ALTERNATE BIDS Additional Information Definitions The amount stated

ALTERNATE BIDS (Additional Information)

Definitions • The amount stated in the bid to be added to or deducted from the amount of the base bid if the corresponding change in project scope or alternate materials and/or methods of construction is accepted. • Additive – An alternate bid resulting in an addition to the same bidder’s base bid. • Deductive – An alternate bid resulting in a deduction from the same bidder’s base bid.

Need for Alternates • There is an understandable need for alternates. • In case the project goes over budget, one or more of the alternates can then be adapted to keep the project within the owner's budget, which allows an award to be made. • Can be accomplished either with Additive or Deductive Alternates. • Instead of starting with a higher Base Bid and accepting Deductive Alternates to bring the price down to the owner's budget, start with the minimum Base Bid and accept Additive Alternates until the price is brought up to the owner's maximum allowable budget. • Either way, clients can use the alternates to bring their projects within budget, and get the most construction for their dollar.

Additive vs. Deductive • Pricing an Additive Alternate is like pricing another small project, separate from the original base bid. • The estimators do not have to be concerned with how much they have included in their Base Bid for the work in question. • They simply calculate the cost of the work involved in the Additive Alternate and then include that alternate price on the bid form along with their base bid. • This saves the Bidders time that they can use to look for ways to reduce their Base Bid. • This will result in their Base Bid prices being lower.

Additive vs. Deductive • When pricing a Deductive Alternate, the contractors must not only be concerned with the cost of the work in question, they must also be concerned with, and confirm, how much money they have included in the base bid estimate for the work being deleted. • Naturally, the contractor does not want to deduct more than he/she has included in their base bid for the work in question. • So, they have to take time to find these costs in their Base Bid estimate before including these same costs in the Deductive Alternates.

Additive vs. Deductive • In pricing a Deductive Alternate, contractors may not credit the project for the overhead and profit on the work being deleted. • When time is running out on bid day, contractors will quickly put together the major cost items in a Deductive Alternate, often leaving out their overhead and profit on these items. • Their motive for doing this is not to make more money. • They simply may not have time to properly calculate the fees associated with the work being deleted in the Deductive Alternate.

Additive vs. Deductive • Another advantage to owners in asking for Additive Alternates in lieu of Deductive Alternates is that omission errors favor the Owner rather than the Bidder. • On Bid Day the Bidders are extremely busy putting their bids together. • Small errors and omissions do occur. • If they mistakenly omit the cost of a portion of the work described in a Deductive Alternate, then it's to the Bidder's advantage if that Deductive Alternate is accepted, because a portion of the work would be deleted without the bidder properly crediting the owner for that work. • On the other hand, if the Owners accepts an Additive Alternate, where the Bidder has mistakenly omitted the cost of a portion of the described in the Additive Alternate, then the advantage goes to the Owner.

Additive vs. Deductive • • • Both Deductive and Additive Alternates take time away from preparing the Base Bid and should be used only when absolutely necessary, and then they should be limited to a maximum of three. It is best to make these alternates Additive. The reasons for using Additive Alternates all favor the owner, whereas using Deductive Alternates may favor the Bidders. Deductive alternates take more time away from preparing the Base Bid, and may not include credits for all the associated costs and fees. However, Additive Alternates: – – – • 1) Are easier for the Bidders to prepare, 2) Take less time to prepare, 3) Have less chance for errors, 4) Favor the Owner if all associated costs are not included, 5) Can be used for the same purpose as Deductive Alternates, and 6) Can save your client thousands of dollars over Deductive Alternates. From an Owner's viewpoint, Additive Alternate is more advantageous.