You are ready to start talking plans and deadlines, but you don’t understand contractor lingo. What is a quote? What is a bid? Is the proposal the beginning of the rest of your life? Below is a breakdown of what the lingo really means.
What is an estimate?
An estimate is just as the name suggests, it is an estimation on how much the project as a whole will probably cost. Contractors use estimates to calculate their expected costs to complete a project. They look at the specifics of a project and determine the materials and labor needed.
This estimate may include an account of taxes, overhead, subcontracts and equipment costs. Estimates are usually free, but some contractors charge for the time it takes to make a thorough and comprehensible estimate.
It’s industry-standard (but not written law) for the estimate to turn directly into a quote if approved by the customer in a timely manner.
What is a quote?
A quote is normally a time-sensitive, signable pricing for a job and/or materials that includes more detail than an average estimate. Usually good for a month contractors put an expiration date on quotes due to price fluctuations for materials and labor.
What is a bid?
A bid, often a term used for larger or commercial projects, is a document that lays out the major aspects of a project, such as the scope of the repairs, how long the project should take, and the total cost of repairs. The bid offers to perform a specific job at a specific price within a certain amount of time, or it may refer to a specific price offered in that document. Bids are usually ways companies compete for public contracts, for instance repairing state roads, or which company will build a new airport.
What is a proposal?
The word proposal is often interchanged with “quote” in the construction industry as they are both a precise offer but technically, there is a big difference.
A proposal is very much like a bid however, it is technically a more detailed account of the imminent project to ensure that the company wins the business. It should include quotes received by the suppliers for raw materials, proposals from subcontractors for their portion of work on the project, an estimate of labor costs, taxes and overhead, and a markup of the contractors’ profit. For example, the type of siding, brick windows, etc. all being used. The timeline for the project and a schedule of payments would also be included.
Hopefully, this clarifies any uncertainty you may have had on the meanings of these words. With this new understanding, you can feel more confident in stepping ahead into your remodeling or building projects.