If you’ve been in the construction world for a while, you already know that many terms are very similar and some are even used interchangeably.
Some of those terms relate to the process of pricing customers, and if you’re still not sure what the difference between estimate, bid, quote, or proposal is, you’re in the right place. Here’s what you need to know.
A construction estimate is a price that a construction company or contractor calculates based on the information provided by their customer and their best guess as to unknown factors, like underground conditions, what is behind a wall, and so on.
Construction estimates should be as close as possible to a final quote, with the understanding that some things are based on assumptions and that things may change if new information comes to light. Sometimes construction estimates are known as budget prices because they are often used to determine if the client’s budget is large enough to cover the desired work.
A construction bid is a much more complex type of construction project price that is usually submitted on a construction bid document, which is also the construction contract. This means that if the client accepts your bid, they only need to sign the construction bid document, and you will have a legally binding contract for the work.
Construction bids are usually open to any qualified bidders interested in the project, and they have strict submission deadlines that all bidders must adhere to.
Construction bids are much more common in commercial and industrial construction, but they are sometimes used for high-end, large-budget residential projects, too.
A construction quote is a type of construction price that is usually offered after the contractor has had a chance to visit the project site, view on-site conditions, take measurements, and ask questions about the project.
It’s a lot more detailed than a construction estimate or budget price but less in-depth than a construction bid. Construction quotes usually also have terms and conditions that might include qualifications to the price, excluding information that the contractor or construction estimator could not establish during their site inspection.
A construction proposal is a type of construction price that is usually offered when the client needs a solution but is unsure of their desired specification or scope of work.
A construction proposal might also be what is known in the industry as a “design-build contract,” which means that the contractor offering the price is taking on the role of the designer and the contractor and will deliver everything, including the concept for the project.
Most construction companies will offer several different types of pricing to their clients, and many might offer estimates, bids, quotes, and proposals under different circumstances.
The right kind of pricing and quoting procedure for your company depends a lot on what you do, who your customers are, and what kind of estimating and project management systems you have.
If you’ve reached a turning point in your construction business, we’d love to show you how Bolster can help. Contact our team to book a free demo and find out why we’re the leader in construction estimating software innovation.