What distinguishes a "bid" from an "estimate"?

The distinction between a bid and an estimate is rooted in their purpose and level of formality. A bid is a formal proposal submitted by a contractor or supplier, detailing the price and terms under which they agree to perform a certain scope of work. It typically includes specific conditions, timelines, and may reflect the contractor’s commitment to the project, making it a definitive offer rather than just a guess about costs.

On the other hand, an estimate is generally a less formal approximation of the costs associated with a project. It is often used in the early stages of project planning and is subject to change as more information becomes available. An estimate provides a preliminary understanding of potential costs, but it lacks the binding nature of a bid.

This understanding of formality and detail helps clarify why a bid is characterized as formal, compared to the more tentative nature of an estimate. Consequently, the correct answer accurately captures this important distinction, reinforcing the idea that a bid is a comprehensive proposal that outlines specific costs and terms, whereas an estimate serves as an initial evaluation of costs.