How to Read a Contractor Bid or Estimate

A contractor's bid tells you as much about how they run their business as about the project cost. Vague estimates lead to disputes; detailed estimates protect both parties.

What every estimate should include

• Scope of work: Exactly what will be done, in detail. "Install new roof" is not enough. "Remove existing three-tab shingles, install 30# felt underlayment and Owens Corning Duration 50-year architectural shingles" is.
• Materials specified: Brand, model, grade, and quantity. Substituting cheaper materials after signing is a common issue when specs aren't written in.
• Labor: Who does the work. If subs are used, they should be named or described.
• Permit fees: Line-itemed. If permits aren't mentioned, ask specifically.
• Demolition and disposal: Who removes old materials and where they go. Tipping fees can be hundreds of dollars.
• Timeline: Start date, estimated completion, and what affects that timeline.
• Payment schedule: Milestone-based. Never pay in full upfront.
• Warranty: Separate sections for material warranty (from manufacturer) and workmanship warranty (from contractor).
• Change order process: How scope changes are handled and approved in writing before any additional work begins.

Watch for these vague phrases

• "Materials as needed" — specify brand, grade, and quantity
• "Standard installation" — standard by whose definition?
• "Allowances" — often used to submit a low number knowing you'll pay more later
• "Plus applicable taxes and fees" — these should be calculated into the estimate

Comparing multiple bids

Don't compare just the bottom line. Compare what each bid includes. A lower bid that excludes disposal, permits, or uses cheaper materials isn't actually lower.