Why three quotes for the same job are never comparable
Ask three contractors to price a bathroom and you will get three numbers that describe three different jobs. This is not dishonesty; it is what happens when nobody has written a specification. Each estimator fills the gaps in your brief with their own assumptions, and the gaps are where the money hides.
Two devices do most of the damage. An exclusion is work the bid does not cover: "tiles supplied by owner", "disposal not included", "electrical by others". Every exclusion lowers the headline price without lowering your cost by a cent, because you still have to buy the thing. An allowance — sometimes called a provisional sum — is a placeholder for a selection you have not made: "$2,000 allowance for tile". Allowances are almost always set low, because a low allowance produces a low, competitive-looking total and the correction arrives later as a variation, when you have already signed.
Levelling removes both. You add each bid's exclusions back at what they will cost you, and you replace each bid's allowance with the price of the fittings you actually intend to buy. What remains is three numbers describing one job, which is the only comparison worth making. The result is often a reordering: the cheapest headline is frequently the most heavily excluded bid.
Feed the winner into your renovation budget, and if part of the scope is work you might take on yourself, test that separately with the DIY versus contractor calculator.
The two adjustments, and the sign of each
The formula has one addition and one difference, and the difference is the part people get wrong.
Exclusions are always added. If a bid excludes $2,500 of work you will have to procure, your true cost of accepting that bid is its price plus $2,500. Enter what the excluded item will cost you, at retail, not what the contractor would have charged for it — you are pricing your own path, and you rarely buy as well as a trade does. If an excluded item is genuinely optional and you will not buy it, enter nothing: an exclusion only counts when it is work that must still happen.
The allowance adjustment is a difference and can go either way. It is your realistic cost minus the allowance the bid carries. A bid carrying a $2,000 tile allowance against a realistic $4,500 gets +$2,500 added. A bid carrying a $6,000 allowance against the same realistic $4,500 gets −$1,500, which is a credit: that contractor has already priced more than you will spend, and levelling correctly gives them the benefit. Most people remember to penalise the low allowance and forget to credit the high one, which quietly biases the comparison towards whoever guessed lowest.
The realistic allowance cost is one shared figure, not three. That is the whole point of levelling — you are pricing the same tiles, the same taps and the same appliances in every column. Go and price them before you sign anything. An hour in a showroom with a tape measure converts the single largest source of renovation overruns into a number you can put in a box.
The deposit is calculated on the headline sum, because that is the contract you sign. Adjusted totals are an analysis tool; nobody writes a cheque against them.
Worked example: three bids on the same bathroom
You have priced the tiles, the vanity and the taps you actually want at $4,500. Three bids arrive.
Bid A: $28,000. Excludes the shower enclosure and the disposal, which will cost you $2,500. Carries a $3,000 tile and fittings allowance.
Bid B: $30,500. Excludes nothing. Carries a $4,500 allowance.
Bid C: $26,900. Excludes the enclosure, disposal, electrical and the vanity — $5,200 in total. Carries a $2,000 allowance.
- Level bid A. $28,000 + $2,500 + ($4,500 − $3,000) = 28,000 + 2,500 + 1,500 = $32,000.
- Level bid B. $30,500 + $0 + ($4,500 − $4,500) = $30,500.
- Level bid C. $26,900 + $5,200 + ($4,500 − $2,000) = 26,900 + 5,200 + 2,500 = $34,600.
- Rank. B at $30,500, then A at $32,000, then C at $34,600.
- Spread. $34,600 − $30,500 = $4,100.
- Deposit on the winner at 20%: $30,500 × 0.20 = $6,100.
The headline ranking was C ($26,900), A ($28,000), B ($30,500) — exactly reversed. Bid C, the one that looked $3,600 cheaper than B, is in fact $4,100 dearer, a swing of $7,700. Nothing dishonest happened: C simply quoted less work, and the quote said so, in the exclusions paragraph most people skim.
How to read the levelled numbers
A small spread after levelling is the good outcome. When three adjusted totals land within roughly ten per cent of each other, the market has agreed on what the job costs and you are choosing on the things that are not money: availability, references, how the contractor answered your questions, whether the contract is written properly. That is a comfortable position and you should not squeeze it.
A spread above about a quarter of the cheapest bid means the scopes still differ. Levelling has not failed; you have simply not found all the differences yet. Go back to the documents and look for the usual suspects: does one bid include making good the walls after the wall tiles come off, or only tiling? Does one price a new consumer unit that the other assumes stays? Is one carrying the cost of working in an occupied house — protection, daily tidy, restricted hours — that the other has not thought about? The downtime cost calculator is worth running here, because the bid with the shorter programme may be worth a premium your spreadsheet cannot see.
Be suspicious of the outlier below, not the outlier above. A bid materially cheaper than two others after levelling is more often a misunderstanding of scope than an efficiency. Ask the estimator to walk you through their quantities. If they cannot, the price is a guess, and a guess this side of a contract becomes a variation on the other side of it.
Deposits are the one number where the law may take a view. Some jurisdictions cap what a home improvement contractor may take up front — California, for example, limits the down payment on a home improvement contract to the lesser of $1,000 or ten per cent of the contract price. Elsewhere the norm is a deposit sufficient to cover ordered materials, with the balance tied to milestones. A demand for half the contract on signature is a reason to walk away regardless of the price.
Exclusions and allowances that most often change the ranking
| Item | Usually appears as | Why it moves the ranking |
|---|---|---|
| Demolition and disposal | Exclusion | Container hire plus tonnage overage is a four-figure line on any tear-out. |
| Tile, stone and fittings | Allowance | The gap between a placeholder allowance and a real selection is routinely the largest single adjustment. |
| Electrical upgrades | Exclusion | A circuit or panel upgrade discovered mid-job is a change order at change-order prices. |
| Making good and decoration | Exclusion | Plaster repair and paint after a trade finishes is real work that no one enjoys pricing. |
| Permits and inspections | Exclusion | Small in money, large in calendar time if nobody has pulled one. |
| Appliances | Allowance | Showroom prices exclude delivery, installation and sales tax more often than not. |
| Site protection and cleaning | Exclusion | Only visible when you compare an occupied-house bid against a vacant-house bid. |
| Asbestos or lead testing | Exclusion | Applies to most pre-1980 housing stock and can stop the job outright. |
Work down this list with each quote in hand and mark every row as included, excluded or allowed. That marking exercise, not the arithmetic, is where the value is.
How to make bids comparable before they arrive
- Write a one-page scope and give the same page to everyone. Room by room, what is removed, what is installed, who supplies what. Bids against a common document need much less levelling.
- Choose your fittings first, or set the allowance yourself. Tell every bidder to carry the same allowance figure. Then the allowance column cancels out entirely and only the exclusions differ.
- Ask for exclusions to be listed explicitly. A quote with no exclusions paragraph is not a quote with no exclusions.
- Ask for a labour and materials split. You cannot negotiate a variation, or check the budget, against a single lump sum.
- Ask for the programme in weeks and the payment schedule against milestones. Price and time are one decision, not two.
- Check licence, insurance and references yourself, and do it before you compare prices rather than after, so an uninsurable bid never enters the comparison.
What levelling cannot tell you
The adjusted total is a cost, not a value. Three things stay outside it, and on a marginal decision they matter more than the money.
Programme. A bid two weeks shorter is worth real money if the space is your only kitchen or bathroom, and worth very little on a spare bedroom. Convert the difference with the downtime cost calculator and add it to the longer bid before you rank them; two weeks of a family eating out routinely exceeds a $1,000 price difference.
Risk of variation. A contractor who has opened up a wall, checked the joists and priced a repair has already absorbed uncertainty you would otherwise carry. Their bid should be higher and it is genuinely worth more. Where nobody has investigated, expect discovery and size your buffer with the contingency calculator.
Contract quality. A fixed-price contract with a defined scope, a payment schedule tied to milestones, a stated programme and a written variation procedure protects you far more than a few hundred dollars of price difference. Where a bid is cheap because it is informal, you are not buying a discount; you are buying the risk yourself.
Finally, remember the exclusions you decide to keep. If you accept a bid that excludes the disposal because you will hire the container yourself, that container is now your line item. Size it with the debris and dumpster calculator and put it in the budget, or the saving you levelled for will quietly reappear as an overrun.