Alternates price optional add or deduct options, allowances hold a placeholder for an item not yet defined, unit rates set a price per measured quantity for work whose amount is unknown, and contingencies reserve room for the unexpected. Each fits a different kind of uncertainty. Comparing bids fairly means confirming that every bidder treated each of these the same way.
- Each tool answers a different kind of uncertainty: choice, undefined item, unknown quantity, or unknown risk.
- An alternate is a priced option. An allowance is a placeholder. Mixing them up skews comparisons.
- Unit rates work when the work is repetitive and measurable, such as feet of piping or number of devices.
- Contingency belongs to whoever the contract says holds it. Confirm that before comparing totals.
- Normalize every bid to the same base scope before ranking them.
Four tools for four kinds of uncertainty
Bid documents rarely arrive complete. Something is undecided, something cannot be measured until a ceiling comes down, or the owner wants to see what an upgrade would add. Four tools handle that, and each has a different job.
| Tool | What it handles | Who sets the quantity | Typical HVAC use |
|---|---|---|---|
| Alternate | A defined option the owner may accept or reject | Owner defines it | Higher-efficiency model, extended controls, added zone |
| Allowance | An item not yet selected or defined | Owner names the placeholder | Finish selections, a specialty accessory, an unresolved device |
| Unit rate | Work whose quantity is unknown until it is performed | Quantity measured as work proceeds | Extra feet of piping, added duct, additional sensors |
| Contingency | Unforeseen risk across the job | Held by owner or GC under the contract | Concealed conditions, minor field changes |
The rest of this page explains how each works in practice, using examples in words so you can adapt them to your own documents. For the broader bid process, see the project delivery and bidding guide.
Alternates: priced options you can accept or decline
An alternate is a described option bid separately from the base. It can add scope, delete scope or substitute one item for another. Owners use alternates when the budget is uncertain, or when they want to see what a better option would cost before deciding.
Example in words: the base bid replaces four rooftop units with standard controls. Alternate one adds a connection to the building automation system. Alternate two swaps two of the units for a higher-efficiency model. The owner can accept either, both or neither after seeing the prices.
- Describe each alternate fully enough that bidders price the same thing.
- State whether alternates are accepted in a stated order or independently.
- State the date by which alternates will be selected, since price validity and lead times depend on it.
- Avoid alternates that change the base scope's meaning, since they make comparison hard.
Allowances: honest placeholders
An allowance holds a place in the price for something that will be chosen later. It is not a quote. The final cost is adjusted up or down when the real item is selected, so the allowance should be realistic and clearly described.
Example in words: the owner has not picked the thermostats for a tenant suite, so the bid documents carry an allowance for the devices, with installation and wiring priced in the base. When the owner chooses, the difference is handled through a change record.
Contractor's base bid includes an allowance for the item described in this scope. The allowance covers the material cost only. Installation, startup and related labor are included in the base bid. When Owner selects the item, the contract amount will be adjusted by the difference between the allowance and the actual cost.
The risk with allowances is that they hide weak decisions. If every unresolved item is parked in an allowance, bids look comparable but are not. Keep allowances to genuinely undecided items and state what labor is and is not included.
Unit rates and contingencies
Unit rates
A unit rate sets a price per measured unit so that work with an unknown quantity can be paid fairly. Examples in words include additional refrigerant line set beyond a stated length, extra duct sections after the ceiling is open, or added control points. Unit rates are useful for repetitive, measurable work and for on-call arrangements like those in the on-call HVAC service agreement scope.
- Define the unit clearly: per foot, per device, per hour of a described crew.
- State what the rate includes: material, labor, supervision, small tools, disposal.
- State how quantities are measured and who verifies them.
- Say whether rates apply to additions only or to deletions as well.
Contingency
A contingency is a reserve for risks that cannot be listed. In most owner-led projects it is held by the owner or GC and released by written approval. When a bidder includes their own contingency inside the base price, it is a pricing choice that the owner cannot see or recover. That is why owners often ask bidders to state how they handle risk, not just what the total is.
Comparing bids on an equal basis
The lowest total is not always the lowest-cost outcome. Before ranking, put every bid on the same base. The steps below work in a simple spreadsheet or on paper.
- List the base scope line by line and mark whether each bid includes it.
- Record every exclusion and qualification each bidder stated.
- Check allowances: same items, same description, same labor treatment.
- Check alternates: same wording, same selection date, same validity period.
- Compare unit rates for the same unit definitions.
- Note how each bidder treated contingency, schedule, permits, crane and closeout items.
- Ask each bidder to confirm any item you could not match, using one written question set.
- Rank only after the bids describe the same job.
The clarifications and exclusions checklist helps identify the items to line up. Many gaps trace back to unclear demarcation, which is why the responsibility matrix is worth building before bids go out.
Public bids and how Davinci handles them
Public agencies and schools often have fixed forms for alternates and unit prices, along with prevailing wage and certified payroll requirements. Confirm current agency rules before bidding. Davinci is PLA and prevailing-wage ready with certified payroll, and its mechanical, refrigeration and controls work is performed by its own UA Local 250 crew. Learn more on the bid projects page and in the public works section.