Unit prices vs. evaluation quantities, City of Cottonwood Flats unit priced contract

The 52 line items on the Schedule of Unit Prices were tested against the City’s estimated evaluation quantities and against work orders under the current contract. Six line items carry 71 percent of the total evaluated bid price. With markup targeted to where it weighs least in the evaluation, and within a limit per line item, expected gross margin is about 12 percent higher at the same total.

City of Cottonwood Flats, WAIFB 2026-14, building and electrical tradesUnit priced contract, 3 years + one optional 1-year extensionSchedule of Unit Prices, 52 line itemsWork orders 2023–2025Prepared Nov 5, 2026

Summary

Total evaluated bid price

6 of 52 line items carry 71% of the total

Carpenter, electrician, plumber, laborer and painter hours plus the markup on building materials make up $6.20M of $8.69M at an even 12% markup. The 30 smallest line items add up to 10.3%. Sources: Schedule of Unit Prices and Instructions to Bidders, Basis of Award, p. 9.

Next step: check the direct cost of these six lines first.

Work order profile

Electrician hours weigh twice as much in the evaluation

The schedule lists 15,000 electrician hours a year. Work orders 2023–2025 averaged 6,200 hours a year (Attachment D). The line carries 22.8% of the evaluated price but 11.0% of expected cost, a weight ratio of 2.08. Carpenter hours go the other way: 18,000 vs. 23,500 hours, ratio 0.66.

Next step: ask the City during the question period how the estimated quantities were derived.

Markup

Targeted markup adds $92,500 a year in gross margin at the same total

With markup set by weight ratio, within our own pricing limit of ±5 points of 12% and never below 4%, the total evaluated bid price stays at $8.69M. Expected gross margin rises from $799,000 to $892,000 a year (+11.6%). Markups range from 7.0% to 17.0%.

The gain assumes work orders follow history. If they follow the bid quantities, gross margin is the same as with an even markup. Whether a targeted markup within that limit could be read as an unbalanced bid under the Instructions to Bidders is a judgment call for procurement counsel before the bid is submitted.

Markup tested against the evaluation quantities

Pick a mode and a markup. The total evaluated bid price is calculated as in the Basis of Award: unit price times estimated quantity. Expected gross margin uses the work order profile. Click a bar or row to see the line’s sources and test a different direct cost.

Mode
Reasonableness check. Targeted markup stays within of the even markup and never below the minimum markup, so every price covers its direct cost and can be explained from the cost buildup. Labor rates are also checked against prevailing wage plus fringe (chapter 39.12 RCW). The limit and the minimum markup are the bid team’s own pricing rules, not legal limits. The Instructions to Bidders allow the City to reject a bid if any of the unit prices are excessively unbalanced (either above or below the amount of a reasonable bid) to the potential detriment of the City.
Total evaluated bid price
Expected revenue per year, excl. pass-through material and subcontract cost
Expected gross margin per year

Share of total evaluated price by line item

6 largest line itemsOther line itemsShare of expected revenueCumulative share

Even vs. targeted markup

Both use the same even markup and limit. Targeted markup gives the same total evaluated bid price.

EvenTargetedDifference

Schedule of Unit Prices

ItemDescriptionBid qtyOrdered/yrDirect costMarkupUnit priceEvaluatedShareRatioStatus

Sources and method

Sources

  • IFB_2026-14_Instructions_to_Bidders.pdfInstructions to Bidders. Section 8, Basis of Award: lowest responsible bidder on the Total Evaluated Bid Price, estimated quantities for evaluation purposes only, unbalanced unit prices24 pages
  • IFB_2026-14_Contract_and_General_Conditions.pdfUnit priced contract under RCW 35.23.352 as applied to code cities by RCW 35A.40.210. Work orders issued as needed, 3-year term with one optional 1-year extension31 pages
  • Schedule_of_Unit_Prices.xlsxBid form: labor rates by trade, markups and unit-priced tasks with estimated annual quantities52 line items
  • Attachment_D_Work_Order_History_2023-2025.xlsxQuantities ordered per line item and year under the current contract52 items × 3 years
  • LI_Prevailing_Wage_Rates_Journey_Level.pdfWashington L&I prevailing wage rates for the project county, wage plus fringe, in effect on the bid date; under RCW 35.23.352(13)(e) the rates are updated at the start of each contract year14 trades
  • Cost_Buildup_Unit_Priced_Contract.xlsxDirect cost per line item: prevailing wage and fringe, payroll taxes, workers’ comp, vehicle and tools, material handling52 items

Method

  1. The 52 line items were read from the bid form with unit and estimated quantity. Markup lines are multiplied by the cost basis stated on the form, as the Basis of Award describes.
  2. Direct cost per line came from the cost buildup. Unit price = direct cost × (1 + markup). For markup lines, direct cost is the handling cost as a percentage of material or subcontract cost.
  3. The expected work order profile is the average quantity per line item ordered in 2023–2025 (Attachment D).
  4. Weight ratio = the line’s share of the total evaluated price divided by its share of expected cost, both at direct cost. Above 1, the line weighs more in the evaluation than in work orders.
  5. Targeted markup = even markup + k − limit × log₂(weight ratio), capped at the reasonableness limit and the minimum markup. The constant k is set so the total evaluated bid price equals the total at an even markup.
  6. Expected gross margin = (unit price − direct cost) × expected quantity, summed per year.

Assumptions and limitations

  • Work order history is not a forecast. Under the Basis of Award, the City guarantees no minimum quantity. The Work order profile slider shows the result if work orders follow the bid quantities instead.
  • Revenue and gross margin % exclude the material and subcontract cost that is passed through; for markup lines only the markup counts. Gross margin is before home office overhead and risk. Annual prevailing wage updates, which apply to unit priced contracts at the start of each contract year, and any price adjustment in later years are not modeled.
  • Prices are calculated unrounded. Rounding to whole cents changes the total by less than 0.01%.
  • The reasonableness limit and minimum markup are internal pricing rules, not legal thresholds. The prevailing wage check is a floor only; a labor rate must also cover payroll taxes, insurance and overhead.
  • For reference, federal sealed bidding treats a bid as materially unbalanced when it is based on prices significantly less than cost for some work and significantly overstated for other work, and there is reasonable doubt that it will result in the lowest overall cost (FAR 52.214-10(e)). This municipal contract is governed by its IFB and Washington law, not the FAR.
  • The bid documents do not say how the estimated quantities were derived.
  • The wage-plus-fringe floors per trade should be checked against L&I’s published prevailing wage rates for the county, using L&I’s own trade titles (for example, Electricians – Inside), by the firm’s prevailing wage specialist before the bid is submitted.