What do the lean, normal and cautious bids each look like?
The lean bid is not the normal bid with a smaller markup. It is a different view of how the job will go, and six assumptions move with it. This template saves all three and prices the difference between them.
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After you install, this is the model to open.
Three Ways to Price This Bid
- In your spreadsheet, click the Sortia icon in the strip of icons down the right-hand edge. No strip? Click the arrow at the bottom-right to open it. You can also use Extensions, then Sortia, then Open Sortia.
- Click Start from a template and put that name in the search box.
- Pick the card with that name and click Load this template. It arrives on a new tab with real numbers already in it.
The answer
The same job, priced three ways:
- Normal bid
- $612,315 $79,867 margin, 13.04%
- Lean
- $555,175 $45,840 margin, 8.26%
- Cautious
- $692,779 $120,234 margin, 17.36%
- Lean to cautious gap
- $137,604 only $63,210 of it is cost
The gap between the lean and the cautious bid is 22% of the normal bid price, and less than half of it is cost. The rest is the markup decision, so if you lose this job by ten percent you did not lose it on your rates, you lost it on how much risk you decided to carry, and those are different conversations with different people. Notice too that margin is not markup: a 15% markup returns a 13.04% margin, because one is a percentage of cost and the other a percentage of the bid.
The model
One package built up from labor, materials, plant and subcontract, with preliminaries at 7.5% of direct cost and a markup on top. Each named case carries its own six assumptions.
| Labor hours / rate | 3,850 / $58 |
| Materials | $168,000 |
| Plant / subcontract | $61,000 / $43,000 |
| Markup on cost | 15% |
| Cost, bid price and margin | calculated per case |
Once it is in your sheet
- The model arrives with real numbers in it and runs as it stands, so you can press the button first and understand it second.
- Change the numbers to yours. The sheet marks which cells are inputs and which hold formulas, and most labels carry a note explaining the row.
- Press the run button at the bottom of the panel. It is labeled for the tool you are in, and the result lands on its own tab, with a written reading of it beside the figures.
Never used Google Sheets? Start here goes the whole way, in seven steps, and assumes nothing.
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Every model like this one, and the method behind them: What-if analysis in Google Sheets.