Construction proposal vs. estimate: What’s the difference?
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Proposals and estimates are both key tools for winning construction jobs, but they serve different purposes. Here’s how each one works and when to use it.
What’s the difference between a proposal and an estimate in construction?
Proposals and estimates are two of the most-used tools in Buildertrend, and customers often ask how they differ. While the two are similar in function, they serve distinct roles in a construction business’s sales and job management process.
What is a construction proposal?
A construction proposal is a formal document that outlines a project for a potential client’s consideration. It typically includes the scope of work, a general approach to completing the project and a ballpark breakdown of costs, timeline, materials and labor. A proposal is more comprehensive than a cost estimate alone and often serves as the first step in landing a job.
In Buildertrend, the Proposal tool lives in the Sales tab. It’s part of the sales process and works alongside other sales features like Activities, Notes and Files to help contractors move leads toward a signed contract.
What is a construction estimate?
An estimate is a calculated approximation of a project’s total cost. It focuses on the numbers: cost of materials, labor cost, equipment cost and other expenses tied to completing the job. Unlike a proposal, an estimate doesn’t include the broader project narrative. It’s a detailed cost breakdown.
In Buildertrend, an estimate is tied to a job and can pull in bids from subcontractors along with selection choices and allowances. This makes it useful for contractors who need to build pricing from multiple sources before finalizing a contract.
How are proposals and estimates similar?
Both tools function in a similar way inside Buildertrend. Each is built around a worksheet where users add line items with pricing details, plus a format page for organizing company information, terms and conditions and other legal language.
Both proposals and estimates can also be sent electronically for client approval, and once signed, each becomes a legally binding contract.
How are proposals and estimates used differently?
The proposal is designed to be part of the sales process. Contractors who rely on bids, selections and allowances to build out a contract typically use the estimate feature instead, since it’s tied directly to the job.
This gives contractors flexibility to use the proposal as an initial design agreement and the estimate as the final formal contract, depending on how they run their sales process.
What are the key benefits of each tool?
A proposal lets contractors send multiple options to a prospective client, giving that client a chance to compare before choosing one to approve.
An estimate offers more flexibility on the pricing side. Because it can pull in general line items, selections, allowances and approved bids, it works well for contractors who need to build a contract from several pricing sources at once.
In many cases, proposals and estimates are submitted to potential customers as distinct documents to meet client expectations. Sometimes, especially for small businesses and smaller projects or in certain contracting formats, the proposal and estimate might be combined into a single document.
Once accepted and signed, a proposal often becomes part of the contract, making the specific price and terms outlined within it binding. Estimates are generally non-binding and serve as a guideline. Final costs can vary due to unforeseen circumstances or changes in project scope.
If there are substantial differences between the estimate and actual costs, it might lead to discussions, negotiations or potential disputes between the general contractor and the client. Clarity in contractual terms regarding how discrepancies will be addressed can help manage such situations.
Build stronger proposals and estimates with Buildertrend
Whether you’re sending a proposal to win a new job or building an estimate to finalize a contract, having the right tool for each step of your sales process matters. Buildertrend gives contractors both, built into one platform.
Ready to see how it works? Schedule a demo today.
