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How To Write A Construction Proposal

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Construction Proposal -Learn How to Write One

Regardless of the cost of a project a written construction proposal protects all parties involved.

A written construction proposal that clearly details and “paints a picture” of what you are promising to do. Details in this proposal  include specific materials, payment schedule and costs. A professional and well-written proposal not only portrays you in a professional light but protects you and your client from misunderstandings and conflict

Detailed Scope of Work

A construction proposal should always be specific with regard to the scope of work. This protects you from having to do work, you had no original intention of doing. You know what I mean, that dreaded “I assumed you were also going to do X, Y and Z?” or even worse “ I thought that was included.” Those comments usually accompany a client holding back the last  payment until you agree to do something for them that you never agreed to but they “assumed” it was covered.

How do you protect from that?  By providing the client a  well written and detailed scope of work proposal!  Not only does a detailed proposal protect you from having to do extra work, it ensures that you can charge for any extra work not originally agreed on. Extra things like add on items, changes mid-project and the dreaded hidden conditions.

What A Construction Proposal Should Include:

I want to stress that if you are researching how to make your own contract you should first check with your local state and licensing authority for input and advice. Many state websites give you sample contracts to use as a boiler plate template.  This is the first step when learning how to write a construction proposal.

In Massachusetts any project over $1000 requires a written contract [proposal] as well as additional points that need to be included in the proposal. [MGL c. 142A] My states mandatory requirements are:

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Spend Time On The Scope Of Work:

Most of my construction proposal is a template and I fill in the blanks for the following:

  1. Owner information
  2. Scope of work for that project
  3. Payment schedule
  4. Start and finish dates

The scope of work section is where I spend most of my time and is where you should pay the MOST attention to. This is by far the MOST IMPORTANT section of the contract and you need to be as detailed as possible.

Don’t Get Lazy Here

This is the spot where I mention the steps in the process, materials used, model and spec numbers, colors, etc. It also has a very important closing statement that reads:

“Only those materials, goods, labor and services SPECIFICALLY STATED in the preceding paragraphs of this contract are bound under the terms of this contract.”

Many a contractor has told me that they specifically stay generic in the description of scope of work section in order not to give the client research information – especially when it comes to model numbers and measurements. They make the argument that many potential clients will research items on line and the tell the contractor that they can get a better price online. They also are concerned that the client will share this information with other contractors to get better pricing.

I disagree. You CAN’T afford not to be detailed and specific in your scope of work! If a client wants to purchase their own fixtures or materials I say let them but tell them that you will not honor any warranty work on homeowner supplied materials or fixtures.

Payment Schedule: Cash Flow

This is the section where you list the job total cost and break down for payments. A payment schedule is essential to keep a positive cash flow as well as ensure that you are not waiting for a huge payment 30 days after the project is complete.

My state allows for 1/3 of the project cost as a deposit or the cost of any materials ordered, which ever costs more.  I try to figure out what each stage costs me and ask for project payments.

The deposit is typically 1/3 the cost of project and covers all materials, dumpster cost and labor into the job. Each payment ensures that I have a constant cash flow to fully pay the sub-contractor or labor costs needed for the next payment. This way I stay ahead of my costs, avoid a large back end payment.

For any custom order like doors, window and fireplace mantles I always require 100% of the item cost up front prior to ordering the item.

Sample Payment Schedule

For example on a $ 25,000 bathroom remodel I will schedule payments as follows:

If I’ve done my job correctly the last payment is usually all company profit. If there is a dispute over the last payment at the end of the project at least I have covered all of my material, labor and sub contractor costs. There is nothing worse than not being able to pay your sub contractors.


Some items on my proposal I list as “allowance” items. This means that a certain dollar amount figure has been set as an allowance for each of these items. Generally, I use allowances for work that is commonly sub-contracted such as excavation, concrete, heating, plumbing, electrical, cabinets, appliances, flooring and painting. These allowance figures are based on current figures from my job files and are intended to represent a realistic and reasonable dollar figure for the item.

By including figures in my budget proposal, I can produce a complete budget for my client, which include all the anticipated sub-contractor items. These figures are then “fine-tuned”,” either before or after the contract signing, by getting the sub-contractor to review the work plan on site. The subs will then provide us with a fixed price for the item. The fixed price is then reconciled with the budget estimate figure.

The price shown on the proposal represents what I expect my cost of the item to be. If actual cost of the allowance items is less than the allowance price listed, the client is entitled to 100% of the difference between the allowance price listed and the actual cost of the item. If the client chooses options that total more than the allowance figure listed, the client will pay contractor’s cost for the item, plus 20%. All such adjustments will be handled as change orders to the contract.

Hidden Defects And Unforeseeable Conditions:

I have a special section in my proposal that deals with unseen conditions. The price agreed upon does not include possible expenses entailed in coping with hidden, unknown or incidental items not included in pricing (for example, unsafe wiring, illegal plumbing conditions, rot, structural issues,  inspector or engineer requirements made subsequent to my agreement and / or overlooked or unknown conditions found after the I have commenced work.

In my proposal I state that the homeowner agrees to pay all costs upon completion of such work. I state that I will inform the homeowner of any such condition in the form of a “Change Order” or if agreed the homeowner shall pay the me a time and materials rate [stated in proposal] to complete the extra work.

I also state that the homeowner agrees to pay all costs incurred in the identifying, testing for, handling, containment, and disposal of all hazardous material found at the job-site, including lead, lead paints, solvents, and asbestos.


It is important to the client and required by law to provide an estimated start date and date that the work will be substantially completed.  People plan around renovations and also may need make arrangements for pets or furniture.   Some folks plan vacations so they will be out of the house during the demo work.

Alterations To The Contract Or “Extras”

A change order is a written agreement to modify, alter, add or delete from the agreed upon scope of work.

Many unscrupulous contractors will often “low bid” a project to get the job. They do this by omitting items in their scope of work or quoting lower quality materials or appliances and then later make up their money on the “extras.”

This unscrupulous contractor strategy is predictable and I always stress to my clients and potential clients that it is important to compare apples to apples in the scope of work.  Any scope of work that is not detailed should be updated or discarded from consideration. I try to do my research up front and get all of the information from the client so that I am proposing a realistic cost with minimal chances of change orders / extras later on.

For information on how to accomplish this read: How to plan a bathroom remodel

Change Orders [Extras]

Back to change orders: “any Homeowner-initiated alterations or modifications to the work outlined in Section One and the price therefore must be agreed upon by the parties in a written “Change Order,” before work on such alteration or modification shall commence. Payment for such alteration or modification shall be made in accordance with the terms of the “Change Order.”

This is where contractors get lazy and procrastinate to the end of the job to ask for extra payments. The time to get paid for an extra payment is when it occurs.  People’s memories are fresh and they are motivated to keep the job moving and write a check. You never want to “hit the client over the head” with a huge back end extra payment. With all the details and progress payments, they typically tend to forget why your charging them the extra and this can cause resentment.

I know it sucks, but take the time to write up a change order / estimate and request payment at the time of the change or extra work. At a minimum get a verbal immediately and then follow up that night with an email asking the client to agree to the extra work and cost.

Use Email / Save Emails

Emails are the preferred method for many of my clients. Use email and save them to a file or folder. The beautiful thing about emails is that they are date and time stamped. Be careful with emails, they lack tone and can be confusing. Make sure your emails says what you mean – proof read them. For more information on sending emails to clients read my article Rules for Writing Professional Emails.

Clarification emails works great, for example: “Marc this morning you asked me to install an additional window in your bedroom, East wall – centered inside the room. This window is to be identical to the one we are currently installing on the West wall.  the additional cost for this work is $950.00.  Please confirm that I have this correct and that you approve the work.”

Creating a paper trail will always be your friend in the end!


This section makes you look professional, educates your client, set expectations, eliminates unrealistic expectations, as well as puts the client on notice of things he or she may be required to do.  It may also make them aware of specific or special needs on the job-site such as toilet facilities, pets or furniture storage issues. I have copied and pasted my exact wording below for your review:

Limited Warranty

My contract has wording that states the following:

“Provided that the Homeowner pays the full amount due under the contract and any change orders and conditioned thereon to the fullest extent allowable by law, contractor guarantees that the work will be constructed in accordance with accepted home improvement practices, and it will be guaranteed against defects in workmanship and materials for a period of one (1) year from the date of its completion. This Limited warranty does not cover damages or defects that result from characteristics common to the materials used, or conditions resulting from condensation, expansion, or contraction of such materials. Warranty work will be completed within sixty (60) days from the date of receipt of a written request from Homeowner.”

You may also want to include some wording such as:

Consequential and Incidental Damages – Duration of Implied Warranty

I list the following in my proposal:

“Please note that this Limited Warranty specifically excludes consequential and incidental damages and there are limitations in duration of implied warranties. This warranty is extended to the above Homeowner and is not transferable to succeeding homeowners. Contractor hereby passes through and assigns to Homeowner any and all manufacturers’ warranties on all appliances and equipment supplied by contractor in the home.”

“Contractor specifically does not assume responsibility for any of the following items, each of which is specifically excluded from this Limited Warranty.”

Variation in Wood and Materials

I list the following in my proposal:

Natural variations in grain, texture, and / or color of the wood is a reality. Most people are aware of the “natural” characteristics of wood. Since no two trees are exactly the same, wood is a unique materials and natural variations in grain, texture and color are the ingredients that cause the “beauty of wood.” These variations can also cause noticeable differences between the sample and finished installation. These grain and tone differences are a natural and acceptable condition of quality wood finishes and will be even more pronounced in a completed project. My suppliers only use select woods to insure their quality

Consider listing the following bullets:

  1. Defects in appliances or pieces of equipment which are covered by manufacturers’ warranties are assigned directly to the Homeowner, and each manufacturer’s warranty claim procedure must be followed where a defect appears in any of those items.
  2. Damage due to ordinary wear and tear, abusive u common to materials used/ Such as, but not limited to
  3. Use, misuse or lack or proper maintenance or the home or its component parts or system.
  4. Work done or defects in items installed by Homeowner or anyone other than Contractor and its subcontractors at contractor’s order.
  5. Defects in items supplied by Homeowner.
  6.  Loss or injury due to elements.
  7.  Conditions resulting from condensation on or contractions of materials.
  8. Defects which are the result of a characteristic(s) Such as:


Alternative Dispute Resolution:

Hopefully you’ll never need this but in my state it is required on all contracts.

“The parties acknowledge and declare that the Contractor may initiate alternative dispute resolution through any private arbitration services program approved by the secretary of the executive office of consumer affairs and business regulation under Massachusetts General Laws Chapter 142A, sub-section 4, to consider any dispute between the parties concerning or arising from this Agreement.”

Construction Proposal Conclusion:

There is much, much more included on my proposal such as agreement clauses, Lead paint warnings, etc. The point of this article was to get you thinking that you need a solid template specific to your line of work which you can reuse each and every time. Once you have that, pay a lawyer to go through it for legality issues, and to make sure you are fully following the law and protecting yourself in the process. Consider the lawyer’s cost cheap insurance.

The major points are to pay attention to producing a detailed scope of work, a well thought out payment plan and to keep up and perform change orders as then occur and NOT procrastinate.If you are disciplined in these categories you will be perceived as professional, methodical and efficient. Plus you’ll get paid and have lass hassles.

Sample Construction Proposal

Here is my boiler plate, feel free to copy this: Sample Construction Proposal.

Being more Organized

By far the most common comment I hear from guys in the construction field is that they love the work but hate the proposal,, estimates and paying of bills. I couldnt agree mote, thats why I’ve adopted some principles to make me more efficient in the office. Here are a few articles listing some of them:

Being More Organized

How To Get The Most From Your Day

6 Tips on Prioritizing 

Returning Phone Calls

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