Two contractors can agree on every unit price, every quantity, every percentage — and still bid tens of thousands of dollars apart. The difference is the order in which markups compound. Sitework bidding uses a waterfall, not a flat markup, and if you've never walked the math step by step, the final number can look almost mystical. It isn't. Here it is, start to finish.
The sequence
The industry-standard order, and the defaults DirtBid uses:
- Base cost — the sum of all direct line items
- + Mobilization (6%) — moving in, setting up, moving out
- + Contingency (8%) — the known-unknowns of dirt work
- + Overhead (15%) — the office, the estimator, the insurance on the yard
- + Profit (10%) — the reason to take the risk
- + Bond (1.5%) and Insurance (2%) — both computed on the marked-up subtotal, then added together
The worked example: $1,000,000 base
| Step | Math | Running total |
|---|---|---|
| Base cost | — | $1,000,000.00 |
| + Mobilization 6% | × 1.06 | $1,060,000.00 |
| + Contingency 8% | × 1.08 | $1,144,800.00 |
| + Overhead 15% | × 1.15 | $1,316,520.00 |
| + Profit 10% | × 1.10 | $1,448,172.00 |
| + Bond 1.5% | $1,448,172 × 0.015 = $21,722.58 | — |
| + Insurance 2% | $1,448,172 × 0.02 = $28,963.44 | — |
| Total bid | — | $1,498,858.02 |
A million dollars of direct work becomes a $1,498,858.02 bid — an effective multiplier of about 1.4989. Every intermediate value is auditable, which matters the day an owner's rep asks you to defend the number line by line.
Why the order matters
Because each step compounds on the last, overhead is charged on mobilization and contingency, profit is charged on overhead, and bond premiums are charged on everything. Flatten the same percentages — just add 42.5% to base — and you'd bid $1,425,000: $73,858 less on the identical scope. That's not a rounding difference; on thin sitework margins it can be the entire profit on the job. Contractors who "simplify" the waterfall are quietly underbidding themselves.
What each layer actually pays for
The percentages stop feeling arbitrary once you see what they buy. Mobilization covers the unglamorous bookends — floating excavators to the site, fencing, temporary facilities, and the demobilization everyone forgets to price. Contingency is the earthwork tax: weather days, quantities that run over plan, the utility conflict nobody drew. Overhead keeps the company existing — the estimator who priced this job (and the nine bids that didn't land), the office, the trucks. Profit compensates the risk of guaranteeing a price on work that happens underground. And bond and insurance are priced by outside parties — the surety and the carrier — as a percentage of everything above them, which is precisely why they sit last in the sequence and why computing them on base cost alone is mathematically wrong, not just stylistically different.
How owners should read a contractor's waterfall
If you're the one receiving bids, the waterfall is a diagnostic tool. A bid with no visible contingency isn't braver — it usually means the contingency is hidden inside unit prices where you can't negotiate it, or that change orders are the profit plan. A profit line meaningfully above 10% invites a conversation; one at 0% should worry you more, because nobody works for free on purpose. And when two bids differ, compare them layer by layer rather than bottom line to bottom line: identical base costs with different markup structures tells you a very different story than different base costs with identical markups. Transparency in the waterfall is a proxy for how the contractor will behave when something goes wrong at yard three.
Percentages are yours; discipline is the point
Your bonding rate, overhead reality, and market posture will move the percentages — the defaults above are honest Virginia norms, not commandments. What shouldn't move is the structure: a fixed order, computed in exact decimal math, stored at every step. That's how DirtBid runs it under the hood, and why every generated estimate — see how contractors use it — can survive an audit to the penny.