Bid Alternates, Allowances, and Unit Prices: Types, Documentation, Owner Decision Points, and Cost Implications
How bid alternates, allowances, and unit prices are structured in bidding documents, when the owner uses each, and the architect's role in advising on selection and documenting outcomes.
When the Budget Is Uncertain: Alternates, Allowances, and Unit Prices
Every project has budget uncertainty. The question is how you handle it in the bidding documents. Three tools let the owner and architect structure bids to manage cost risk, preserve options, and cover unknowns without rewriting the entire set of documents.
Bid alternates let the owner add or subtract defined scope items after seeing the base bid. An additive alternate is scope the owner might add if the base bid comes in under budget. A deductive alternate is scope the owner might remove if the base bid comes in over budget. Either way, the bidder prices both the base and the alternate separately, giving the owner real market pricing on each.
Allowances are dollar amounts the architect embeds directly into the contract sum for work that can't be fully specified at bid time. Think of them as placeholders. The contractor includes the allowance amount in their bid, but actual purchases are made later against that allowance. Leftover money goes back to the owner; overages become change orders.
Unit prices are per-unit costs the contractor establishes at bid time for work that will be performed in an unknown quantity. They're common for earthwork, rock excavation, or demolition where the actual quantity won't be known until the work is underway. The contractor bids a price per cubic yard, per linear foot, or per unit, and the owner pays for actual quantities used.
The architect's role spans all three: writing them correctly in the bidding documents, helping the owner understand the decision points, and documenting the owner's choices so the contract correctly reflects what was accepted.
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