How to Research Pricing for a Construction Bid
Pricing too high loses the job. Pricing too low wins a job you will lose money on. This guide covers how to research material costs, labor rates, and market benchmarks for competitive construction bids.
The lag problem with cost databases
Published construction cost databases like RSMeans are updated quarterly or annually. In a market with 10 to 20 percent year-over-year material cost swings, a three-month-old unit cost can make your bid uncompetitive before you submit it. Always verify high-volatility line items against current supplier quotes.
Step-by-step process
Get subcontractor quotes for every major division
The most accurate pricing comes from subcontractors who do the work every day. Send the relevant drawings and specifications to at least two subs per division. For divisions with no responsive bids, you need a reliable unit cost database (RSMeans, Gordian, or similar) as a fallback. Do not self-perform a division at an estimated rate without a market check.
Verify current material costs against recent purchase orders
Published cost databases have a lag of three to twelve months. For high-volatility materials like steel, lumber, copper, and concrete, check current market pricing. Call your supplier and ask what they charged on a similar job closed in the last 30 days. For long-duration projects, build in an escalation contingency for materials that will be purchased more than 90 days from bid date.
Research prevailing wage requirements
If the project is public work or receives federal funding, prevailing wage rates apply under Davis-Bacon or state equivalents. Prevailing wage rates vary by county, by craft classification, and are updated periodically. Using commercial wage rates on a prevailing wage job is a compliance failure with significant back-pay exposure. Check the applicable wage determination before finalizing labor costs.
Factor in local conditions and site logistics
The same scope costs different amounts depending on access, site density, existing structure, and project duration. Tight urban infill sites carry higher productivity penalties than open suburban sites. Multi-floor work adds vertical logistics costs. Projects within occupied buildings require phasing and noise restrictions. These factors are not in cost databases. They come from your superintendent's experience and your site visit.
Set contingency and margin based on estimate confidence
A conceptual estimate from square footage benchmarks warrants 20 to 30 percent contingency. A detailed estimate with full subcontractor quotes and a complete set of construction documents warrants 5 to 10 percent. Set your margin based on the competitive environment: how many other bidders, how much you want the job, and your backlog. Margin is a business decision, not an estimating line item.
Pricing data sources
| Source | Best For | Reliability |
|---|---|---|
| Subcontractor bids | Final bid pricing | Highest |
| RSMeans / Gordian | Budget estimates, unit cost checks | High (with lag) |
| ENR Construction Cost Index | Escalation factors, market trend | High |
| State prevailing wage schedules | Public work labor rates | Authoritative |
| Supplier quotes | Current material pricing | High (real-time) |
| Historical job cost data | Self-perform divisions, overhead | High (project-specific) |
Time required
Manual process
1 to 3 days
To gather sub quotes, verify material costs, check prevailing wage, and assemble the estimate
With TrussNote
Under 30 minutes
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