Why bid shopping exists Unethical behaviour Main contractors generally bargain with subcontractors from a position of power, which May et al. (2001) consider can lead to unethical behaviour and exploitation of the subcontractor. Vee and Skitmore (2003), in their survey of professional ethics in the construction industry, found that post-award bid shopping is viewed as being unethical because the decision to bid shop deprives the subcontractor of work fairly won in a competitive tender. Post-award bid shopping is considered unfair and reveals commercially sensitive tendering information. Those that benefit from the practice consider it acceptable while those that suffer from it consider it to be wrong.

Bid shopping increases profit Post-award bid shopping does not reduce the contract price; any reduction in costs would be for the main contractor‟s benefit and increases their profit (Shash 1998). The prevailing opinion on why bid shopping occurs is that it appears to be attributed to the main contractor's desire to increase profit

Bid shopping is considered an unethical practice used by contractors to gain advantage over their clients in the bidding process. Bid shopping can be harmful to the construction industry because it creates an unhealthy business environment, eliminates the benefits of the bid system, promotes lower standards of quality performance, delays project completion and reduces job site safety.

Just in timeTo try and prevent contractors from shopping their bids, subcontractors submit their bids to the contractor just prior to the time that the contractor is required to submit their bid to the owner. The reasoning is that the contractor won’t have time to shop their bids to other subcontractors. This practice is often referred to as “just in time bid submittal.”

While this practice, used by subcontractors as a defense against bid shopping, does keep the contractor from bid shopping, it can also act as a double-edged sword. The problem is, if the subcontractors turn in their bids just prior to the deadline of the contractors bid turn, the contractor is unable to check for any discrepancies or errors. These discrepancies and errors, of course, lead to increased costs, disputes over the scope of work, and the general inefficient prosecution of work

Bid depositoryTo help prevent bid shopping and provide clear scopes to all the subcontractors, an online bid depository may be available. Bid depositories assist the contractor to manage the scopes of work prior to bid day. The bid depository reviews the construction documents and creates bid forms that are customized to each project allowing the bids to compare “apples to apple” for the various scopes of work. While bid depositories may not cover all the scopes of work on a project, they assist the general contractor in ensuring that the scopes of the various trades are uniform. Bid depositories also reduce if not eliminate the opportunity for bid shopping to occur.

project buyoutTo compensate for insufficient time during the bidding process for a contractor to analyze the bids, generally a period of time is allotted after the award of the bid to the general contractor and prior to the award of subcontracts and purchase orders, during which the general contractor completes the review of all bids. This period of time is often referred to as “project buyout”. Project buyout is the process of converting all subcontractor bids to subcontracts and all material quotes to purchase orders (Johnston, 2004).

What happensNo contractor enjoys the prospect of making less profit than desired. Therefore, the shopper has strong incentive to develop ways to recoup that lost profit. One of these ways is to cheapen quality. The shopper may not use the specified material and/or allows workmanship to suffer in order to gain back the profit lost.

Another way is to search for opportunities to increase the amount of one's contract through extras. The bidder is constantly motivated to seek change orders, often pricing them at substantial premiums above the actual cost of the work done. In either of the two scenarios, conflict is sure to result, and legal issues arise. The original fee is lost or reduced by discounting and the added burden of legal fees to resolve the ensuing conflict is inevitable.