Thinking of doing a bit of remodeling or adding a room to your home? The planning stages can be just as stressful as the remodeling process. Sitting down with a contractor to discuss price, materials needed, and length of project can be very intimidating for some. Here is a brief explanation of some of the things people find confusing.
In construction, an estimate, bid, quote, and proposal can take on different meanings depending on who is using the terms. Some construction professionals use the words “estimate” and “quote” interchangeably, while a bid or proposal may turn into a contract if the customer signs it.
To further simplify it, it’s a lot like the difference between Coke, cola, soda, and pop- it all depends on where you are and who you are talking to, but we can all agree that you won’t get a glass of milk when you order one.
Now, putting all of the confusion aside, below are what we consider the most widely accepted definitions.
Quote: What is a Quote?
A quote is a figure that a contractor gets from a supplier for the price of material they need for a job.
Quotes are often only good for a certain amount of time-generally about a month-which means the builder has only that amount of time to buy the materials at the given price. Outside the given time frame, the price of materials more than likely will change. Quotes expire because the materials involved in a construction project are commodities, and their prices fluctuate based on supply and demand.
Estimate: What is an Estimate?
Contractors use estimates to calculate their expected costs to complete a project. They look at the specifications for a project and determine the raw materials and labor they need. The contractor then goes to their suppliers to get quotes for the raw materials, which they use to calculate the estimates.
An estimate may also include an accounting of taxes, overhead, subcontracts, and equipment costs. Estimates are usually free, but some contractors do charge for the time it takes to do a good and thorough job. Those contactors who charge often have a formal education and you can expect a much more detailed document where everything is spelled out.
Bid: What is a Bid?
The word “bid” in construction may refer to a document that offers to perform a specific job at a specific price within a certain amount of time, or it may refer to the specific price offered in that document.
A subcontractor might also submit a bid to a general contractor to perform a certain part of a project.
Proposal: What is a Proposal?
A proposal is a detailed document submitted as part of a competitive process to win business. It includes quotes received from suppliers for raw materials, proposals from subcontractors for their portion of work on the project, and estimates of labor costs, taxes, and other overhead.
Some proposals also include a place for the customer to sign as indicating their acceptance of the proposal. Contractors may also refer to this type of proposal as a “contract”.
While the difference between a construction estimate, quote, bid, and proposals /contract may be confusing to understand, knowing the difference is extremely crucial to the ultimate success of your remodeling project.
Watch: What is the Difference Between an Estimate? Bid? and Quote?