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Do you know the difference between an Estimate and a Proposal?
This subject tends to confuse people and the definitions could change according to demographics or trades. We would like to take some time to explain the difference between an estimate and a proposal.
An estimate is an approximation of cost using loose variables or definitions; an assumption of cost. We will use estimates to give an approximate cost on a larger job before actually doing a proposal, so that you may determine whether your request will fit within your available budget. On the smaller jobs, the estimates do not typically change, unless the client decides to add additional work that is not part of the original estimate. Those changes will be covered under, what is referred to as, a “change order.” On larger jobs, an estimate is subject to change. Free estimates are generally reserved for smaller jobs that are not going to be complicated, like installing a new door, or simple repairs.
A proposal is a more detailed scope of work and costs. Proposals usually do or could require a lenghthy consultation with the client to determine exactly what they are expecting. It will usually require more detailed planning and revisions. A proposal requires a lot more time and leg work to determine pricing on particular materials the client may have requested, services from subcontractors, permit fees for different municipalities, structural engineers, planning, HOA, etc. Because these details do require more time and resources, it is not uncommon for a reputable contractor to charge a fee. These fees could range from $200.-$1,000., depending on the complexity. (These fees do not include any expenses accrued, such as, architectural or engineer fees.) Most reputable contractors will waive this fee, if the proposal is accepted and you have enter into a contract for the scope of work in the proposal.
Proposals are not subject to change, unless clearly noted in writing in the proposal, however, clients do sometimes change their minds about one aspect or another or any unforeseen issues which may arise; these items will be handled, as with estimates, with change orders. Some contractors charge for client requested change orders. The reason for these charges can include time preparing documents and adding to the original proposal, research on new material, any possible scheduling conflicts, additional trip charges, etc. The change orders can also, add time to the overall completion date.
Even with a reputable contractor, there is always a possibility, especially in a remodel/rebuild, of having unforeseen issues that might require additional work to actually complete the scope of work originally proposed. The older the property is, the more likely it does not meet current building codes, as they change yearly. During an inspection, a building inspector might notice certain code upgrades that are required or critical, that were not anticipated by the contractor. Note, not all code upgrades are required on a property, unless you are remodeling over a certain percentage, per municipality, of the property, but some upgrades should be made for safety and energy efficiency. Also, the older the property, the greater the possibility of finding substandard and/or incorrect repairs that must be remedied before moving forward with the project. A reputable contractor would not overlook these upgrades or errors. Unfortunately, these are things that can add to the cost and time of a project even when a proposal is submitted.