Comprehensive and Detailed Explanation From Exact Extract (CSI-aligned, paraphrased)
CSI describes several techniques in the procurement documents to manage cost uncertainty. When the owner is concerned that the project may exceed the budget when bids are received, the most common tool to allow scope flexibility is the use of alternates.
Alternates (often called “bid alternates”):
Are defined variations in the work (additions or deletions) that bidders price separately from the base bid.
Can be additive (additional scope that can be accepted if the budget allows) or deductive (scope that can be removed to reduce cost if needed).
Give the owner the ability, after seeing the base bids, to accept or reject alternates to bring the project within the available budget without redesigning the entire project.
This fits the scenario in the question exactly: the owner anticipates that the budget may be tight and wants a mechanism to adjust the final contract amount if bids come in high.
Why the other options are not the primary CSI method for this budget-flexibility issue:
A. Cash allowanceAn allowance is a set amount included in the contract sum to cover a defined but not fully specified portion of the work (e.g., artwork, specialty items). It helps manage scope uncertainty, but it doesn’t systematically provide a way to reduce overall cost after bids in the same way alternates do.
B. Quantity allowanceThis is a form of allowance tied to a presumed quantity (e.g., rock excavation). It addresses uncertain quantities, not overall budget flexibility in the bidding process.
C. Unit pricingUnit prices provide fixed prices per unit (e.g., per cubic meter, per square meter) for work items whose final quantities are uncertain. They are useful for adjustments after contract award as quantities change, but they are not the primary tool for adjusting total scope to meet the owner’s budget at bid time.
Therefore, the CSI-aligned answer for allowing flexibility when bids may exceed the budget is:
Key CSI-Related References (titles only, no links):
CSI Project Delivery Practice Guide – procurement and pricing strategies, including alternates and allowances.
CSI Construction Specifications Practice Guide – Division 01 sections on Alternates, Unit Prices, and Allowances.
CSI CDT Study Materials – explanations of bid alternates and their role in controlling project cost.
