How to write a construction contract proposal and win more jobs

You’re probably no stranger to paperwork.

The task of preparing proposals, contracts and estimates – and communicating the intricacies of each document to your clients – is a hefty one, made even more complicated by changing scopes and competing builders.

The good news is, there are proven tactics for how to write a contract proposal and cut down the time it takes to create these them, all while making them more accurate and efficient. In this article, we’re diving deeper into proposals for construction projects and sharing best practices and examples for how to make the proposal process pay off for you – and your clients. 

What is a construction contract proposal?

A construction proposal is a document used to provide a client with a clear understanding of a project’s details.

In residential construction, a builder creates a proposal for the homeowner or home buyer. A typical proposal is able to provide a comprehensive understanding of the project by detailing the scope, estimated costs, timeline and terms. Generally, it’s treated as an entry point to the sales process. From it, both parties can negotiate details before creating a more detailed estimate and entering into a formal contract agreement.

What to include in a construction contract proposal

Most construction projects are unique to fit each project’s situation. Although there is not a standardized contract proposal template, there are several common elements that are typically included.

Project overview and description

Provides a brief description of the project, including the type of residential construction (such as new construction, remodeling or addition) and the specific goals or objectives of the project.

Scope of work and deliverables

Outlines specific tasks that’ll be performed as part of the construction project, including activities such as site preparation, different types of building systems and finishing work.

Project timeline or schedule

Indicates the expected start date, completion date and milestone estimations throughout the project. If a start date is unknown, a proposal still includes a timeline range estimating how long the project is expected to take until completion.

Cost estimate and breakdown

Provides a breakdown of estimated costs needed to complete a project. It includes estimated material, labor and equipment expenses, as well as miscellaneous costs, like permit fees.

Payment terms and conditions

Details expectations for payment, including necessary deposits, allowable payment windows, accepted methods to pay and the understood impact on the project in the case of nonpayment.

Materials and specifications

Specifies any requirements with materials, equipment or processes used during construction. An example of this might include a builder needing to comply with energy-efficient construction processes.

Contractor’s qualifications and experience

Establishes the expertise and credibility of the contractor, including their qualifications, licenses and certifications. This section may also include client testimonials or referral contacts to whom potential clients can speak with.

Any specific terms and conditions related to the project

Outlines additional details that will inform the contract agreement. Some examples may include expected warranties, close-out expectations, standard operating procedures, change order processes and requirements for risk insurance.

Though proposals vary, it’s a good rule of thumb to ensure your construction proposals are clear, detailed and customized to the specific needs of your client’s project. This helps reduce the risk of disputes and disagreements after a contract is signed.

Do I need a proposal and a contract? 

Although some construction companies may use them interchangeably, technically a construction proposal and a construction contract are two different documents.

A construction proposal is used to present a detailed plan and estimate for a proposed construction project. It’s typically used as the basis for negotiation until a final agreement is met.

A construction contract is a legally binding agreement between the builder and the client detailing each party’s rights and obligations. In more complex agreements, you might see expanded terms and conditions – including payment terms and dispute resolution processes.

It’s also important to remember that, although a proposal can serve as a baseline for project scope, a project’s contract is the binding agreement. If there are discrepancies between the two, the signed contract agreement should be considered the source of truth. If a proposal goes through many changes or revisions before an agreement is made, in many cases, the final version becomes the construction contract.

What’s the difference between a proposal and an estimate?

The difference between a proposal and an estimate is mainly that a proposal is a formal document for both parties to consider, whereas an estimate is a detailed – even if approximate – calculation of costs. For example, an estimate can also include bids from subcontractors and allowances.

Although an estimate may be included within a proposal, they are two separate tools.

How to write a contract proposal

To write a construction contract proposal, follow these eight steps: 

1. Outline the project requirements

Start by thoroughly understanding project requirements, based on your initial client meetings. Put pen to paper on the scope of work, understood deliverables, expected timeline and any other client specifications.

2. Create an introduction and executive summary

Depending on how detailed your proposal is, it can end up being multiple pages long. Summarize the highlights of the document in an executive summary. This is typically included at the very beginning of a proposal, so the client can gain a quick grasp on the most important details: scope, timeline and cost.

3. Write the project overview

Immediately following the executive summary, it’s a good idea to provide a project overview. This differs from an executive summary, as it provides a more thorough description of project details, objectives, deliverables and background information.

4. Describe the methodology and approach

In other words, explain the steps, processes and techniques you’ll use to ensure a successful project. Do you use construction management software to help ensure detailed project scope and clear communication? This is a great place to include these details, especially since they can be differentiators that help your client choose to work with you over your competition.

5. Present a clear timeline and schedule

Map out a realistic timeline for the project, breaking it down into phases of work. This should include the time between breaking ground and completing the build, as well as work taking place off the job site, such as obtaining permits and scheduling inspections.

6. Provide a detailed cost estimation

Include a breakdown of all expected costs associated with a project. This includes labor, materials, equipment, subcontractor expenses, permits and fees, insurance premiums and any other relevant expenses. By itemizing these details, you can help reduce confusion on how the budget is divided. Just be sure to include language in the proposal about how costs may change from estimated figures based on market changes.

7. Include terms and conditions

Even if you plan to draft a contract with detailed agreement terms, it’s important to cover aspects such as payment terms during initial proposals.

8. Showcase your company’s qualifications and experience

Remember, a construction proposal is much like a very detailed bid for work. It’s used as a tool to help you win business. As your potential clients decide if and when to move forward with a project, they’ll want to research your expertise, recent work and licenses or certifications. They may even request contact information to speak with past clients. By providing this information in your proposal, you can speed up the decision-making process while backing up your reputation as a builder.

Two examples of effective construction proposals

Effective construction proposals should communicate the value and benefits of your services, address potential project risks and be clearly defined. When individualized for each client, proposals can help turn new leads into jobs.

Creating and streamlining proposals can be a labor-intensive process. Some experts suggest requiring a down payment before completing estimates and proposals to help establish commitment before you begin the process, as well as using standard language in the terms and conditions instead of complicated legal verbiage to help the process move faster.

Even so, it’s also important to leverage construction proposal software to help reduce some of the legwork in the proposal process. Hear from two builders who found measurable success with their proposal process.

Success story 1: “For proposals, we use budgeting and estimating, and we’re able to do it much more quickly. We’ve saved so many hours, and it’s allowed us to get things to clients quicker [using proposal software].” – Brett Phillips, High Street Homes. Read the full case study.

The effectiveness of construction proposals also depends on how quickly a proposal can be created and shared with clients – while ensuring each detail is accurate. That’s why it’s important to use tools such as takeoff software to calculate material needs and costs during the proposal stage. Doing this can reduce the time it takes you to create your proposals by half.

Success story 2: It’s estimated using takeoff software has helped reduce the time it took Color Houses to create accurate proposals by half. Read the full case study.

Simplify your construction proposals with Buildertrend

Just as it’s important to showcase your proactive use of technology within your proposal to help secure a client’s approval, you can also use technology to create your proposals.

Buildertrend’s construction company software helps construction contractors create and share proposals quickly and accurately.  Here’s how:

• Proposal creation: Within Buildertrend, you can create and save proposal templates for the type of work you do. By having predesigned templates, you can accelerate your sales process. You can even save multiple versions of proposal templates that you can quickly customize when sending to potential clients.
• Estimates: Buildertrend’s construction estimating software helps translate project scope into line-item costs for project proposals.
• Project takeoff: To help support accurate estimates, use Buildertrend Takeoff, which helps precisely measure and calculate project costs using digital tools and blueprint uploads.
• Document sharing: Using Buildertrend, you can save and share proposals with your clients electronically, which speeds up the communication process. Once parties agree on a proposal and a contract is signed, Buildertrend serves as an easy and secure place to store documents.

Buildertrend’s new digital signature experience makes it easier than ever for clients to review and sign contracts from any device, while keeping every signature secure, trackable and legally binding. For builders, remodelers and specialty contractors, this means less time chasing approvals, fewer disputes and a smoother, more professional client experience – so your team can focus on the job site, not paperwork.

Learn more about creating proposals efficiently and effectively using Buildertrend today.

Construction proposal FAQs

Get answers to the most common questions about construction project proposals.

How long is a construction proposal valid?

The validity of a construction proposal varies depending on its terms and conditions. It’s common to include a period of time before the proposal is considered expired, such as 30 or 60 days. While existing proposals can be used for context, new proposals should be created if a project is revisited after the expiration date.

Can a construction proposal be customized?

A construction proposal can – and should – be customized to meet the specific needs and requirements of a project and client. However, there are several common elements to include within a proposal, such as scope, timeline, costs, terms and conditions, material specifications and builder qualifications.

Is a construction proposal legally binding?

A construction proposal is not legally binding unless it is accepted and signed by both parties. In that instance, a proposal becomes a legally binding construction contract.