Published: 5 Oct 2026 · Last verified: 5 Oct 2026 · Next review: Jan 2027 Cost figures are re-checked against permit records quarterly. Changes are logged in Corrections.
Three bids. $289,000, $341,000, $318,000. The cheapest is not the cheapest — you just cannot tell yet, because no two bids are describing the same job.
This post is the method we use on every build in this series to make bids comparable. It has no numbers of its own. It is a sorting machine: feed any ADU bid through it and the honest number falls out the other side.
Rule zero: same drawings, same scope
Before you sort anything, fix the input. Every contractor bids on the same plan set and the same written scope of work — square footage, story count, foundation type, finish grade named explicitly (“mid-grade,” with two or three named reference points), and the site conditions you already know (slope, access, distance to utilities).
A bid against a different scope is not a lower price. It is a different project. If a contractor wants to propose an alternative — prefab instead of site-built, say — that is a second bid on a second scope, compared separately. Our modular vs. site-built breakdown exists precisely because those two scopes diverge in specific phases.
Send the scope in writing. If it is not written, it is not bid.
The four buckets
Every line in every bid goes into exactly one bucket:
| Bucket | Meaning | Example |
|---|---|---|
| Included | In the contract price, contractor’s risk | Framing labor, roofing, drywall |
| Allowance | Placeholder budget — you will pay the difference | “$4,000 appliance allowance” |
| Excluded | Real work, not in this price — you pay someone else | Utility trenching, permit fees |
| Owner-paid | Paid directly by you, outside the contract | Building permit fees, school district fees, utility connection charges |
The headline number is only the Included bucket. The honest number is all four added together. A $289,000 bid with $30,000 of allowances set 40% too low and $25,000 of exclusions is a $344,000+ bid wearing a costume.
Do this literally: make a four-column sheet — ours is free at the worksheet — and force every bid into it. The bid that resists the buckets is telling you something.
Allowances: where low bids hide
An allowance is a guess the contractor is allowed to get wrong at your expense. They are legitimate for genuinely unknowable selections, and they are the single most abused line in residential bidding. Interrogate each one:
- What does this allowance actually buy? “$4,000 appliance allowance” means nothing until you know it covers a specific refrigerator, range, dishwasher, and microwave at a named grade. Price that package yourself in ten minutes.
- Is the allowance realistic for the grade you specified? A mid-grade kitchen appliance package is not $4,000. If the allowance is 40% below retail for the specified grade, the bid is $6,000+ light and the contractor knows it.
- How many allowances are there? One or two (appliances, maybe lighting) is normal. Eight allowances is a bid built of placeholders — the final price is unknowable and the contractor prefers it that way.
Rule of thumb: add up all allowances, then ask yourself what happens if every one of them runs 25% over. If that breaks the budget, the bid was never real.
The exclusion list that matters most
Exclusions are not dishonest by themselves — some work genuinely belongs outside a builder’s contract. What matters is that you see them before signing, because every item below is mandatory in reality:
- Utility laterals and trenching. Sewer, water, gas, electric from the main to the unit. Distance-dependent, invisible until dug. Frequently five figures on its own.
- Soils report and survey. Required before engineering in most jurisdictions; almost never in a builder’s bid.
- Permit, plan-check, and impact fees. Paid by you to the city/county/school district — see our soft-costs breakdown for what these run by jurisdiction type. On an 800 sq ft ADU these are $28,000–$40,000 before construction starts, and they appear in zero contractors’ bids.
- Crane, pumping, and access costs. Tight lot? Concrete that cannot be wheelbarrowed in gets pumped; roof trusses get craned. Access-driven costs barely scale with unit size and surprise first-time builders.
- Electrical service upgrade. If the existing panel cannot carry the ADU load, someone pays for the upgrade — find out whether that someone is in the bid.
- Landscaping and hardscape beyond a stoop. Most bids end at the building’s edge. Paths, fences, and planting are yours.
For each exclusion, write down who does it and what it costs. An exclusion with no assigned owner and no price is a hole in the budget, not a savings.
The soft costs nobody bids
This deserves its own section because it is the largest invisible line: design, engineering, energy calculations, plan check, permits, school fees, and utility charges are almost never in a contractor’s bid, yet they are 10–13% of the total build in this series. Our six-phase ledger puts them in Phase 1 precisely so they cannot hide.
Before you compare any two bids, add the soft-cost line from the relevant post for your jurisdiction — Los Angeles County, San Diego, San Jose / Bay Area, San Francisco, Sacramento — to both bids equally. It does not change which bid wins, but it changes whether the winner fits your budget.
Payment: milestones, not dates
California law caps the down payment: no more than 10% or $1,000, whichever is less, before work begins (Bus. & Prof. Code §7159). Everything after that should follow this shape:
- Payments tied to completed milestones — foundation poured, framing complete, rough-in passed inspection — never to calendar dates. “30% on June 1st” pays for time passing; “25% at framing completion” pays for work done.
- Retention on each payment. Holding back 5–10% until the milestone is verified complete is standard and reasonable.
- Final payment only at final inspection and lien releases. Not at “substantial completion.” Not when the contractor needs it for the next job.
Walk away from: a third or half upfront, large deposits for “materials” without supplier receipts in your name, or any payment schedule the contractor cannot map to the inspection sequence.
Contingency and change orders
Hold 10–15% contingency yourself. On a $320,000 build, that is $32,000–$48,000. It covers unknowns — soil conditions, existing-structure surprises, price movement over a 9–14 month build — not upgrades. It is not inside the contract, not inside allowances, and not the contractor’s to spend. If you finish without touching it, it is savings.
Change orders in writing, priced before the work starts. Every deviation from the scope — and there will be deviations — gets a written change order with a fixed price, signed before execution. Verbal “yeah, we can do that” is how $320,000 becomes $370,000 without a single decision you remember making.
Putting it together: the honest number
For each bid, compute:
Included + realistic allowances (repriced by you) + excluded items (priced by owner) + owner-paid soft costs = comparable total
Then compare the comparable totals — and compare them against our modeled medians for your scenario, not against each other in a vacuum. A bid 20% below every model in this series is not a bargain; it is a bid with buckets you have not found yet.
Normalize any bid into the six phases →
Download the blank worksheet — CSV, no email required →
Methodology and sources
This post is a method, not a model — but every factual claim in it is sourced:
| Claim | Source |
|---|---|
| Down-payment cap (10% / $1,000) | Cal. Bus. & Prof. Code §7159 |
| Soft-cost bands by jurisdiction | ADU soft costs · city posts in this series |
| Six-phase ledger structure | Methodology |
| Contingency guidance (10–15%) | Series standard, stated in every city post |
If a contractor practice described here conflicts with your local requirements, the local requirement wins — see Corrections.
Our position
We don’t build ADUs. We don’t sell plans. We don’t sell your information to contractors. Nothing on this site has been paid for or reviewed by anyone whose costs we publish. More on About.
This is construction cost information — not a quote, and not legal, engineering, or financial advice. Confirm contract requirements with a licensed California contractor and, for payment law, the Contractors State License Board.
Frequently asked questions
How do I compare ADU contractor bids?
Bid all contractors on the same drawings and the same written scope, then sort every line of each bid into four buckets: Included (in the price), Allowance (a placeholder budget), Excluded (you pay someone else), and Owner-paid (permits, fees, utilities you pay directly). Two bids are only comparable once all four buckets are filled in for both.
What is an allowance in a construction bid?
A placeholder dollar amount for work whose final cost isn’t known yet — common for appliances, fixtures, and finishes. Allowances are where low bids hide: a $3,000 appliance allowance against a $9,000 actual selection turns a ‘cheap’ bid expensive after signing. Always ask what each allowance actually buys.
What do ADU bids usually exclude?
The most commonly excluded items: utility laterals and trenching, soils and survey work, permit and impact fees, crane or concrete pumping if access is tight, landscaping and hardscape beyond a basic stoop, and sometimes the electrical service upgrade. None of these are optional in reality — excluded just means they are not in that contractor’s number.
How much should I pay a contractor upfront for an ADU?
In California, a contractor may not take more than 10% down or $1,000, whichever is less, before work starts (Business and Professions Code §7159). Legitimate payment schedules tie every subsequent payment to a completed milestone — foundation, framing, rough-in — never to calendar dates. Walk away from anyone asking for a third or half upfront.
What contingency should I budget for an ADU build?
10% to 15% of the construction cost, held by you — not by the contractor, and not inside allowances. On a $320,000 build that is $32,000 to $48,000. Contingency is for the unknowns you cannot see yet (soil, existing conditions, price movement), not for upgrades you choose.