Procurement & finance
Buy-Out
The process of converting the tender allowances in a winning bid into actual awarded subcontracts and orders. The gap between what you allowed and what you actually buy is the buy-out gain — or the buy-out hole.
Buy-out is where a contractor’s margin is genuinely made or lost, and it happens in the first months of a project, quietly, while everyone is looking at mobilisation.
It is also where the pressure to award fast collides with the value of awarding well. A package bought in a hurry, on an uncompeted basis, gives back the margin the estimator earned — and nobody will ever attribute the loss to that decision.