A breakdown of what contractor proposals typically include and how to read between the lines
Introduction
Once contractor bids start coming in, the next step is understanding what you’re looking at. Bids can vary in format, level of detail, and pricing structure, even when the scope is the same. This page explains how to interpret different types of contractor bids, what to look for, and how to spot missing or vague information that could lead to surprises later.
Common Bid Formats
There’s no universal standard for how contractors format their proposals. You might receive:
- Detailed Line-Item Bids – Break down labor and materials by scope (framing, electrical, flooring, etc.)
- Lump-Sum Bids – Provide one total price for the whole job with a basic description of what’s included
- Hybrid Bids – Include a few specific line items plus allowances for the rest
The format depends on how the contractor estimates and how complete your scope or plans are. None of these formats are necessarily better, but the more detail you get, the easier it is to compare bids and avoid scope gaps.
Typical Components of a Contractor Bid
Most complete proposals will include the following elements in some form:
- Cover Letter or Summary – A short intro, sometimes with assumptions or qualifications
- Scope of Work – A written description of what’s included
- Exclusions – A list of what’s not included in the price
- Allowances – Budget placeholders for items not yet selected
- Unit Pricing – Price per square foot or per fixture (optional, but helpful for future changes)
- Schedule Estimate – A rough timeline or duration for the project
- Payment Terms – When payments are due and how they’re structured
- Warranty Information – Duration and coverage of the contractor’s warranty
- License & Insurance Info – Proof of qualifications and coverage
Allowances and How They Work
If you haven’t selected every product or finish yet, the contractor will likely include an allowance, a placeholder amount set aside in the budget for items like flooring, tile, lighting, or countertops.
Example:
- “Tile Allowance: $8/sf material cost (labor included separately)”
- “Cabinet Allowance: $12,000 (includes installation)”
These are normal, but it’s important to check whether the allowance reflects your actual taste and market pricing. Low allowances can lead to change orders or budget overruns later.
Finishes and Fixtures: How They’re Priced in Bids
Finishes are one of the most flexible (and expensive) parts of a construction project. Every contractor handles them differently. You might see:
- Itemized finishes – Where specific products (with links or SKUs) are listed and priced into the bid
- General descriptions with allowances – “$7/sf tile,” “$1,500 for plumbing fixtures,” etc.
- Owner-supplied finishes – Labeled as “by owner,” meaning you’ll purchase them separately
Here’s why this matters:
- A vague line like “bathroom finishes included” doesn’t tell you what you’re getting
- If you don’t see brands, price ranges, or SKUs, ask what the bid assumes
- Owner-supplied items may save money, but can cause delays or coordination issues if expectations aren’t clear
Tip: Ask the contractor to clarify what’s included for key finish categories: flooring, tile, plumbing fixtures, lighting, cabinetry, and countertops.
Exclusions: What’s Not Included
Almost every bid has exclusions, and that’s normal. The important part is making sure you know what they are, and how they compare across contractors.
Common exclusions include:
- Permit fees
- Appliances
- Landscaping
- Utility service upgrades
- Furniture or window coverings
- Surveying, engineering, or specialty consultants
Sometimes, exclusions are reasonable. Other times, they may reveal missing scope that needs to be discussed. Always ask: “If this is excluded, who will be responsible for it?”
Red Flags to Watch For
When reviewing bids, keep an eye out for things that might signal missing info or unclear assumptions:
- Scope is too vague or overly general (“kitchen remodel,” no details)
- Allowances are unrealistically low (e.g., $1,000 for all lighting)
- Major scope areas are missing (no mention of demo, electrical, or paint)
- Too many exclusions with no plan for how they’ll be handled
- No mention of timeline, payment terms, or warranty
- Missing license number or contractor info
None of these automatically disqualifies a bid, but they would need clarifying before moving forward.
What’s Next: Understanding Bid Structure & CSI Divisions
Now that you understand what’s included in contractor bids, the next step is to learn how those line items are organized. That includes recognizing how contractors group costs under divisions, how to interpret technical-sounding scopes, and how to spot overlap or omissions between trades.
Continue to Understanding Bid Structure & CSI Divisions to see how construction estimates are formatted and how to better interpret scope language during comparisons.