The Conclusion of The Construction Proposal Is the Contract

Two men in suits shaking hands

 

 

 

Putting A Period at The End of The Proposal Communication

 

The discussion of “Building a Better Proposal” began with the problems that arise from poor communication. We talked about this being the responsibility of the contractor and some of the reasons this is a problem.


Over the last several weeks we laid out the “Blueprint for Building a Better Proposal” going over the different parts of the system, an explanation of the system, gathering of information, writing a scope of work, putting a price to the project and finally how to put all of the pieces together into a proposal ready to present to the customer.

 

Once you have a signed Proposal, conclude with a Contract.

 

 

 

 


The Contract completes the Proposal process and covers things beyond construction. Things like funding, additional documents, property boundaries, time within which the project will be started and terms and conditions.

  • Construction Funds – This isn’t something that is relevant to every project but will be to some. If it is, the information would be included in this section of the contract.

 

  • Description of the Work – A complete and full Scope of Work could be included here but not needed if the customer has been presented a Proposal. If so then a brief description of the project can be inserted and a reference to the specific Proposal and any other additional documentation, i.e. blueprints, drawings, spec sheets, governing body documents, etc.

 

  • Property Lines – This is another category that isn’t relevant to every project but certainly can be. If working inside of city limits, normally there are set back requirements and easements, this makes it critical to know where the property boundaries are or to have a licensed surveyor make this determination.

 

  • Payment – Like the description of work above, this should be in the Proposal. If no Proposal was given to the customer, then this should be specified here. If a Proposal was given repeat it again here.

 

  • Time for the Completion of Work – The duration of the work from start to finish is typically expressed in the Proposal. Due to the varying number of Proposals prepared and presented to customers, there’s no way of knowing what order they will be signed and returned. With the Proposal being signed and returned prior to the preparation of the Contract, the start date of the project can be determined and specified here.

 

  • Terms and Conditions – An in-depth explanation of specifications, descriptions, expectations, insurance, warranty, media permissions, etc. These will be specific to your company, type of work and location.


I would recommend that to have a legal expert or attorney review your Proposal and Contract templates as well as any other agreement document to make sure they meet your specific needs.


 

We’ve now gone through the process of meeting with a customer all the way to getting a signed Contract. Now it’s time to do the “construction” part of the project.

 


Communication will be needed in this part too.


Just because you have a signed Proposal and Contract don’t think the communication is done. In most construction project changes occur. These changes need to be treated like separate, sub-projects of the original with Change Orders.


This is a topic of discussion for a different day and one that we’ll have in the future.


If you know anyone in a construction trade or related industry that you think would benefit from learning the “Blueprint for Building a Better Proposal” share a link to this Weekly Solution or the to the Solution Building website. 

 

 

Don’t forget to check back in the next couple of weeks for the upcoming announcement.

 

How To Put The Pieces Of The Construction Proposal Together

The Last Piece Is Always the Most Fun

If you’ve ever done a jigsaw puzzle, you know how frustrating it is to get to the last piece…and you can’t find it anywhere. This is the same frustration a customer feels when they don’t have the full picture of what is to be included in their construction project.


Giving the customer a complete and thorough proposal gives them the full picture.


Doing puzzles growing up I remember when getting near the end of a puzzle the level of excitement would begin to amp up. In the accelerated push to get it finished more people would get involved, in the rush, often a piece would get lost. Finding the missing piece and putting it in made the picture complete.


There’s a real sense of accomplishment when the last piece of the puzzle is put in place.


It’s the same finishing a proposal…the final piece is now in place. The hard work of gathering the info, preparing the Scope of Work, and pricing are done. All that’s left is putting them together to provide a clear picture for the customer.


Jane Smith’s laundry/sewing room project.


Start with the Proposal template.

Insert the customer information in the open areas at the top of the first page as it pertains to the project.

To: This is the name of the person who requested the proposal or is responsible for the project organization.

Re: This is a name describing this specific construction project.

For: This is the party or organization for who the project is going to be done for.

At: This is the address of where the construction project is going to be performed.

Copy and paste the description of the work to be performed and material to be supplied from the Bid Sheet on to the Proposal template. (See below)

Next, take the prices from the Worksheet for each individual described action on the Proposal and place it on the right side of the page. At the end of each section put the total price for that section. (See below)

Now that the description of the work to be performed, the materials to be used, the prices for each action and the totals of each section have been placed on the Proposal template, it’s time for the project to be totaled. Complete the Proposal by defining the payment schedule, determining the date in which the Proposal will expire and the duration of time to complete the project. The only thing left is signing of the document.

Once the proposal is signed, I recommend following up with a Contract. Even though the signed Proposal serves as a legal and binding document, there is nothing in the Proposal about when the project will be started. The Contract also includes more detailed customer information, a list of any referenced documents, a place for construction funding information, property specifics and legal terms and conditions.


We’ll look at a Contract in the next post.

If you’ve found this series on the “Blueprint for Building a Better Proposal” helpful and you or someone you know would be interested in the templates for Building a Better Proposal, keep checking back. In the next few weeks we have a big announcement coming.

How To Build A Better Proposal

 

 

 

 

One of The Foundational Building Blocks of a Successful Company

 

Small and medium size construction companies struggle with preparing detailed and accurate proposals. This problem isn’t restricted only to small companies. It begins there, but only gets worse until they either get big enough to absorb the costs of guessing at project costs or give up trying and quit.


When I started doing construction forty plus years ago, I had no clue how to prepare proposals and like every other small construction company…I guessed. I used a common method called, trial and error. Doing proposals this way is a real crap shoot and doesn’t leave much room for mistakes.


Preparing accurate proposals that communicate clearly doesn’t have to be a roll of the dice.


Early on I began working on a proposal system that worked for me. It has gone through years of experimenting and tweaking to become what it is now. Over the last fifteen or twenty years I’ve been asked multiple times by other contractors who saw my proposals how I did them. I just assumed that everybody else was doing something similar.


Several years ago, it hit me that this wasn’t the case after being hired by other contractors to do proposals for them. This is when it became apparent that there was a real need for a proposal system. I kept pushing this down the road until God hit me upside the head with a board and pointed out that my system could help other contractors.


I’ve been busy with construction projects and life in general and continued to procrastinate developing a system that other companies could use. Earlier this year I decided I better get to work on this before I get hit in the head again.


I’m happy to announce that we are currently in the final stages of preparing a proposal system that will be made available for other contractors to use. It’s currently being tested by independent contractors. We are rebuilding the Solution Building website to allow for downloading the proposal documents. It’s not just for general contractors either, it will work for any of the construction trades.


This proposal system will include templates for:

 

  • Bid sheet – A Word document with all the construction sections and individual items already listed out with space for filling out the scope of the work to be done, dimensions, materials, locations, etc., as needed for communication.

 

  • Worksheet – An Excel spreadsheet with all the construction sections and individual items already listed out with optional overhead and profit markups inserted in the appropriate cells.

 

  • Estimate – A word document with spaces to fill in the pertinent information, i.e. customer’s information, what will or will not be supplied by the contractor, the scope of work, the estimated price for each specific element and a total estimated price.

 

  • Proposal – A word document with spaces to fill in the pertinent information, i.e. customer’s information, what will or will not be supplied by the contractor, the scope of work, the proposed price for each specific element, a total project price, payment arrangements and project duration.

 

  • Contract – A word document with spaces to fill in the pertinent information, i.e. customer’s information, list of referenced documents, construction funding information, property specifics, project start date and legal terms and conditions.

 

  • Proposal-Contract – A word document that is a combination of a proposal / contract in one.

 

It also will include a data base for material and labor costs:

 

  • Data Base – An Excel spreadsheet with prices for material and labor for a wide variety of specific construction tasks. This information will be copied and pasted to a blank worksheet.

Clear communication between contactor and customer is difficult, especially when there isn’t any. Last week I wrote about the importance of communicating clearly through proposals and reasons contractors avoid doing them


Next week I will break down the proposal process even more.

 

 

What Should Be Included in A Contractor’s Communication

 

 

 

 

The Nuts and Bolts of a Construction Agreement

 

The last two weeks I wrote about how to prevent your construction project from falling apart and the high cost of no communication


In the first post I focused on –

  • The fact that bad construction experiences are way too common
  • The most frequent reasons that it happens
  • The number one reason it does


Last week’s emphasis was on –

  • The high cost of this bad communication
  • Reasons communication is avoided
  • The results that can be expected when it doesn’t


What can you, as the customer, do to avoid having a bad construction experience?


It’s not as difficult as it initially appears. It will require some time, effort and education. Reading this week’s solution is a good start.


Communication needs to be thorough and understandable. If it’s not, then it really isn’t communication. When considering a construction project, it is even more important because you have a lot at stake, i.e. time, money, finished project, etc.


Before you start your project, you should expect a written proposal. This proposal should include:

  • Information pertaining to customer and job – Customer’s name, project address, what the job is, who the proposal is going to.
  • What is going to be provided by the contractor – Labor, services, material, equipment, etc.

  • Scope of work – A written-out description of what the project is going to include, specific work to be done, dimensions, materials to be used, etc.
  • Price – Amount for each specific element of the project in addition to a total for the complete project.

  • Payment arrangement – When the payments will be made (at specific time intervals or at completion of specific portions of the project).
  • Project duration – The amount of time the project will take to do after starting.


Now you have the important pieces you need to make an informed decision about your project. You should be able to determine if you and your contractor are in agreement about what the project includes, the price to have it done and how long it will take. One piece of information that is still missing, is when will the project get started. This information will come in a contract after the proposal has been signed.


If your contractor is qualified to do your project, they should be busy doing other construction projects as well as preparing other proposals. This means they can’t realistically schedule your project until the proposal has been signed.

 

Then they can follow up the signed proposal with a contract. This contract should include:

  • Information pertaining to customer and job – Same as on the proposal including any additional pertinent legal information needed.
  • Reference to any additional documents – This could be drawings, specific information about materials used, requirements of the governing body, etc.
  • Construction funding – Pertinent banking information if money is being borrowed.
  • Property specifics – Location of boundaries and/or need for surveying.
  • Start time – The time for the project to be started and the duration.
  • Terms and conditions – More in-depth explanation of project specifications, expectations, requirements and permissions.

 

This amount of communication can lead to information overload, but don’t let it. If you don’t understand something, ask your contractor. If they’re unwilling or unable to satisfactorily explain it to you, this may be another indication that they aren’t the right fit for you.

 


This construction project is your dream don’t let it turn into a nightmare.

 

I’ve spent a lot of time on the communication reason construction projects fall apart. Next week we’ll look at the second half of the list.

  • Poor quality
  • Cluttered and unorganized job site
  • Left hanging part way through an unfinished project
  • Lack of scheduling or poor time management

 

Share your construction nightmares in the comments below.