Red Flags to Watch for in Construction Bids: What Smart Clients Always Look For

Choosing the right contractor or construction management team is one of the most important decisions you'll make for your project. And while bids are a useful tool, not all proposals are created equal. In fact, some bids may look great on the surface—but hide costly surprises, delays, or even shady practices.

So how can you protect yourself and your investment? It starts with knowing what to look out for. Here are the top red flags to watch for in construction bids—plus tips on how to read between the lines.

Significantly Lower Than Other Bids

It might feel tempting to go with the lowest bidder—especially if your budget is tight—but a bid that’s way below the average is often a warning sign. That contractor may:

• Be cutting corners on materials or labor

• Not fully understand the project scope

• Plan to hit you with change orders later

Tip: Ask for a breakdown of costs and compare line items to other bids. If something feels too good to be true—it probably is.

Vague or Missing Details

A professional bid should include clear, itemized descriptions of what’s included (and what’s not). Watch out for bids that simply list a lump sum with little explanation.

Red flags include:

• No details on labor or materials

• Missing payment schedule

• No clear project timeline

Tip: Ask for a scope of work, payment terms, and a construction schedule in writing.

No License or Insurance Information

Any reputable contractor should list their license number and proof of insurance right in the bid—or be ready to provide it without hesitation.

If a contractor:

• Avoids the topic

• Isn’t properly licensed

• Can’t show proof of general liability and workers' comp insurance

…then walk away. You're putting yourself at legal and financial risk.

High Deposit Requirements Upfront

While deposits are normal, an unusually large upfront payment (like 40–50%) is a red flag. You should never have to pay the majority of the project cost before work even begins.

Tip: A typical deposit is around 10–20% of the total cost. Make sure payment terms are tied to progress milestones, not vague dates.

Pressure to “Sign Now”

If a contractor is pushing hard for you to sign on the spot—especially without giving you time to read the contract—that’s a serious red flag. Trustworthy professionals respect your time to review and compare bids.

Warning signs:

• “This price is only good today”

• “I can give you a big discount if you sign now”

• “We don’t really need a contract—we can just start”

Always insist on a written contract and take time to review it.

No Timeline or Unrealistic Timeline

Your bid should include a start date, estimated duration, and major project milestones. Be cautious of contractors who give vague timelines or promise to “start next week and finish in no time.”

Tip: Ask how the contractor manages delays and what their average timeline is for similar projects.

Lack of References or Past Work

If the bid doesn’t include a portfolio or reference list, ask for it. A contractor who can’t—or won’t—show you previous projects or happy clients may be trying to hide something.

Follow-up tip: Actually call the references and ask:

• Was the project completed on time and on budget?

• How was communication throughout?

• Would you hire them again?

Construction is a major investment—financially, emotionally, and logistically. The bid you choose sets the tone for everything that follows. By knowing what red flags to watch for, you can avoid stress, save money, and choose a partner who gets the job done right.

Need help reviewing a bid or comparing your options? Our experienced team offers free consultations and transparent estimates—no surprises, no pressure.