Also called: rule of three bids, three quotes, competitive bidding.
Three is a threshold, not a magic number. Its purpose is to establish a defensible market price and to demonstrate that the award was not arbitrary, which matters when you are spending someone else's money.
The rule fails in practice for a mundane reason: contractors do not respond. Chasing three bids for a $6,000 job can take two weeks of phone calls, and the third bid often arrives too late to matter or never arrives at all.
A rule satisfied with three non-comparable bids satisfies the paperwork and not the intent. Three prices for three different scopes still do not establish a market price.
Why it matters
For property managers and board members the three-bid rule is often a fiduciary obligation rather than a preference — and the file needs to show not just three numbers, but that they were all bidding on the same job.
Related terms
- Apples-to-apples comparison — An apples-to-apples comparison is one where every bid covers identical work under identical conditions, so the only variable left between them is price. Achieving it requires a single shared scope; without one, the phrase is aspirational.
- Bid leveling — Bid leveling is the process of adjusting competing contractor bids onto a common basis so their prices can be compared directly — adding in what one bidder excluded, stripping out what another included, until every number covers the same work.
- Scope of work — A scope of work is the written, itemised description of exactly what a contractor will do on a job — the tasks, the materials, the quantities and the conditions. It is what a price is a price for.
Quotrium drafts the scope, sends it to the contractors you pick, and scores every bid against it line by line. See how it works.