A contractor receives the following bids for sitework: $125,000, $118,000, $145,000, and $95,000. The engineer's estimate was $130,000. Which bid should receive the most scrutiny?
Correct Answer
D) $95,000 - significantly below others
The $95,000 bid is significantly below the engineer's estimate and other bids, suggesting possible errors, omissions, or unrealistic pricing that could lead to problems during construction.
Why This Is the Correct Answer
The $95,000 bid is approximately 27% below the engineer's estimate and 19% below the next lowest bid, which represents a significant deviation that warrants investigation. Such a large variance typically indicates potential errors in the bid calculation, missing scope items, or unrealistic pricing that could lead to change orders, delays, or contractor financial difficulties during construction. As a general contractor, scrutinizing unusually low bids protects against future project complications and ensures the subcontractor can actually perform the work as specified.
Why the Other Options Are Wrong
Option A: $125,000 - closest to engineer's estimate
While the $125,000 bid is closest to the engineer's estimate, being close to the estimate doesn't necessarily require additional scrutiny - it suggests the bid is reasonable and well-calculated.
Option B: $118,000 - reasonable and competitive
The $118,000 bid is within a reasonable range of the engineer's estimate (about 9% lower) and falls between other competitive bids, making it appear legitimate and not requiring special scrutiny.
Option C: $145,000 - highest bid received
Although the $145,000 bid is the highest, it's only about 12% above the engineer's estimate, which is within a reasonable variance range and doesn't necessarily indicate problems that require scrutiny.
Memory Technique
Use 'LOW = LOOK OUT WIDE' - when a bid is significantly LOW, LOOK OUT for problems and investigate WIDE-ranging potential issues
Reference Hint
Florida Building Code - Administration and Enforcement, Chapter on Contract Administration and Bidding Procedures
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