How to Write a Construction Proposal and Land Your Dream Project

11

Min Read

Tom Smery

The hiring of a construction contractor by a project owner is done through a procedure known as the bidding process, which takes place prior to the start of a construction project. As a contractor, you must be able to convince a potential client to choose you by presenting a proposal that accurately describes the range of work you intend to accomplish and conveys confidence in your company's capacity to do so.

Your construction company may exhibit effective leadership, have devoted, hard-working employees, or even fill a niche that few others do; however, if you cannot clearly communicate these qualities to a potential client in a written construction proposal, you may be losing many opportunities. To help you write a client-winning proposal, we will go over the necessary preparation and essential elements you must cover.

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What Is a Construction Proposal?

When competing for contracts, a construction proposal, also known as a bid, is presented. It contains comprehensive project details, such as quotes from suppliers that provide an estimate of the cost of the construction project's raw materials. Additionally, it provides estimates from subcontractors for the work they will perform on the construction project. A good construction proposal can also serve as your company's portfolio, assurance, legally-binding agreement, as well as an effective marketing and sales tool.

It helps you prevent disputes later on in the construction process because it is far more detailed than a project bid, and it also gives you a chance to present your client with a workable alternative in case their expectations are not reasonable and manageable through the construction project. You may promote your business, talents, and reputation while demonstrating to potential clients how well you understand their construction project by simply writing a strong construction proposal.

But there are a few things you must take care of before you sit down to write your business proposal.

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Before You Write a Construction Project Proposal

Your construction proposal must be excellent if you want to impress your potential clients and get the green light for your project. And you can't write a convincing proposal without some preparation work. Here are some tips to help you get it right.

Do Your Research

Any successful construction project must start with research. Don't start writing your proposal until you have done extensive research on every facet of what you'll be writing and delivering. This also entails becoming familiar with the bidding process, particularly if you're trying to land a government project as they are frequently subject to strict regulations.

Often, construction proposals fall short in accurately defining the goods or services they aim to provide. When this happens, your client will have a lot of inquiries to make in order to comprehend the scope of work, and will probably find your proposal difficult to understand, therefore might disregard it.

Check State and Local Laws

Depending on the state you will be working at, there might be mandatory requirements that your construction proposal must follow. These may outline the specific contact information you should include, the amount limit you are allowed to request as a deposit, a legal registration of all contractors and subcontractors participating in the project, as well as a dispute resolution clause.

Meet With Your Prospective Clients

When creating a construction bid proposal for a new prospective client, it is crucial to understand who they are and what they are all about. Arranging a meeting with your clients before drafting a proposal will allow you to learn more about their industry and how it relates to the work you are looking to acquire, as well as obtaining essential information about the project that may be vital to include in your proposal. You may also do this over the phone, or online via email, as long as you can gather all the relevant information. This will ultimately help you show that you have the necessary knowledge, competence, and capacity to do the job and meet their needs.

Now let's go over the information you must never miss when drafting your construction proposal.

Use Bonsai’s Free Construction Proposal Template

Drafting your own project proposal may seem like a daunting task, and with so many elements required to do it right, you might be missing essential information along the way. To make your life easier, use Bonsai's free construction proposal templates, which you can fully personalize to fit your business needs and use it for all of your construction projects.

Stop wasting time and use a proposal template that has been legally reviewed and approved by thousands of professionals in the construction industry. Check out these key elements that will make it the go-to option for any construction firm.

  • They're fully customizable so you can emphasize your professionalism by adding your branding elements and registered trademarks.
  • You can integrate multiple pricing packages to provide easy-to-understand alternatives and a fee summary.
  • There is no need for time-consuming back and forth or lengthy email chains as our proposals can be accepted and signed from within the document itself.

What are you waiting for? Get your free construction bid proposal template today, and while you're at it, try Bonsai's all-in-one product suite that has everything you need to run your construction business like a pro.

What Items Should Be Included in Construction Proposals?

Your construction proposal serves to 'paint a picture' for your clients by describing what you are planning to accomplish in clear detail. It should include information about specific materials, a payment plan, and expenses. In addition to presenting you in a professional light, a polished proposal safeguards both you and your client from miscommunication and disagreement. When you write proposals, make sure you include the following essential elements.

Specification of Parties Involved

The construction bid proposal is once again a safety net for you and your clients, outlining their responsibilities and liabilities, as well as any information or resources they must give. For it to be a legally binding construction contract, your proposal must list all the parties involved, your client's information, be worded accurately, without errors, and it needs to be signed by all parties.

Include the parties' full names, addresses, federal ID numbers (if applicable), contractor registration numbers, names of any sales people participating. You may also add your company logo or any other branding elements to give your proposal a more professional presentation.

Detailed Scope of Work

You should focus your attention mostly on the ‘scope of work’ section, this is where you will spend most of your drafting time. You must be as specific as you can in this portion of the proposal because it is by far the most crucial. Here is where you list the steps involved, the materials used, the model and spec numbers, the colors, etc. You can't afford to be vague and general in your scope of work as you might end up doing work you didn't agree to or having to honor a warranty because the materials were not specified.

Describe the building work that will be done as part of the project, providing specifics on the activities, deliverables, and phases. Include any necessary tools, labor, and supplies as well. Even a construction plan is acceptable. Take note of the certifications needed for the job, as well as the details on an annual inspection, a bond, and insurance.

Finally, you can include a critical closing statement that clarifies the conditions for the type of construction contract. Discuss the materials, commodities, labor, and services explicitly stated in this section.

Cost Estimate

Your construction proposal should also include a very thorough cost estimate covering every last detail. It must include all direct expenses such as labor (including subcontractors), equipment, the quantity takeoff, which accounts for all the materials required to finish the build, as well as a sum for allowances (which we will cover below). You must also account for all of your indirect expenses, such as office rent and operating expenses. Your clients will want to know exactly what their money will be spent on, so don't leave anything out.

You could also include a "success criteria" section to discuss your project goals and how the costs previously discussed will help achieve these goals. This will help your clients understand the need for each expense and envision the finished project.

Payment Schedule

Establishing a payment plan is necessary to maintain a healthy cash flow as well as to prevent having to wait 30 days for a sizable payment upon project completion. Again, depending on your state laws you'll be allowed to ask for a certain percentage of the total project cost as a deposit, and then you'll have to estimate how much each stage will cost you so you can lay out a clear payment schedule.

Typically, you'll use the deposit to pay for all materials, dumpster rental fees, and labor for the work. Each following payment guarantees you'll have enough money on hand to cover the subcontractor or labor costs in full. For example, you might send construction invoices as you reach established milestones (completing rough plumbing, electrical installation, etc...), or specify a certain date when you expect to get payments.

You should also define any upfront payment that you might request in the case of special orders such as windows, doors, custom accessories, etc. A good strategy to make sure you always cover the material costs, labor and sub contractors, is to set the last payment to be just the amount of profit you expect from the project, so that in case of any dispute you're not left with any loss.

Project Schedule

Your clients will often do some planning around renovations, arrange accommodations for pets or furnishings and even schedule trips to be away while work is being done, so it's important to the client (and mandatory by law) to provide a detailed project schedule. The description of the construction schedule will include the anticipated start date for the work as well as the anticipated completion date.

You should also include additional dates, such as approvals, easements, and permitting, as well as milestones like when one phase concludes and another begins. In order to further protect you and your clients, you should also include milestone completion dates and who is responsible for delays, depending on the reason for the delay. Include the day on which all the contractors received notification to proceed with the construction project.

Allowances

In the context of construction, an allowance is a set sum of money typically set aside for tasks you'll need to subcontract. Although it is anticipated that these figures won't be exactly correct, they will offer your client a general notion of what to anticipate. These figures will later be "fine-tuned" by having the subcontractor evaluate the work plan on location, either before or after the contract is signed.

Your construction proposal would usually include allowance items in your proposal for work that is frequently subcontracted, such excavation, concrete, heating, plumbing, electrical, cabinets, appliances, flooring, and painting. This helps you create a comprehensive project budget proposal for your clients that includes all of the predicted subcontractor items.

Unforeseen Circumstances

This section is often overlooked, but it is a very important addition if you want to save a ton of time, money, and disputes.  The agreed-upon project costs always exclude any potential expenses associated with dealing with unforeseen, incidental, or hidden costs (such as those related to unsafe wiring, illegal plumbing practices, mold, structural problems, inspector or engineer requirements added after my agreement, and any other unanticipated conditions discovered after the construction project starts).

Of course, there will be additional costs in these situations for testing, handling, cleanup, containment, disposal, or elimination of the unanticipated problem, so you must stipulate that your client consents to cover these charges.

Alternative Prices

You should think about identifying alternatives that could improve the project's value or, on the other hand, lower project costs through value-engineering in addition to explaining your scope to the customer. Generally speaking, it's advised to only give alternative costs when the project specifications are vague or you have the impression that the client is receptive to alternatives.

You could also include different pricing packages to show your client what you could do with different budgets and what you could do with cheaper or more expensive materials. Include as many alternatives as you find appropriate, but always be mindful that an excessive number of options might be confusing for your clients. Many construction companies do this to highlight the services offered and showcase the value that their initiative might bring to the project.

Warranty Information

The warranty portion of a construction proposal is another safety measure. Here you specify what repairs you are responsible for making and under what circumstances, as well as what you are not responsible for, such as general wear and tear, misuse, or lack of proper maintenance by the owner. You can also include an 'Incidental and Consequential Damages' disclaimer.

Strong Call to Action

Your construction proposals must include a strong final call-to-action that leaves your clients with a positive impression of your business. Make sure to clarify the procedures to follow if they wish to do business with you, and present yourself as someone who is professional but also a pleasure to work with.

This is your opportunity to let your personality shine through in your closing remarks, inviting your client to give you a call or accept your proposal online via email. Make it clear you are open to any concerns they may have and express how much you look forward to making their dream project come true.

Tom Smery
Tom Smery is a certified CPA for over a decade. In his free time, he writes articles to pass on his expert knowledge on taxes and accounting. Thomas has a wide range of deep knowledge on 1099 taxes, and finance topics. You can find him fishing when he is not preparing taxes for his clients or writing about accounting.

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