10 important terms to include in your quotes and contracts - Residential contractor's guide

Construction estimating and quoting is a tricky business. Even once you’ve got construction estimating software that works well for your business, there’s still a chance that your quotes will be misinterpreted, that customers will assume something is included when it’s not, or you might find yourself in some other kind of disagreement with your customers.

The best way to avoid this kind of issue once your construction project is underway is to ensure everything is covered in your quote and terms. Here are a few must-have terms you need to include in any construction quote:

1. The validity period – every quote should be dated and have a fixed validity period, and if you need to make it shorter than 30 days because of volatile pricing from suppliers, don’t be shy!
2. A clear note that the quote includes only what is described in the quantities mentioned and that any changes to those may be subject to change – and be as detailed in your description of scope, quantities, and specifications as possible, so there’s no room for interpretation. In the construction world, this is known as “qualifying” your bid or quote.
3. A clause that states that prices cannot be reduced without a new quotation if the size and scope of the project changes – often, customers assume that they can simply prorate their price when things change, but if you’ve got fixed costs mixed into your price, that’s not an option, so be sure to state it clearly in your terms.
4. A clear list of anything that is expressly excluded – whether you don’t get permits or you don’t include surveying or something else, if it’s not included in your price, make sure it’s expressly excluded in writing.
5. A list of your requirements to complete the work as quoted – this usually includes things like access to the site, secure storage for goods and materials, whether you need the property owner to provide electricity or water, or something else.
6. Whether you have included any demolition or waste removal in your quote – many companies offer one but not the other, so if you will take out the old materials but the client needs to arrange a waste bin and removal, be sure to state that clearly.
7. What is required to make the work site ready for your crew to start work – sometimes, you’re dependent on the work of another contractor, like a landscaper who needs to bring an area up to grade, so make it clear to your customer that you can’t start work until that is done.
8. If there are any limitations on your insurance, such as requiring the site to be vacant during the project, make sure you mention those too.
9. If you are working on a longer project and you need to make adjustments during the project for material and labor costs, include an escalation clause in your terms.
10. Finally, always include a clause that states that all materials used to complete the project remain your property until they are paid for in full – you might need to get a lien if your customer doesn’t pay when they should, and being clear about the ownership of materials might make that process a little simpler!

As your construction business grows and changes, you will probably find that there are a few more terms you need to add to your quotes. Sometimes, mistakes and challenges are the best teachers, and they’ll help you to develop terms that protect you as much as possible.

Make sure that whatever construction estimating software you choose allows you to customize your terms of quotation, and review them regularly to make sure they’re still what your business needs.