A contractor proposal is more than just an agreement document that covers what you are offering to your clients, but this is also a good way to prevent any misunderstanding. Misunderstanding between the contractor and clients can happen when the proposal is not clear enough in explaining what would the contractor do. It makes the clients think you need to do certain jobs they think are covered in your proposal, while you know you never put them in. the wrong assumption from the client is proof that your contractor proposal was badly written, so ensure you get it right before sending it.
1. Things to Include. The requirements of the contractor proposal might be different in different states, so you need to check your state licensing and proposal templates first. There are surely many things to include in a contract or proposal, but you can note the most important ones. The most important thing to include should your detailed and clear description of the project including the work and materials. This should be clear to prevent any misunderstanding from your clients about what kinds of work you would do during the project. The schedule, which is the beginning and ending date of the project, should be also mentioned in your proposal. The amount of payment and its schedule will be also important to put in since the clients need to know how the payment should be given and how much the project costs. If you want a paid in advance, make sure that you don’t request it more than one-third of the project total cost. The payment should be completed when the project completed, so don’t ask the clients to give all the total costs before you finish your project. As a contractor, there are some rules you need to know in writing a proposal and that is why checking for some templates might be necessary.
2. Payment Schedule. While you have mentioned the total cost of your project, you need to make it more detailed in a more specific section. Break down all the payments by listing the job and the cost. You are not supposed to ask for total cost before the job completed, but you must ensure that during the process, the cash is flowing smoothly as it is. You can request for cost deposit, which is usually around 1/3 of the total cost. This payment schedule allows the clients to know when they should make the payment in each phase of the project. You have to let them understand that you always need the payment for different phases because there are many expenses to cover. However, some custom-made items should be paid fully upfront, so request it if you would use such materials. When the project finished, you would get the profit for your company from the last payment. It means that the last payment should be something huge. It also means that once the project is done, you don’t have anything that is not yet covered. When you still have a list of required expenses, your payment schedule needs to be changed and corrected.
3. Allowances. After setting the payment schedule and the budget needed for the project, there should be also an allowance, which is a set budget for covering the items listed as allowance. This would make the proposal more detailed since you can inform the clients about the items that might be used later in the project. Since the budget has been set and the fixed price is not yet known when the project starts, later you need to reconcile the fixed price with the estimated budget.in this case, the fixed price can be different from the prices in your proposal and the clients can have two options. First, they can cover completely the difference price from the written and the actual cost or second, they can pay only 20 percent additional cost if the fixed price is higher.
4. Unseen Conditions. Still talking about budget, all the things you have included above are still not yet covered the unseen conditions, which might lead to additional costs. Some conditions force you to use some dollars and the clients must cover them. You should state it in the proposal that the clients should agree with the unseen condition’s costs. This usually includes harmful conditions such as wiring, using hazardous material or any other kinds of activities that can put you in danger. Not only the conditions, but even the testing process to identify hazardous materials such as lead paints needs costs that should be covered by the clients.
You can agree to alterations of the proposal if in case some extras need to be included. Both parties should agree upon any changes made for achieving a good result while providing benefits for both the contractor and the clients.
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