guesses that resolve as change orders after you have signed.
What should a draw schedule look like?
Payments tied to completed milestones with retainage held to closeout. Be wary of schedules that front-load a large share of the price before meaningful work, and confirm the paperwork supports your TI reimbursement, since landlords reimburse against invoices and lien waivers.
How do I verify a contractor's insurance?
Request the certificate directly from the contractor's insurance agent, confirm general liability and workers compensation limits against your landlord's requirements, and have yourself and the landlord added as additional insureds where the lease calls for it.
Should I just take the lowest bid?
Take the lowest complete bid. A low number built on thin scope, optimistic allowances, and aggressive change-order terms routinely finishes above the highest honest bid. Price the whole contract, scope, allowances, payment terms, and change pricing, not the total line.
About the author
Yelp
General contractor, Royse City, TX
Commercial tenant improvement, build-out and renovation, and residential outdoor living, fencing, additions and high-end kitchens and baths across Dallas-Fort Worth and East Texas.