Procurement & finance
Abnormally Low Tender
A bid so far below the others, and below any plausible cost, that it suggests the bidder has misunderstood the scope, made an error, or intends to recover the shortfall through claims and variations.
The tempting response is to take the money. The correct response is to investigate, because an abnormally low tender is not a saving — it is a transfer of risk to you, and the mechanism by which the bidder recovers is a claims campaign that will consume your project team for two years.
And if the bidder simply made an error, the outcome is often worse: a contractor working at a loss will cut corners, slow down, defer payments to its supply chain, and eventually stop. The cheapest bid becomes the most expensive project you have ever run.