A "bid deduct" applies to contractors working on particular building projects, which provide the ability to leave figures related to workers compensation and other insurance out of the bid they made to win the contract.
Usually, when a contractor takes a job, they need to buy insurance, in case someone gets hurt while working on the project. They factor these costs into the bid they submit for the project. When they say, "we can do this for $X" that X includes the cost of workers compensation and other insurance.
However, for some large projects, this insurance is already covered. Large projects predominantly work by having a single large company farm work out to multiple subcontractors. In these situations, the main contractor might have insurance coverage that also applies to any subcontractor they bring on. This type of coverage is called an Owner Controlled Insurance Program, or OCIP.
The bid deduct lowers the subcontractor's bids, because they don't need to include the insurance coverage. It's already baked into the cost of the overall project.
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![Finance: What is Spread?](https://media1.shmoop.com/video/thumbnails/COURSE.FINANCE.206_770x433.jpg)
Finance: What is Spread?48 Views
finance a la shmoop. what is spread? before we start just no. get your mind
out of the gutter. spread refers to the money value between [100 dollar bill]
a bid and ask price under a market maker structure of trading securities. no more
wire hangers, a plastic hanger company is publicly traded on an exchange like
Nasdaq where buyers bid for a price to purchase and sellers ask for a price to [Nasdaq wall shown]
trade. no more wire hangers is bid this moment at 37:23 a share by buyers
willing to buy right now at that price and is being asked at this moment at a
price of 37.31. note the eight cents a shared difference in the share prices.
that dif is the spread between the two prices, and it's worth noting that in [bread is buttered]
extremely volatile stocks, the spread widens. and in boring highly liquid
stocks which don't move much, the spread tightens or is narrower. that is on a
volatile equivalent of no more wire hangers the spread might grow to 20 or
30 cents a share whereas a boring name that pays a big dividend and the stock
never moves much we're thinking AT&T here, [man snores at a desk]
well that spread might be just three or four cents. so why grow? well because a
market maker in a volatile stock doesn't want to be caught losing money on her
inventory. if no more wire hangers suddenly gapped down to 37.10 a share [equation shown]
well it would be likely less than the average of what the market maker paid
for her quote "inventory" unquote in that stock from which he was making a market
in it. each time the shares trade the market makers dip into that spread to [woman dips cracker in butter]
pay their bills and allow them to keep doing business. so that's spread. and it's
not the type that Prince used to sing about. [man on stage]
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Spread to treasuries is an indication of risk associated with a given debt or bond offering.