The lowest tender isn't always the lowest price. Bids arrive with different exclusions, different assumptions about allowances, different readings of the drawings and a page of qualifications that quietly move risk back to the owner. Comparing the totals on the bid forms is comparing numbers that don't describe the same job.
Bid levelling is the work of turning those numbers into a fair comparison. This guide explains how to do it properly, where owners get caught, and what changes when the tender is a formal one under Canadian tendering law. A worked example shows how a low bid can turn out to be the most expensive.
What bid levelling is, and what it isn't
Levelling means adjusting each bid, for comparison purposes only, so every price reflects the same scope, the same allowances and the same risk. If one bidder excludes permits and the others include them, you add a fair value for permits to the first bidder's column. You're not changing anyone's bid. You're working out what each one would really cost you.
It isn't negotiation. It isn't an invitation to shop one bidder's price to another. And in a formal tender it isn't a way to rescue a bid that doesn't comply. More on that below.
Step 1: check compliance first
Before any arithmetic, confirm each bid is complete and compliant: signed, on the right form, with every addendum acknowledged, the required bid security attached and all mandatory schedules filled in.
This order matters in Canada. Under the Contract A / Contract B framework from Ron Engineering (1981), a formal tender creates obligations to every bidder. The Supreme Court held in M.J.B. Enterprises (1999) that an owner has an implied obligation to accept only compliant bids. The Ontario Court of Appeal in Rankin Construction v. Ontario (2014) confirmed that an owner may waive a mere formality but not a material non-compliance. A bid with a qualification that changes price or risk in a way the others can't match may not be one you're allowed to accept, however good its number looks after levelling.
So the sequence is: compliance, then levelling. Our guide to tender strategy for owners explains Contract A in more detail.
Step 2: build the scope matrix
List every significant scope item down the side and every bidder across the top. Mark each cell included, excluded, qualified or unclear. The items to check on almost every building project:
- Permits, fees and inspections: building permit, utility connection fees, third-party testing.
- General requirements: site supervision, temporary facilities, hoisting, winter conditions, cleaning, waste removal.
- Interfaces between trades: firestopping, blocking, access panels, temporary protection of existing finishes.
- Cash allowances: whether the bidder carried the specified amounts or substituted its own.
- Bonds and insurance: whether the required bonds and coverage are priced.
- Schedule assumptions: working hours, phasing, overtime, and the completion date the price is based on.
Read the qualifications letter line by line. Phrases like "by others", "as per our standard exclusions" or "based on drawings only" are where scope disappears.
View the data
| Item | Bidder A | Bidder B | Bidder C |
|---|---|---|---|
| Permits and fees | Included | Excluded, add $38k | Included |
| Winter conditions | Included | Excluded, add $45k | Included |
| Millwork allowance | Included | Short, add $60k | Included |
| Temporary protection | Included | Included | Excluded, add $25k |
| Bid form total | $2,410,000 | $2,285,000 | $2,350,000 |
| Levelling adjustments | $0 | +$143,000 | +$25,000 |
| Levelled price | $2,410,000 | $2,428,000 | $2,375,000 |
Step 3: normalize the numbers
For each gap, add a fair value to the bidder that left it out. Where do the values come from? In order of preference: a price another bidder actually carried for the same item, your cost consultant's estimate, or a written clarification from the bidder. Avoid using the highest number you can find. The aim is a fair comparison, not a penalty.
Keep the adjustments in a separate column from the bid price, with a note explaining each one. When a board member asks why the recommended contractor wasn't the lowest bidder, that column is the answer.
A worked example
Take an illustrative commercial interior fit-out with three stipulated-price bids:
- Bidder A: $2,410,000, with no material exclusions.
- Bidder B: $2,285,000, excluding permits and fees, excluding winter conditions, and carrying $120,000 for millwork where the documents specified a $180,000 cash allowance.
- Bidder C: $2,350,000, excluding temporary protection of the existing finishes.
Levelling B adds $38,000 for permits and fees, $45,000 for winter conditions and $60,000 to bring the millwork allowance up to the specified amount. That's $143,000, or about 6% of its bid, for a levelled price of $2,428,000. Levelling C adds $25,000 for temporary protection, for $2,375,000. Bidder A stays at $2,410,000.
The ranking reverses. The lowest bid on the form becomes the highest levelled price, and the middle bid becomes the best value. B wasn't cheaper. It just priced less of the job.
View the data
| Bidder | Bid form total | Adjustments | Levelled price |
|---|---|---|---|
| Bidder A | $2,410,000 | $0 | $2,410,000 |
| Bidder B | $2,285,000 | $143,000 | $2,428,000 |
| Bidder C | $2,350,000 | $25,000 | $2,375,000 |
Alternates and unit prices
Alternates are separately priced options, such as an upgraded lighting package or a deleted scope item. Decide which alternates you're likely to accept before you compare, and level on that basis. In the example, if the owner expects to accept a lighting alternate priced at $40,000 by A, $55,000 by B and $62,000 by C, the levelled totals become $2,450,000, $2,483,000 and $2,437,000. C is still lowest, but the gap to A shrinks from $35,000 to $13,000. If an alternate can change the ranking, the tender documents should say how alternates will be used in the evaluation.
Unit prices cover quantities nobody can fix at tender, such as rock excavation, contaminated soil or extra drywall repair. Apply each bidder's rates to the same realistic quantity, not just the tender quantity, and add the result to the comparison.
Watch for unbalanced rates. A bidder that expects a quantity to be overestimated can bid that item very low and load the difference onto items it's sure to be paid for. In Municipalité de Piedmont v. Uniroc Construction (2020), the Quebec Court of Appeal upheld a municipality's rejection of a low bid that priced rock excavation at about $1 per cubic metre, well below market, with the difference spread across other items. The case is from Quebec, but the lesson travels: test the rates as well as the total.
Step 4: clarify, in writing, the same way for everyone
Most levelling questions need a short written clarification from the bidder. Two rules keep this clean. Ask every bidder the same kind of question when the same issue applies. And don't let a clarification become a chance to change the price. A bidder who answers "yes, permits are included" is clarifying. A bidder who answers "we can include them for $38,000" is re-pricing, which in a formal tender can breach the duty to treat bidders fairly.
Record every question and answer. The levelled comparison should be reproducible by someone who wasn't in the room.
Beyond price: schedule and risk
A levelled price is the start of the recommendation, not the end. Check each bidder's proposed schedule against the tender requirement, its key staff, the trades it named and its current workload. A bidder that's $20,000 lower but proposes a site superintendent shared with two other jobs may be the more expensive choice once delay is priced in. If the evaluation includes non-price factors, they must be the ones announced in the tender documents, weighted as announced.
Who should do the levelling
Under a stipulated-price tender, the consultant team usually reviews bids, but its focus is often on compliance and the design intent rather than cost. Under construction management, the construction manager levels the trade bids, and it's worth remembering that the same firm will later manage those trades. In both cases the owner benefits from an independent check by its cost consultant or owner's representative, someone with no stake in which bidder wins.
The levelling should also be done quickly. Bids are only open for acceptance for the period stated in the tender, and a slow review pushes the award toward that deadline, which weakens the owner's position if clarifications drag on.
Common levelling mistakes
- Comparing bid form totals. The most common and most expensive mistake.
- Levelling a non-compliant bid into contention. Adjustments can't cure a material non-compliance.
- Adjusting with the wrong numbers. Using the contractor's own plug, or a punitive figure, distorts the result.
- Negotiating during clarification. Treat clarifications as questions of fact, not offers.
- Ignoring the qualifications letter. Exclusions buried in a cover letter are still exclusions.
What owners should do
- Design the bid form for levelling. Require separate prices for cash allowances, alternates, unit prices and key separable items, and prohibit general exclusion lists.
- Check compliance before levelling, and get legal advice before waiving any irregularity in a formal tender.
- Build a scope matrix for every bid and level each gap with a documented, fair value.
- Test alternates and unit prices against realistic quantities and look for unbalanced rates.
- Clarify in writing, consistently, and keep a record a third party could follow.
- Carry the levelled exclusions into the contract. Whatever you levelled for, make sure the awarded contract actually includes it.
The bottom line
A tender result is only as good as the comparison behind it. Levelling turns a set of bid form totals into a decision you can defend, and it routinely changes who should win. Owners who skip it often award to the bidder who priced the least work, then buy back the rest as change orders. Done properly and in the right order, levelling protects both the budget and the fairness of the tender.
Have bids coming in and want an independent levelling? Book a 30-minute call with Benjamin R. Consulting.
Sources: Canadian Consulting Engineer, Tendering Trials (Ron Engineering and M.J.B. Enterprises); Construction Law Canada, Eight Rules of Tender Law Pronounced by the Ontario Court of Appeal (Rankin Construction v. Ontario, 2014); Langlois Lawyers, Responding to public tenders: beware of unbalanced unit prices (Piedmont v. Uniroc, 2020 QCCA 329); Buildern, Bid Leveling in Construction: Steps, Templates, Tools and More. The worked example is illustrative. This article is general information, not legal advice. Get legal advice on your contract and specific circumstances.