The five inputs to audit are underlying cost inputs, overhead and profit inputs, bond requirement inputs, wage document inputs, and labor classification inputs.
Key takeaways
- Check underlying costs, overhead and profit controls, applicable bond provisions, wage documents, and labor classifications before submitting a public bid.
- Start with the cost basis before any selling markup is applied.
- Confirm a clause substantially the same as 52.228-15 when a construction contract contains a performance and payment bond requirement and the resultant contract is expected to exceed $150,000.
- Confirm the clause at 52.228-13 when a construction contract's estimated or actual value exceeds $35,000 but does not exceed $150,000.
- Confirm the wage determination or SF 308 request, the 90-day award check, and the laborer or mechanic coverage tests.
Construction estimate review checklist: the inputs to check
The first input is the cost before any markup is applied, which represents the cost to you, not the customer, according to Clear Estimates. This baseline isolates the direct expenses from the selling price. The second input involves the markup added for overhead and profit, which must be inspected separately from the base cost. The third input covers bond requirements, distinguishing between performance and payment bonds for contracts that contain a requirement for performance and payment bonds if the resultant contract is expected to exceed $150,000 and the clause at 52.228-13, Alternative Payment Protections, for contracts where the estimated or actual value exceeds $35,000 but does not exceed $150,000. The fourth input is the wage determination, which requires a general determination or an agency SF 308 request if unavailable. The fifth input is labor classification, which includes apprentices, helpers, and, in the case of contracts subject to the Contract Work Hours and Safety Standards Act, watchpersons or guards, and the term does not apply to workers whose duties are primarily administrative, executive, or clerical, rather than manual, according to Legal Information Institute. Each input requires a specific source or tool setting to verify before the bid is submitted.
Before review: separate underlying costs from the selling price
Isolate the base costs from the added profit before you submit the bid. In the "How Markup Works - Clear Estimates" guide, parts can have any combination of material, labor, and subcontractor cost, according to Clear Estimates. These components form the underlying estimate cost. You must identify these specific cost types before applying any additional amounts. The guide notes that it is important to remember that this is the cost before any markup is applied (the cost to you - not the customer.), according to Clear Estimates.
Once you have the base cost, you can evaluate the added amount. The source defines markup as the amount added to the cost of your estimate to cover overhead and profit, according to Clear Estimates. This added portion is distinct from the material, labor, and subcontractor figures. By keeping the cost to you separate from the customer price, you can audit each input independently. Check your material quantities and labor hours against your takeoff. Verify subcontractor bids against current market rates. These checks ensure the base cost is accurate before you apply the overhead and profit allowance.
If you use other tools, similar principles apply. You might review how Configure 8 profit settings in your estimating tools handles these separations. Or see how Markup and margin rates in 4 estimating tools defines these terms. The core task remains the same: distinguish the direct costs from the added profit. Do not mix these figures in your review. If the base cost is inflated, the markup percentage may appear lower than it is. If the base cost is low, the markup may seem high. Accurate separation prevents misinterpretation of your pricing structure.
During review: inspect the tool's overhead and profit controls
After isolating underlying costs, verify how your estimating software calculates the selling price. Different platforms handle markup and margin with distinct controls, and the specific setting you select changes how the final number is derived. Check the tool’s interface to see exactly how the profit layer is applied to your resources.
In Buildxact, you can view the origin of your added value by using the breakdown feature. From the markup interface, you can then click on the 'Show breakdown' button to see a complete breakdown of where the markup originates from, according to Buildxact. This view allows you to trace the specific components that contribute to the total added amount.
For resource-level adjustments, Sage provides a specific dropdown selection for margin calculations. Select Margin Percentage in the Sell Markup dropdown next to the relevant resource and enter the value in the available field, according to Sage.
Ressio offers a different approach by allowing direct dollar adjustments to the profit side. In addition to adjusting individual lines and percentages, you can modify the dollar amount on the builder profit side, according to Ressio.
These three examples illustrate that markup, margin, and builder-profit adjustments do not have identical effects in every estimating tool. Each platform defines the input field and the calculation method differently. Before submitting a bid, confirm which control your specific software uses to generate the final price.
- Buildxact: Use the 'Show breakdown' button to see a complete breakdown of where the markup originates from.
- Sage: Select Margin Percentage in the Sell Markup dropdown next to the relevant resource.
- Ressio: Modify the dollar amount on the builder profit side.
Review your current estimate’s profit settings against these documented controls. If your tool does not offer a specific breakdown or dollar adjustment, ensure your manual calculations align with the intended margin percentage. Verify that the selected control matches your business model for public work bids.
For a deeper look at how these settings interact with takeoff data, see Takeoff scale setup and stated limits for 5 programs.
During review: match bond provisions and wage documents to the bid
Verify the contract value against the specific bond and payment protection clauses required by the Federal Acquisition Regulation. If the resultant contract is expected to exceed $150,000, the solicitation must insert a clause substantially the same as the clause at 52.228-15, Performance and Payment Bonds-Construction, according to Acquisition.gov. This provision applies to solicitations and contracts for construction that contain a requirement for performance and payment bonds. For contracts where the estimated or actual value exceeds $35,000 but does not exceed $150,000, the solicitation must insert the clause at 52.228-13, Alternative Payment Protections, according to Acquisition.gov. These two provisions address different value ranges and serve distinct functions within the contract structure. Do not treat the bond thresholds as establishing a surety premium or bid bond percentage; the clause insertion requirements are based on contract value.
Check the availability of the general wage determination before finalizing labor costs. If a general wage determination is not available on Wage Determinations at SAM.gov, a contracting agency shall submit requests for project wage determinations on SF 308 to the Department of Labor, according to Acquisition.gov. Confirm the specific project wage rates are formally requested when the standard general determination is missing.
Account for potential changes in wage rates if the award process extends beyond the standard period. If an award is not made within 90 days after bid opening, any modification to a general wage determination which is published on the Wage Determinations at SAM.gov before award shall be effective for any resultant contract unless an extension of the 90-day period is obtained from the Administrator, Wage and Hour Division, according to Acquisition.gov. Flag the 90-day threshold as a critical date for rechecking wage determination modifications if the award timeline is uncertain.
Keep California-specific requirements separate from these federal provisions. Do not apply the separate request deadline of at least 45 days before bid advertisement, which is tied to a California source, to these federal solicitation clauses. The federal rules described here govern the insertion of specific contract clauses and the handling of wage determination modifications for federal construction contracts.
Public bid input reference table by publisher
The table below lists the specific estimate inputs and documented controls for each publisher. Use it to verify that your estimate's underlying costs, markup settings, bond provisions, and wage classifications align with the cited sources before submitting a public bid.
Verify each row against your current estimate file. If a control is missing or a threshold is not met, adjust the input before proceeding to the next review step.
Illustrative example: one estimate walkthrough
Picture one estimate with a base cost of 850 before any markup. Keep an overhead and profit amount of 175 separate from that base. Keep the 45-day advertisement request timing separate from the 90-day award check and the 30-day classification action. These round figures only show the order of the review.
After review: confirm each input on one estimate today
Today, mark each assumption in one estimate and identify the applicable source or tool setting before submitting the bid. This review covers the five input categories defined in the audit scope: underlying cost inputs, overhead and profit inputs, bond requirement inputs, wage document inputs, and labor classification inputs. For each input, note the specific value or assumption you are using, the exact source document or tool setting that supports it, and the current status of that verification.
When a labor classification is not yet finalized, note the pending action beside that input. If you receive notice that additional time is necessary, keep the extended timeline rather than assuming the original 30-day window remains active. Do not treat this response timing as a guarantee of approval; the action may be approved, modified, or disapproved.
For bond and wage provisions, record whether the specific clause applies to your contract value. If the bond provision is unclear or the wage determination is unavailable, note the specific request form or deadline you are tracking. This prevents submitting a bid with unverified compliance assumptions.
Review the estimate to ensure every open item has a documented next step. If any input is still unknown, return to the relevant estimate section to verify the input before finalizing the bid submission.
FAQ: checking your estimate's public work assumptions
What belongs on a construction estimate review checklist?
The checklist covers five specific inputs: underlying costs, overhead and profit controls, bond provisions, wage documents, and labor classifications. These items ensure the estimate separates base costs from markup and aligns with public bid requirements.
How can I distinguish underlying cost from overhead and profit in Clear Estimates?
Underlying costs are material, labor, and subcontractor amounts before any markup, and markup is the amount added for overhead and profit.
Does the alternative payment protection provision cover a federal construction contract valued above $35,000 but not above $150,000?
Yes, the clause at 52.228-13, Alternative Payment Protections, is inserted in solicitations and contracts for construction when the estimated or actual value exceeds $35,000 but does not exceed $150,000, according to Acquisition.gov. This provision applies specifically within that value range. It does not apply to contracts exceeding $150,000 under this specific clause.
When can a general wage determination modification affect an award delayed beyond 90 days after bid opening?
If an award is not made within 90 days after bid opening, any modification to a general wage determination which is published on the Wage Determinations at SAM.gov before award, shall be effective for any resultant contract unless an extension of the 90-day period is obtained from the Administrator, Wage and Hour Division, according to Acquisition.gov.
Which workers are included or excluded under the laborer and mechanic definitions?
The term “laborer” or “mechanic” includes apprentices, helpers, and, in the case of contracts subject to the Contract Work Hours and Safety Standards Act, watchpersons or guards, according to Legal Information Institute. The term does not apply to workers whose duties are primarily administrative, executive, or clerical, rather than manual.