Understanding Construction Bids, Estimates, and Proposals (with templates)
Pro Tips

Understanding Construction Bids, Estimates, and Proposals (with templates)

BuildBook Team
December 21, 2022
February 14, 2023

When it comes to construction projects, there are a lot of terms and documents that can be confusing for the uninitiated. Two of the most common terms are "bid" and "estimate," but what about a "proposal"? While all three have something to do with money and pricing, they each serve a different purpose.

Let's take a look at what these terms mean and how they differ from one another along with how to bid construction projects and create estimates and proposals that win you the job. 

Construction Bid

A Construction Bid is an offer from a contractor or subcontractor to provide certain services for a certain price. Bids usually contain detailed information about the scope of work being offered as well as any other relevant details that may be required by the client. Bids are typically due by a certain date and time and should include any restrictions or special conditions that may apply. 

Each bid should also include an expiration date after which it will no longer be valid. It’s important for contractors to note that bids cannot be changed once submitted, so accuracy is key when submitting them.

Construction Estimate

A construction estimate is a projection based on information provided by the contractor or subcontractor about the cost of completing a project. Estimates typically include components such as labor costs, materials costs, equipment rental fees, etc., but may not include any additional charges or fees associated with the project (such as taxes). 

Estimates are often used when submitting bids on construction projects because they give clients an idea of what they can expect in terms of cost if they choose to hire the contractor or subcontractor submitting the estimate. 

Construction Proposal 

A construction proposal is an offer from one party to another outlining specific terms related to a particular project or job opportunity. Proposals usually contain more information than estimates or bids because they outline not only cost but also potential timelines for completion and any other pertinent details necessary for both parties to understand exactly what is expected from them throughout the duration of the project. Once accepted by both parties, proposals become legally binding contracts between them. 

Protip: Read “How to Create a Winning Construction Proposal

Knowing when to use which one  

It's important to understand the differences between construction bids, estimates, and proposals in order to ensure successful communication between all parties involved in any given project or job opportunity. Knowing which documents need to be submitted at which times can help streamline communication between contractors and clients while helping ensure that everyone involved understands exactly what needs to be done in order for everyone involved to get paid properly for their services rendered!  With this knowledge under your belt, you’ll be ready tackle just about any construction project like a pro!

How to bid construction jobs

Bidding on a construction job is no easy feat, and requires careful planning and research to ensure that you are offering the most competitive bid possible.

In order to successfully bid on a construction job, there are several steps you’ll need to take: 

1. Gather material, labor, and other project costs: Assemble cost estimates from suppliers for any materials that will be needed for the project. You should also provide labor hours if required in your bid including time for corrective work, equipment rental fees, etc. Add all of these together to come up with an accurate overall cost estimate for the project as whole. 

2. Set contingencies: Include a buffer in your budget by setting aside money just in case unexpected problems arise during the course of the project such as weather delays or additional labor hours required due to unforeseen circumstances. This allows you more financial flexibility should something unexpected happen during construction without disrupting your budget too much or forcing you into dire straights during times of crisis or emergency repairs needed during construction sites. 

3. Research competitors’ prices: Check out your competitors and see what they’re charging customers where applicable so that you can stay competitive while still making a profit off of each job taken on by your company.  

4. Set prices appropriately: Err on the side of caution when it comes to bidding jobs as undercutting yourself financially can lead to less profits and ultimately cause financial strains. 

Also be sure to factor in things like overhead costs such as taxes, insurance, etc., all which can have severe impacts if omitted from pricing calculations.  

5. Follow bidding guidelines: Make sure when preparing bids that all requirements specified by potential clients are met exactly — this includes any written specifications provided as well as any verbal agreements made throughout discussions with the client. 

6. Submit professional proposals/bids: It's important whether submitting bids electronically or delivering a physical document — whatever method chosen make sure its done professionally so no potential clients feel put off. This includes well written copy, proper grammar & punctuation, appropriate visuals, company branding, and a clean design. Lastly, make sure you deliver your proposal in a timely fashion, and certainly on or before any deadlines set forth by the client.  

Following these 6 steps will help provide guidance towards successfully winning projects through fair bidding practices ensuring both you and your clients gain returns beneficial towards your respective interests. 

How to create a construction bid, estimate, or proposal

When it comes to creating construction bids, estimates, and proposals, there are several options available. For starters, you can use construction estimate software that is designed specifically for this purpose. Alternatively, construction companies also may use estimating templates they’ve found or created on their own. 

Construction bid templates 

A construction bid template is designed to help contractors easily generate accurate bids for their potential clients. 

A basic construction bid template should include details about the scope of work being requested, a breakdown of labor and materials costs associated with completing the project, estimated timelines for completion and payment terms. 

All successful bids need to clearly communicate three key elements: price, product or service delivery timeline and legal expectations. A well-crafted construction bid template will emphasize these points while also addressing any contingencies or risks associated with the project so that both parties are fully informed going forward. 

A couple examples of free construction bid templates include:

Construction Bid Form for Excel

Free Construction Estimate and Proposal Template

Alternatively, you could create your own template by following the steps in How to Create a Scope of Work Template in Microsoft Word

Construction Estimating Software

When preparing a construction estimate and proposal, the most important tool you can use is construction management software that offers you the ability to create estimates, proposals, and track every aspect of the project.

Construction estimating software allows you to quickly and easily generate detailed plans that include accurate material costs, labor time estimates, project bids and more. Additionally, they provide built-in templates to help streamline the process.

And, once you win the bid, you can convert your estimate into a project to keep on top of all costs, materials, supplies and labor during each phase of the project. By accurately tracking these components, you can more easily stay on budget and schedule based on the estimate and proposal you had submitted. 

Best Construction Estimate Software

BuildBook construction estimating software

If you’re looking for the best construction estimate and proposal software in the market, look no further than BuildBook

BuildBook has created construction estimating software that is simple to use and helps you create accurate bids that protect your profit and build trust with your potential clients. 

When your estimate is complete, BuildBook offers you the ability to generate a professionally branded construction proposal in minutes. The proposal is formatted for you to download, print, or share online for your clients to review & approve instantly.

The best part is, you can try BuildBook construction estimate software free as part of a 10-day trial.  

Estimate Twice, Propose Once

No matter whether you’re bidding, estimating, or proposing, and no matter what method you choose to do so, make sure that you’re being accurate and thorough. If need be, use construction calculators to calculate your hourly rate, or project labor costs, or even your markup. Factor for contingencies, delays, and any additional costs required outside the original scope of work. Being thorough at bidding time eliminates financial discrepancies at payment time.


Like what you are seeing? Sign up to receive our blog content and product announcements right to your inbox.

No spam. Ever. Just helpful biz tips and stories you can relate to.