Why Learning to Read ADU Bids Is a Critical Homeowner Skill
You have collected three to five bids for your ADU project (as recommended in our guide on how many bids to get). Now comes the hard part: understanding what each bid actually includes, identifying the differences between them, and making an informed decision about which contractor to hire.
Financial Disclaimer: The cost figures and financial comparisons in this article are general estimates based on the California ADU market as of 2026. Actual bid amounts will vary based on your project's specific scope, location, materials, and market conditions. These figures are provided for educational purposes only and should not be used as definitive pricing guides.
ADU construction bids are complex documents that can span 10 to 50+ pages. They use industry-specific terminology, make assumptions that may not be obvious, and often contain carefully worded exclusions that can dramatically increase your actual cost if you do not catch them before signing. In this guide, we will teach you how to read, analyze, and compare ADU bids like a construction professional.
The Anatomy of an ADU Construction Bid
A professional ADU construction bid should include several key sections. Understanding the purpose of each section helps you evaluate the bid as a whole.
Cover Letter and Company Information
This section introduces the contractor and their company. Look for the contractor's name, company name, and CSLB license number; their physical address, phone number, and email; insurance information (or a statement that certificates of insurance are available upon request); and a brief description of their qualifications and ADU experience.
Project Scope and Description
This is the most important section of the bid. It should describe, in detail, what work is included. The scope should reference your architectural plans (by plan number and revision date) and list all major construction activities from site preparation through final cleanup.
Cost Breakdown
The cost breakdown is where you will spend most of your analysis time. It should itemize costs by construction phase or category. Here is what a thorough breakdown looks like:
| Line Item Category | Typical Cost Range (800 sq ft ADU) | % of Total |
|---|---|---|
| Site Preparation and Demolition | $5,000 to $15,000 | 2% to 6% |
| Foundation | $15,000 to $30,000 | 6% to 12% |
| Framing and Structural | $25,000 to $45,000 | 10% to 18% |
| Roofing | $8,000 to $18,000 | 3% to 7% |
| Windows and Exterior Doors | $8,000 to $20,000 | 3% to 8% |
| Exterior Finishes (Siding, Stucco) | $10,000 to $25,000 | 4% to 10% |
| Plumbing | $12,000 to $25,000 | 5% to 10% |
| Electrical | $10,000 to $22,000 | 4% to 9% |
| HVAC | $5,000 to $12,000 | 2% to 5% |
| Insulation | $3,000 to $8,000 | 1% to 3% |
| Drywall | $6,000 to $14,000 | 2% to 6% |
| Interior Finishes (Paint, Trim) | $8,000 to $18,000 | 3% to 7% |
| Flooring | $5,000 to $15,000 | 2% to 6% |
| Kitchen Cabinets and Countertops | $8,000 to $25,000 | 3% to 10% |
| Bathroom Tile and Fixtures | $5,000 to $15,000 | 2% to 6% |
| Permits and Fees | $8,000 to $20,000 | 3% to 8% |
| Utility Connections | $5,000 to $25,000 | 2% to 10% |
| Landscaping and Site Restoration | $3,000 to $10,000 | 1% to 4% |
| General Conditions and Overhead | $15,000 to $35,000 | 6% to 14% |
| Contractor Profit | $15,000 to $40,000 | 6% to 16% |
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Allowances are budget placeholders for items you have not yet selected. They are one of the most misunderstood and potentially misleading elements of a construction bid.
Common Allowance Items in ADU Bids
- Flooring: Typical allowance of $3 to $8 per sq ft
- Kitchen countertops: Typical allowance of $40 to $80 per sq ft
- Light fixtures: Typical allowance of $100 to $300 per fixture
- Plumbing fixtures: Typical allowance of $200 to $800 per fixture
- Appliance package: Typical allowance of $3,000 to $8,000
- Cabinet hardware: Typical allowance of $5 to $25 per piece
Why Allowances Matter for Bid Comparison
A bid with lower allowances will appear cheaper, but you may end up paying more if your actual selections exceed those allowances. When comparing bids, look at the allowance amounts carefully. If one contractor's total bid is $20,000 less than another's but their allowances are $15,000 lower, the actual price difference is only $5,000.
How to Handle Allowances
The best approach is to select as many finishes and fixtures as possible before receiving bids so the contractor can provide actual costs instead of allowances. If allowances are necessary, ask the contractor what specific products their allowance covers. Visit showrooms to understand what your selections will cost and adjust the allowance amounts if needed before signing the contract.
Reading the Exclusions Carefully
The exclusions section is where bids can become misleading. This section lists everything the contractor is NOT including in their bid. Common exclusions that can add significant costs include:
| Common Exclusion | Potential Cost If Excluded | Should It Be Included? |
|---|---|---|
| Building permits and fees | $8,000 to $20,000 | Yes, in most cases |
| Utility connections | $5,000 to $25,000 | Yes, absolutely |
| Architectural and engineering plans | $10,000 to $25,000 | Sometimes separate |
| Soil/geotechnical report | $2,000 to $5,000 | Often separate |
| Landscaping | $3,000 to $15,000 | At least basic restoration |
| Appliances | $3,000 to $10,000 | Varies by contractor |
| Window coverings | $1,000 to $5,000 | Often excluded |
| Furniture and staging | $2,000 to $10,000 | Always excluded |
Step-by-Step Bid Comparison Process
Follow this systematic process to compare your ADU bids accurately and fairly.
Step 1: Normalize the Scope
Before comparing prices, make sure all bids include the same scope of work. Create a checklist of every major work item and mark which bids include each item. If a bid excludes something that others include, either ask the contractor to add it or adjust the bid price to include an estimate for that item.
Step 2: Equalize the Allowances
Adjust all bids to use the same allowance amounts for comparison purposes. If Contractor A uses a $5/sq ft flooring allowance and Contractor B uses $8/sq ft, adjust one to match the other so you are comparing apples to apples.
Step 3: Compare Category by Category
Do not just compare the bottom-line numbers. Compare each cost category individually to understand where and why the bids differ. This will reveal which contractors are pricing specific items higher or lower and help you identify potential issues.
Step 4: Assess Value, Not Just Price
The cheapest bid is not always the best value. Consider the contractor's experience and reputation (see our guide on evaluating contractor portfolios), the quality of materials specified, the warranty offered, the projected timeline, communication quality during the bid process, and the completeness and professionalism of the bid document itself.
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Schedule Free ConsultationRed Flags to Watch for When Comparing Bids
For a comprehensive list of warning signs, see our detailed guide on red flags in ADU contractor bids. Here are the most critical issues to watch for during the comparison process.
Significantly Lower Total Price
A bid that is 20%+ below the average of other bids is almost certainly missing scope items, using inferior materials, or planning to make up the difference through change orders.
Lump-Sum Pricing Without Breakdown
A single lump-sum price without line-item detail makes it impossible to compare bids accurately. Insist on a detailed breakdown before making any comparison.
Unrealistic Timelines
If one bid promises completion in half the time of the others, the contractor is either using unrealistically optimistic scheduling or plans to cut corners on quality and safety.
Missing Permit and Fee Costs
Some contractors exclude permit fees to make their bid appear lower. These fees are real costs that you will need to pay regardless, so they should be part of the comparison.
Tips for Negotiating After Comparing Bids
Use Your Comparison as Leverage
If you prefer Contractor A but their price is higher than Contractor B, share your comparison analysis (without revealing specific numbers from other bids). Point to specific line items where Contractor A is higher and ask if they can match or reduce those costs.
Negotiate Value Engineering
Instead of asking for a blanket price reduction (which often leads to corner-cutting), ask the contractor to suggest specific value-engineering alternatives. For example, using a different roofing material that is less expensive but equally durable, or simplifying the foundation design without compromising structural integrity.
Ask About Payment Terms
If you cannot negotiate a lower price, try negotiating better payment terms. A more back-loaded payment schedule reduces your financial risk. See our article on ADU contract requirements for recommended payment schedules.
Bundle Decisions
If a contractor is bidding on multiple elements (design, permitting, and construction), negotiate the full package. Bundling services often results in a lower overall price than hiring separate providers for each phase.
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View Floor PlansFrequently Asked Questions About Comparing ADU Bids
Why do ADU bids vary so much in price?
ADU bids can vary by 30% to 50% or more for several reasons: different scope interpretations (what is included versus excluded), different material quality levels, different overhead and profit margins, contractor experience and demand, and different subcontractor pricing. The key is understanding what drives the price difference, not just looking at the bottom-line number.
Should I share one contractor's bid details with another contractor?
No. Sharing specific bid amounts or details between contractors is considered unprofessional and can backfire. Contractors who learn you are sharing their pricing may withdraw from the project or submit inflated bids. Instead, communicate in general terms: "Your bid is higher than others in certain areas, and I am wondering if there is room for adjustment."
How long should I take to compare bids before making a decision?
Allow one to two weeks for a thorough bid comparison. This includes time for initial review of each bid, creating a normalized comparison spreadsheet, preparing follow-up questions for each contractor, receiving answers to follow-up questions, and making your final decision. Do not rush this process. A hasty decision on a $200,000+ project is never wise.
What if all the bids are higher than my budget?
If all bids exceed your budget, you have several options. Reduce the project scope (smaller ADU, fewer custom features, simpler finishes). Adjust your timeline (some contractors offer lower prices for off-peak scheduling). Explore ADU financing options to increase your available budget. Consider a phased approach where you build the shell now and complete the finishes later (though this adds coordination complexity). Get additional bids from contractors who specialize in more affordable ADU construction.
Is the most expensive bid always the best?
No. The most expensive bid may reflect higher overhead, a premium brand name, or simply an inflated profit margin. The best bid is the one that offers the best value: fair pricing, a complete and detailed scope, quality materials, an experienced contractor with a strong track record, and clear contract terms. Price should be one factor among many in your decision.
Should I hire someone to help me compare bids?
For projects over $200,000, hiring a construction consultant or owner's representative to help you compare bids can be a worthwhile investment (typically $500 to $2,000 for a bid review). They can identify discrepancies, flag potential issues, and help you negotiate more effectively. An architect who designed your ADU can also assist with bid review since they understand the scope better than anyone.
Need help comparing bids for your ADU project? Our team offers bid review services to help you make the best decision.
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Schedule Free ConsultationFrequently Asked Questions About Reading ADU Construction Bids
What is the most important section to compare across ADU bids?
The scope of work section is the most critical part of any ADU construction bid. This section should list every task the contractor plans to complete, from demolition and site prep through final cleanup. When comparing bids, focus on whether each contractor has included the same scope items. A bid that looks significantly cheaper may simply be leaving out important work items like grading, utility connections, or final landscaping. Create a spreadsheet listing every scope item from each bid side by side to identify gaps. For more on evaluating bids, read our guide on red flags in ADU contractor bids.
Should I always choose the lowest ADU bid?
No. The lowest bid is not always the best value. A significantly low bid often signals that the contractor has underestimated the project scope, plans to use lower-quality materials, or intends to recover costs through change orders during construction. California homeowners should look for bids that fall within a reasonable range of each other and focus on the overall value, including the contractor's experience with ADU projects, their communication responsiveness, warranty terms, and references from recent clients. A mid-range bid from a highly qualified contractor often delivers the best outcome.
How detailed should material specifications be in an ADU bid?
Material specifications should be detailed enough that you could independently purchase the same items. Each major material should include the brand name, product line, model number or grade, color or finish, and quantity. Vague descriptions like "standard grade flooring" or "builder-grade fixtures" give the contractor too much discretion and often result in disappointments. If a bid lacks specific material callouts, ask the contractor to revise it with detailed specifications before you compare it against other proposals. Learn more about what should be included in your agreement in our guide on what an ADU contract should include.
How long should I expect to wait for an ADU construction bid after a site visit?
A thorough ADU construction bid typically takes 7 to 14 business days after the initial site visit. The contractor needs time to measure the site, consult with subcontractors, price materials, and prepare a detailed proposal. If a contractor sends you a bid within 24 hours of visiting your property, it likely lacks the detail and accuracy you need for an informed decision. On the other hand, if a contractor takes more than three weeks without explanation, that may indicate disorganization or lack of interest in your project. A reasonable turnaround time suggests the contractor is thorough but also values your business. Check our article on how many bids to get before choosing a contractor for additional guidance on the bidding process.
