Construction proposal letter: This document spells out a detailed picture of everything involved to submit a solid bid. A good portion of the estimating process involves completing the take-off, checking it for accuracy, making labor adjustments, applying your overhead and direct job expenses, and deciding how much, if any, profit you want to put on the job to come up with your sell, or bid, price.
Now that you have that completed, there is a very important step before you send your price to the general contractor or construction manager. It’s called a proposal, or scope, letter. In effect this document becomes the first legal correspondence of what your price includes and does not include. You can always rely on this letter if you prepare it properly.
Most companies have a standard format for completing the proposal letter.
- Always state the project name, address and a job number, if available.
- List the drawings and their respective dates on which your proposal is based.
- This is very important since you want to make sure that, if by some chance you received the wrong set of drawings, as least you have documented the set you were working with. Accordingly, if you received any addenda or bid clarifications, be sure to list what you received with the date, again to cover yourself in case you did not receive a particular document.
Construction Proposal Letter: State what is included
In the proposal letter, list all the items that are included in the proposal. There is a fine line between not listing enough and listing too much, but I always like to include standard and “big ticket” items.
- Standard items would be lighting, lighting controls, branch devices; state what you carried and what the wiring methods are for these items. For example, “lighting with branch run in MC cable with EMT home runs as specified.”
- You can also do the same for mechanical equipment connections (don’t forget to state whether you carried the disconnects), fire alarm, tel/data, and other low voltage systems.
- For feeders, state what you carried for the primary conduits, secondary conduits, all the way to the last point of distribution. There is typically a lot of money involved in the distribution system, so be specific about what you carried.
- If the specs call for Schedule 80 versus Schedule 40 for the primary, make sure you spell that out in your proposal instead of generically stating “incoming service primary run in PVC.”
- If there are any special or unusual items in the take-off, mention them in your scope letter. These could include items such as conduits to the roof for a satellite dish, spare conduits for future equipment, or special systems.
- If your job includes fees, permits, sales tax, utility company charges, make sure that you state that in your proposal.
Construction Proposal Letter: State what is excluded
Detail the items that are excluded from your proposal.
- Examples: cutting-patching-painting of walls, concrete housekeeping pads, transformer or generator pads, site pole bases, and concrete encasement of duct banks. If any items are existing, exclude them and make a note that they are existing.
- If any work is by the general contractor or other trade, exclude these as well and mark them “by others.” This acknowledges the item rather than ignoring it and hoping that the general contractor will intuitively know what you are talking about.
Construction Proposal Letter: State your terms and conditions!
At the end of your proposal, state any “terms and conditions” upon which your proposal is based.
- Length of time for which your proposal is effective
- Typical working hours such as Monday through Friday, 7 am to 3:30 pm, excluding major holidays.
This may sound like overkill, but you never want to get stuck paying your crew overtime because you did not exclude overtime work from your proposal.
- Finally, make sure you clearly state what your proposal price is. I know some contractors that not only list it numerically, but actually write out the dollar amount–“proposal price is $850,000 (Eight hundred fifty thousand dollars).” Be sure to list any alternate pricing, as well, as either an add alternate or a deduct alternate price.
You have completed your bid, written your proposal letter, and now it is time to submit your price.