Estimate vs Bid – What to Need to Know for Your Next Project

When planning a project, you’ll often hear two essential terms: estimate vs bid. While these words may seem interchangeable, they serve different purposes.

You need to understand the difference between an estimate and a bid in contracts. When to use each and how they impact budgeting, timelines, and commitments for your next project.

Choosing between an estimate or a bid can save time, reduce costs, and lead to smoother project management from start to finish.

Estimate vs Bid – Differences Between Them

A few significant differences between an estimate and a bid can make them useful for different project parts. These differences involve how much detail they provide, how flexible they are, and their purpose.

Level of Detail

An estimate gives a rough approximation. It is quick to create and doesn’t require extensive research. For example, a plumber might offer an estimate after looking at the job without looking deeply into every possible cost​.

On the other hand, a bid is much more detailed and comprehensive. It involves everything from the cost of materials to how long the project will take. Once a company submits a bid, they have done the research and planned the project thoroughly​.

Flexibility

An estimate is flexible, meaning the price or plan can change as the project progresses or if unexpected things happen.

Let’s say you’re getting your roof fixed, and the contractor discovers more damage than expected during the job. Your estimate should increase to cover these new repairs.

A bid, however, is fixed and binding once the client accepts it. If a business submits a bid to build a school, the price and project scope are locked in once the bid is chosen. They can’t raise the price later, even if they incur extra costs​.

Purpose

Finally, an estimate is mainly used to give clients a rough idea of how much a project will cost early on. It helps people understand whether they can afford the project and if they should move forward.

A bid, however, is used in more formal and competitive scenarios. Companies present bids when competing to win a contract, like a big government job or a large construction project​.

Winning the bid means the company gets the job and must follow the terms they set.

Scenarios for Using Estimates and Bids

Depending on the type of project and the amount of detail, an estimate or a bid might be useful in several situations.

Estimates are ideal when exact costs aren’t clear upfront. For example, in a kitchen remodel, a contractor may not know if the wiring needs replacing or what countertops you’ll choose. They provide an estimate to give a rough idea of costs, but the price can change as the project progresses.

They are also useful during early project discussions. When a business begins exploring a project with a client, they may not have enough details for an exact figure. The estimate starts the conversation and helps the client decide whether to proceed.

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Bids, however, are for projects where full details are available, and accuracy is crucial. For instance, in large construction projects, a company submits a bid outlining precise costs, timelines, and project specifics. They are legally binding once accepted, as these projects typically involve significant money.

They are also common in government or commercial contracts, where companies compete for the job. For example, when a government needs a new road, multiple companies submit bids detailing costs, timelines, and their approach. The bid offering the best combination of price, quality, and timeline usually wins.

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