Buyout is when the estimate becomes real. Once the GC wins the job, the project team re-bids or negotiates each trade, levels the proposals for scope, and issues subcontracts and purchase orders. Each signed agreement becomes a commitment against the budget.
A typical buyout process:
- Build a buyout log listing every budget line or cost code to be committed, with its budgeted amount.
- Send bid packages with clear scope, drawings, specs and schedule.
- Level bids so each covers the same scope, catching exclusions and gaps between trades.
- Negotiate and award, then issue the subcontract or PO with the agreed scope and price.
- Record the committed amount against the budget and note the variance.
Speed matters. The longer buyout drags, the more exposure to price escalation, and the more risk that long-lead items fall behind schedule. Many GCs target buying out the major trades within the first few months.
Why it matters
Until a trade is bought out, its cost is an estimate. Fast, careful buyout turns uncertainty into committed numbers, which makes cost-to-complete and the forecast margin far more reliable. Scope gaps found after buyout usually come out of the GC’s pocket.
Common mistakes
- Awarding to the low number without leveling scope, then paying for the gaps later.
- Leaving the buyout log informal, so nobody knows what’s still uncommitted.
- Treating every dollar under budget as profit before the job is further along.
- Letting long-lead procurement wait for full trade buyout.
How os.construction handles it
We’re building buyout tracking where each subcontract and PO becomes a commitment against the budget line it buys out, so uncommitted scope and variance are visible on the job record. It’s in development.