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Building a Winning Construction Proposal
Chapter Six

Building a Winning Construction Proposal

Okay, now that you’ve added your profit margin, overhead, and taxes to the bare costs of your base bid, you now have your sales price for the job and you’re ready to build your construction proposal. Depending on who you’re providing pricing to—either directly to a customer or to a general contractor—will determine the format and detail you should include in the document.

Let me explain, general contractors usually do not care for all the extra verbiage and fluff that goes into a construction proposal and would rather receive a standard bid form for the construction project they’re accepting bids on. This is because they’re interested in seeing the cost broken out in a format that can be easily compared to competing electrical contractors and checked quickly for scope to ensure nothing is missing from the electrical package that was included in the bidding documents. Ultimately, they will be responsible for delivering a finished product that includes everything outlined in the scope of work per the construction contract at completion of the project.

In addition to the standard information below included in a typical construction bid form, you can also have supplementary requirements or break-outs. For example, some bid packages require that you break the pricing out by CSI formats to make it easier to compare the cost for each scope of work within the construction project. Also, in some cases, the customer might ask for unit costs in their construction bids for change order in the event of additions and deduction of common items. This is to ensure that you do not over charge for change orders after the construction project has been awarded.

Standard Bid Forms Include:

  • Name of Bidder
  • Assumptions - Inclusions / Exclusions
  • Base Bid Amount
  • Alternates
  • Sales Tax
  • Performance Bond - Applied Post Tax
  • Bid Price
  • Signature/Acceptance Page

When bidding directly to a customer or owner, in either negotiated or competitive bidding, where you’re not dealing directly with a general contractor—the owner might appreciate a narrative format found in a standard construction proposal that outlines everything being provided. Generally, the amount of information you include depends on the size of the construction project and your understanding of the situation. If you know you’re up against known low bidders, you’ll want to outline in detail the value you bring, to justify the potential increase in cost by using you over a competitor. On larger construction projects, you might also go into much more detail than smaller service work.

Note: Free download construction proposal template here »

Standard Construction Proposals Include:

  • Cover page with name of bidder, construction project name and construction business logo
  • Executive summary that outlines the construction businesses history, and competitive advantages
  • Scope of work broken out by phase, including bullet point details of the project deliverable's and building methodologies
  • Narrative sections that outline the:

    – Construction businesses insurance and bidding capabilities

    – Project management and change order processes

    – Project close-out procedure and deliverables

    – Jobsite safety

    – Warranty details

  • Project assumptions section with bullet points outlining what is included and excluded in your pricing
  • Project pricing page that includes the projects sub-total or cost broken-out by phase, taxes, project total, and any billing terms outlined
  • Signature/acceptance page

Today, most electrical contractors opt for “lump sum” bids versus breaking out the details in their bid form or construction bid proposal to secure their pricing. They do this to avoid going through the trouble of bidding a project and providing a construction proposal that details their pricing, only to have their construction proposal used as a price check for a competing electrical contractor. This can be a common practice in the construction business. Depending on the relationship you have with the general contractor or owner, this can be to your benefit if you’re the contractor getting a second look. However, it’s never fun to do all the work only to have your price checked and used to leverage another electrical contractor to lower their bid price.

Depending on the type of work you’ve engaged, different owners will request different contract types based on the size of the project, risk tolerance, etc.

We’ve outlined the three most common types of construction contracts in the next chapter:

Continue to Chapter 7

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