“What margin should we bid at” is the wrong first question. The contract form the tender is written under decides what that margin is actually protecting you against — recompute from there.
Key takeaways
“Bid it at ten percent” is a sentence that means at least two different things, and which one a firm means often depends on which contract form the tender was written under. Recomputing both readings on the same job is the fastest way to see how much the ambiguity is worth.
A CCDC 2 stipulated-price contract “establishes a single, pre-determined fixed price, or lump sum,” which is exactly why bidding under CCDC 2 is the highest-stakes place to set margin: once signed, the contractor absorbs any cost overrun the price does not already anticipate, without recourse to reprice unless a formal change applies. A CCDC 3 cost-plus contract, by contrast, is priced “on an actual-cost basis, plus a percentage or fixed fee,” which makes the margin transparent and largely insulated from estimating error — the fee is the margin, negotiated up front rather than buried in a lump sum. A CCDC 4 unit-price contract sits between the two: “the total price is determined by multiplying the unit price by the actual, measured quantity of work performed,” so the margin built into each unit rate scales with real, measured volume rather than an estimate made weeks before the work started.
“Ten percent” bid as a markup on cost and “ten percent” bid as a margin on the final price produce two different bid prices from the same cost estimate, and the gap is not trivial — the worked example below runs both on the same job. Neither convention is wrong; what is wrong is using the word “margin” in an estimate review without saying which one is meant, because a ten-percent target that quietly shifts definitions between the estimator and whoever signs off on the bid is a silent, unrecorded change to the number. The choice of contract form itself is worth pinning down at the same time — see stipulated price vs cost-plus for how the two allocate cost risk before margin ever enters the conversation.
Pressure to win a bid pushes price down toward cost, which is a statement about behaviour, not a number this page will invent. What is real and citable is that the underlying market moves within a single bid cycle: Statistics Canada recorded the total value of investment in building construction down 1.3% to $22.6 billion in March 2026, then down a further 0.3% to $23.4 billion in May 2026. That is investment spending, not a materials-cost index, and it is not evidence of what any one input costs — but it is direct evidence that the conditions a bid was priced under are not static between submission and award, which is exactly why the two contract-form questions above have to be answered before a margin number is defended.
Before a margin figure is signed off: which CCDC form governs (stipulated price, cost-plus, or unit price), whether the number quoted internally is on cost or on price, and — on a unit-price job — whether the estimate the margin sits on top of is a fixed quantity take-off or a rate that will be applied to whatever gets measured; see unit-price contracts and quantity risk for how that last distinction is usually framed. A firm tracking its results against these distinctions over time — see running a post-bid debrief that teaches — will usually find its margin erosion clusters in one contract form far more than the others, which is a more useful finding than a single blended average across every job type.
The contract-form question above answers what the owner pays for; a second, separate question is what the contractor is actually pricing margin against on any given line item. Self-performed work — labour and material the contractor’s own crews put in place — carries production risk the estimator controls directly: crew rates, output per day, weather exposure. Subcontracted scope carries a different risk: the sub’s own quote, and whether that quote is still valid by the time the prime bid is priced and awarded, which is as much a scheduling problem as a pricing one. A blended margin figure applied uniformly across both kinds of scope on the same stipulated-price bid tends to under-price the self-performed lines, where the contractor is the only party absorbing production risk, and over-price the subcontracted lines, where a competitive sub market has usually already squeezed the number tighter than the contractor’s own blended target assumes.
A general contractor estimates direct and indirect cost on a stipulated-price job at $1,850,000 and wants a ten-percent margin.
Priced as a margin on the final price, the target is: price such that cost is 90% of price, i.e. price = $1,850,000 ÷ 0.90 = $2,055,556. Priced as a markup on cost, the target is instead: price = $1,850,000 × 1.10 = $2,035,000. Same job, same “ten percent,” and a $20,556 gap between the two bid prices — about 1% of the job, decided entirely by which definition of the word the estimator used.
Now take the same margin decision into a CCDC 4 unit-price job instead of a stipulated-price one. A cost of $38.18 per cubic metre, marked up to a 10%-on-price target, gives a bid unit rate of $38.18 ÷ 0.90 = $42.42 per m³. Estimated quantity is 10,000 m³, for an estimated contract value of $424,222. If the work measured on site actually comes to 10,800 m³ — an 8% overrun against the estimate — CCDC 4’s own rule is that the contractor is paid for the actual, measured quantity, so revenue is 10,800 × $42.42 = $458,160, a $33,938 increase that flows through automatically at the bid rate. Run the identical 8% quantity overrun on the CCDC 2 lump-sum version of this job instead, and none of that extra volume is paid at all unless it clears a formal change — the same estimating error, under two different CCDC forms, produces an automatic $33,938 gain in one and an unpaid $33,938 exposure in the other. Every figure in both scenarios is a constructed illustration of the CCDC forms’ own stated mechanics, not a real job’s numbers or market pricing — the rule, not the estimate, is what changes the outcome.
No Canadian source — CCDC included — publishes a standard or benchmark margin figure, and this page will not invent one; what matters more than the number is whether “10%” is defined as margin-on-price or markup-on-cost, since those two readings of the same target produce different bid prices on the same job.
Mostly, on the underlying cost — a CCDC 3 contract is priced on “an actual-cost basis, plus a percentage or fixed fee,” so cost overruns are largely passed through rather than absorbed. What moves under a cost-plus contract is the fee negotiation itself, which is where the margin decision actually sits.
Unit price. A CCDC 4 contract pays “the unit price” against “the actual, measured quantity of work performed,” so a quantity that comes in higher than estimated is compensated at the bid rate automatically, rather than requiring a formal change the way a stipulated-price contract would.
A 30-minute call is enough to tell you whether your bid margin matches the contract form it is priced under.
