Why Are Commercial Construction Bids in Phoenix So Different for the Same Project?

A business owner in Phoenix, Arizona sends the same set of plans to five contractors and gets back five numbers that don’t even look like they’re for the same building. It happens more often than owners expect, and it usually has less to do with contractors trying to take advantage of anyone and more to do with project fit, as well as how much room for interpretation exists in the bidding process itself.

Mike Marden, a registered architect and licensed general contractor and founder of WDS, a Phoenix-based integrated design-build firm, has watched this play out from both sides of the table for decades. According to Mike, the spread in numbers almost always traces back to a handful of specific gaps, and once an owner knows what they are, comparing bids gets a lot easier.

It Starts With What Contractors Are Actually Looking At

If the bid is based on a preliminary walkthrough rather than a finished, detailed set of plans, Mike says there is already room for wildly different interpretations before a single number gets written down.

“There’s a lot of interpretation going on there,” Mike says. “Their imaginations are running wild, or the owner giving them information is presenting it a little differently each time.” On a site walkthrough, what one contractor sees, hears, and gets told can be different from what the next one experiences, and that alone can start the variation.

Even with a full, specific set of plans, Mike says the numbers can still diverge based on how much time and attention a contractor plans to spend on the project. That difference shows up directly in the final price as adequate or inadequate supervision, management, and overhead.

What Gets Left Out of the Scope Causes Even Bigger Gaps

One of the most common reasons bids spread apart, according to Mike, is that some contractors go look at the actual job site conditions and some don’t.

“They have the drawings or the specs, but they don’t go out and look. They don’t walk the job site,” Mike says. If two out of five bidders skip that step, they are pricing a different project than the other three, even though everyone received the same paperwork. Special instructions, separate exhibits, or desired exclusions can also get missed by contractors who are not reading closely, which widens the spread even further.

How to Actually Compare Bids That Don’t Match Up

Owners often assume the lowest number is the safest choice, but Mike says the real problem is usually that the bids were never in a comparable format to begin with.

“Please break these down into separate scopes,” is the basic ask he recommends. Without that breakdown, markups like overhead, insurance, and taxes stay hidden inside a single lump-sum number, which makes it impossible to know what is actually being paid for. For larger projects, Mike suggests separating a project into its logical phases first, such as interior work versus site work or landlord work versus tenant work, and then breaking each trade out individually. That includes asking every bidder to detail their supervision costs specifically, since Mike considers supervision one of the biggest drivers of price differences between contractors. Some contractors provide a daily on-site quality control supervisor dedicated to the project, while others may just have someone occasionally driving by to check the job site.

Red Flags Worth Slowing Down For

A bid that looks too good to be true is often exactly that, and Mike says the first place to look is not the number itself but who submitted it.

“If it looks very thorough, you’re going to have to dig deeper. If it’s just a one-liner or it looks like it’s put together quickly, then I think we’re on to something,” he says. From there, Mike recommends checking whether the contractor has actually done this type of project before, since a company skilled at building houses is not automatically qualified to build a medical office or restaurant. Taking a look at what kind of projects are in the photographs on their website is another good indicator of their true experience. He also flags a missing project schedule as a warning sign, since a contractor who hasn’t accounted for the full duration of the job may not have built enough into their number to cover it.

The clearest way to prevent this kind of confusion in the first place, Mike says, is to set the terms before bids come in: state the expected project duration or ask each contractor to submit a timeline or schedule, and require a standardized, itemized form that breaks out insurance, taxes, and overhead and profit separately from trade costs and from project personnel and job site costs. Getting everyone on the same playing field before the numbers arrive is what actually makes an apples-to-apples comparison possible.

WDS is an integrated design-build firm based in Phoenix, Arizona, comprised of WDS Architecture PLLC and WDS Commercial LLC, subsidiaries of Marden Companies LLC.

This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.