If you’ve worked in construction, you’ve likely encountered both proposals and quotes. Internally, quotes and estimates are often referred to interchangeably, as are bids and proposals. However, with potential clients, it’s essential to stay consistent with maximizing your efficiency and fluency with the customer. A practical and consistent outreach strategy can help minimize the frustration and confusion that can come along with creating bespoke deals with customers.
Table of Contents
—What a proposal is and the specific uses for proposal in construction
—When to use a Request for Proposal during the bidding process
—Quotes in construction and best practices for when to use them
—The right time and place to use a Request for Quotation in construction
—Differences between proposals and quotes explained
While they do have many similarities, proposals and quotes should be used in distinctly different situations. But how do you know when to use a proposal vs quote? Keep reading to learn the fundamental differences between a proposal vs quote and for a guide to the appropriate circumstances for using each one.
Proposals are detailed documents submitted during the process of competition between firms trying to win business from a contractor. Contractors usually solicit several options for proposals, with many alternate solutions or methods for completing the project. Proposals are more comprehensive than bids, estimates, and quotes, and are incredibly beneficial for large, complex construction projects.
Proposals generally include the following:
– Quotes for raw material supplies used to complete the project
– Types of materials needed to complete the project (wood, concrete, windows, etc.)
– Cost estimates for direct and indirect costs such as labor, taxes, and overhead
– Overall bid cost to complete the work
A request for proposal (RFP) is used by contractors to gather information from potential vendors about their suggested construction process. RFPs often occur utilizing a bidding process between vendors to win business from a company. The company specifies its issues and invites vendors to suggest solutions based on their offerings. An RFP usually follows a request for information (RFI) since it is more specific and tailored to the individual customer. When submitting an RFP, you should have precise needs and be willing to share private information with the vendor.
It is good practice when submitting an RFP to do the following:
– Ask for pricing terms upfront to avoid shock later on
– Ask the vendor for examples of their past work to get a gauge of their services
– Be specific about requirements and expectations since this stage requires a commitment to a vendor
An RFP requires high amounts of specification in what a company wishes to purchase from a vendor. The more specific a vendor can be, the more accurate a proposal will turn out.
In construction, a quote is a detailed document that breaks down the anticipated costs associated with a project. Quotes usually include factors such as labor cost, material cost, and quantities, and are generally only valid for around a month due to the fluctuating nature of material and labor costs.
Quotes are heavily dependent on the current supply and demand for materials and labor and are typically discussed before a project has begun. However, some elements such as lumber have a long turnaround time, so it can take suppliers extra time to catch up to the demand for the material.
An RFQ (request for quotation) is similar to an RFP but focuses on the exact specification costs required by the company for a project. RFQs differ from RFPs in that they are not posing open-ended questions and looking for suggestions but rather have predetermined specs for the project they want the vendors to fulfill. An RFQ can be useful in a situation where a company is looking to supplement an existing system. Still, since there is not much room for autonomy, many vendors consider them unfavorable in comparison to an RFP.
Quotes are the most precise method to present an offering to potential customers. Similarly to how “quoting” someone is an exact copy versus paraphrasing, creating a quote in construction has a similar meaning. Quotes are much more precise than estimates, which are an educated guess of how much a project would cost. Customers expect quotes to be exact amounts in which they can expect to pay.
On the contrary, proposals are submitted as part of the competition to win business from customers. Think of proposals as the tryout, and quotes as the offer letter. Proposals are somewhat of a hybrid of quotes, bids, and estimates, and are helpful in complicated projects with multiple solutions.
It’s essential to know the differences between a proposal vs quote to ensure clarity and ease of communication with customers. A concise and worded outreach strategy can be the make-or-break factor on whether you win a client’s business, and understanding a proposal vs quote is a key step towards ensuring effective communication with your potential client.