Course outline
Alternates, unit prices and allowances
Alternates are optional scope changes the owner can accept: an add alternate increases your base bid, a deduct alternate reduces it. Unit prices are per-unit rates (per SF, LF or EA) the owner can use to add or remove quantities later. Allowances are fixed amounts carried for work not yet defined. Price each exactly as the bid form asks — a missing or misread alternate can make a good bid non-responsive or cost you money after award.
By Michael Reddy, IntelBid
After this lesson you can
- Price add and deduct alternates correctly against your base bid
- Set unit prices you can live with for additions and deletions
- Explain what an allowance covers and what stays in your base price
What's the difference between them?
| Item | What it is | Usually found in |
|---|---|---|
| Add alternate | Extra scope the owner may buy — priced as the amount added to your base bid | Section 01 23 00 (Alternates) and the bid form |
| Deduct alternate | A reduction or substitution the owner may accept — priced as the amount subtracted | Section 01 23 00 and the bid form |
| Unit price | A rate per unit to add or delete quantities during the job | Section 01 22 00 (Unit Prices) and the bid form |
| Allowance | A fixed sum carried in the bid for work or products not yet selected | Section 01 21 00 (Allowances) |
Section numbers follow common MasterFormat numbering; some projects place these in the bid form or instructions instead.
How do you price an alternate?
- Read the exact description“Provide carpet tile in lieu of LVT in offices 201–215” is a substitution, not an addition. Know which rooms, which products and what's unchanged.
- Price the difference, not a new jobAn alternate is the change from your base bid: material, labor, waste, accessories, and any change in mobilization or schedule.
- Check what else it touchesA product swap can change transitions, base, prep and adhesive. A deduct alternate that removes a room may leave a transition behind.
- Enter it the way the bid form asksAs a dollar amount, marked add or deduct. Don't bury alternates in the base bid, and don't leave a line blank — write “no change” if that's the answer.
- Base bid scope
- 18,000 SF of LVT
- Alternate
- Carpet tile instead of LVT in 6,000 SF of offices
- LVT installed cost in your price
- $6.10 / SF
- Carpet tile installed cost in your price
- $4.85 / SF
- Difference per SF: $6.10 − $4.85 = $1.25 less per SF.
- Area affected: 6,000 SF.
- Deduct amount: $1.25 × 6,000 = $7,500.
- Then check the side effects: new carpet-to-LVT transitions at the office doors are an add inside the same alternate.
Unit prices: rates you'll be held to
A unit price is a promise. If the owner adds 2,000 SF of carpet tile mid-job, they'll pay your unit price — and if they delete 2,000 SF, they may deduct at the same rate.
- Carry overhead and profit inside the rate. A unit price that only covers material and labor loses money on every addition.
- Watch small quantities. A per-SF rate that works for 5,000 SF doesn't work for 80 SF in one closet with a separate mobilization. Qualify a minimum where you can.
- Ask whether add and deduct rates can differ. Some bid forms allow it; when they don't, a deduct at your full rate refunds overhead you already spent.
- Common flooring unit prices: floor preparation or patching per SF, moisture mitigation per SF, self-leveling underlayment per SF at a stated depth, and removal of existing flooring per SF.
Allowances: what's in, what's out
An allowance is a set amount — say $25,000 for lobby flooring that hasn't been selected yet — that you include in your bid. When the product is chosen, the contract is adjusted up or down to the actual cost.
Under common contract terms such as AIA A201, a material allowance usually covers only the cost of the materials delivered to the site. Your handling, installation labor, overhead and profit for that work belong in your base price, not in the allowance. Read Section 01 21 00 for the project's actual rule — if you assume the allowance covers labor and it doesn't, you've installed that floor for free.
What is the difference between an add alternate and a deduct alternate?
An add alternate is optional extra scope priced as an increase to your base bid. A deduct alternate is an optional reduction or cheaper substitution priced as a decrease. The owner decides which alternates to accept.
What are unit prices in a construction bid?
Per-unit rates — per square foot, linear foot or each — that the owner can use to add or remove quantities after award. They should include your overhead and profit.
Does an allowance include installation labor?
Often not. Under common contract terms like AIA A201, an allowance covers material cost delivered to site, while installation, handling, overhead and profit are included in the base contract price. Check the project's allowances section.
Key points
- An alternate is priced as the difference from your base bid, including side effects.
- Unit prices must carry overhead and profit — you'll be held to them.
- Allowances usually buy material only; installation stays in your base price.
Alternates as their own proposal lines
Every proposal line in IntelBid can be marked Base, Add alt or Deduct alt, so alternates print as separate, clearly labeled amounts instead of being buried in the base bid — and the GC can level your number without guessing.
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About the author. Michael Reddy builds IntelBid, bid management software for commercial flooring subcontractors. These lessons come from the bid desk: how the work is priced, won and paid for.