Front-loading
Front-loading is assigning more value to early line items on a schedule of values than they actually cost, so that a contractor is paid more than it has earned in the opening months.
Also written as unbalanced bid, front loaded schedule of values.
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Reviewed by Eric Collin · President and Founder of Firmo Construction, 20+ years in preconstruction and bid evaluation
The total contract price is unchanged, which is what makes it hard to see. Mobilization, excavation, and other early activities are inflated, and later activities carry correspondingly less. The contractor improves its cash position at the owner's expense and shifts risk onto the end of the job.
The risk it creates is concrete. If a front-loaded contractor defaults at seventy percent complete, it has already been paid for eighty-five percent, and the money to finish is not there. Retainage exists partly to blunt this, which is why front-loading and pressure to reduce retainage often arrive together.
It is detected by comparing the schedule of values against a reasonable cost distribution for the trade, and by noticing when early line items are round and generous while later ones are oddly precise. A bidder unwilling to substantiate its breakdown is telling you something.
A related version appears in unit price bidding, where a contractor overprices units it expects to overrun and underprices those it expects to underrun. The bid appears competitive at the estimated quantities and is not at the actual ones.
- Schedule of values
A schedule of values is the breakdown of a contract price into line items, used to measure progress and to determine how much is payable in each application for payment.
- Retainage
Retainage is a percentage of each progress payment that is withheld until the work is complete, as security that the contractor will finish and correct its work.
- Unit price
A unit price is a rate per unit of measure — per cubic yard, per linear foot — used for work whose quantity cannot be known when the bid is submitted.
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