Field Notes
Estimate, Bid, Quote, Proposal: Which One You Just Sent
Four pages. "Estimate" in the header, a column of numbers, and a signature line on the last page with the homeowner's name typed under it.
I see that document more than any other in this trade. The header calls the number a guess. The signature line calls it a price. Whichever one the client's attorney decides to read is the one you sent.
The four words get used as if they were interchangeable. They are not, and the difference does not live in a dictionary. It lives in what happens the day somebody signs.
Estimate vs. bid vs. quote vs. proposal
Here is how I use the words, and how the documents at /bid-room/documents use them.
An estimate is a number built on assumed quantities. You have not counted every stud because there are no drawings to count from, so you priced a house like this one, at this size, on this lot, and you said so. Its job is to tell the client whether the conversation should continue. It carries a range because it is honest about what it does not know yet, and it carries a date after which it is no longer anyone's number.
A quote is a fixed price for a defined scope. The quantities are counted. The exclusions are listed. Sign a quote and the number is a contract price, which is fine, because you meant it to be.
A bid is a quote submitted in competition. Somebody issued a set of documents, two or three builders priced the same set, and the owner will read them next to each other. A bid has a deadline and rivals. It is the only one of the four where the reader has something to compare it against on the same afternoon.
A proposal is the whole package. Scope, price, schedule, terms, and the case for why it should be you. A proposal contains a quote or a bid. A quote does not contain a proposal, which is why the column-of-numbers document loses to the packet even when the column is lower. I laid the packet out page by page in the construction proposal template.
| The number is | Signing it means | It expires | |
|---|---|---|---|
| Estimate | A guess with a stated range | It should not be signable | On a printed date, always |
| Quote | Fixed, for a defined scope | That is the price | When you say it does |
| Bid | Fixed, against issued documents, in competition | That is the price, and you beat two others to it | On the owner's deadline |
| Proposal | Whichever of the above it carries | The next document gets signed, not this one | With the number inside it |
The signature line changes the word
Take the estimate from the top of this post. Put a signature line on a number built from assumed quantities and you have written an offer. Somebody can accept it. When they do, you have a contract at a number you arrived at by assuming, and the assumptions are now yours to eat.
Nobody sets out to do this. The signature line is there because the template had one, or because the last document you built from was a contract and you changed the header. The trade sends the same four pages under three different names, and 95.8% of the 785 contractors in the study show nothing a client can reach, no proposal system and no portal, so the four pages usually go out as an attachment from whatever program was open.
The preliminary estimate in the Bid Room suite is the one document in the set nobody signs. It has no signature line on purpose. What it has instead is an expiry, the range around the number, the not-carried items, and the open questions the number is waiting on. It is built to start the conversation and to be useless as a contract. The page for it is at /bid-room/estimate.
I will say the obvious thing once. I am not a lawyer. Every specimen in the suite carries an attorney-review line, and this post should be read with the same line under it. What I can tell you is what I have watched happen when a guess had a place to sign.
What the expiry is for
A number quoted in March comes back in September. Lumber moved. The framer you priced is on another job. The town changed what it wants in the drainage plan. The homeowner has the four pages on the fridge and the number is, to her, still the number.
An expiry is how a number stops being a promise you did not make. It is one line: this estimate is valid through such a date. After that, you look at it again with the drawings that exist now. It costs nothing to print, and it has kept builders I know out of an argument about a spring price in the fall.
A quote expires too, but on your terms. You set the window because the sub numbers under it have a window. A bid expires on the owner's deadline, because that is the day they decide.
What a bank reads
There is a fourth reader nobody talks about. When the homeowner is borrowing to build, the estimate or the bid goes to a lender, and the lender uses it as the basis for a lending decision.
That changes what the document is allowed to say. If the work is more than the lender will carry, the temptation is to make the number fit. Do not. Presenting one scope at another scope's price is misrepresentation, and the person who signed the loan paperwork is the one holding it. The honest version shows the whole scope and breaks it into phases, with the first phase under the ceiling and the later phases dated and priced. Phase it. Never re-price it.
The same rule covers value engineering. Trim self-performed labor and the amenities that can be added later. Structure, envelope, and anything the code requires stay in the number, because a bank-facing document that leaves them out is a wrong number, whatever it saves on paper.
The four documents, and which word each one is
The Bid Room suite runs four documents in a fixed order, and part of the reason for the order is that each one is a different word.
00 is the estimate. No signature line. An expiry. The range and the items left out, in writing. It settles whether to keep talking and nothing else.
01 is the letter of intent, where the first signature happens, and still not a price for the house. It takes a retainer, holds a slot in your calendar, and turns preconstruction from favors into paid work.
02 is the pre-construction design agreement. A price for the drawings, not the build. The design fee comes off the contract if you build it, and the drawings stay yours until they are paid for. They cannot be walked across the street to be priced by someone else.
03 is the construction agreement. This is where the quote lives. A contract sum with a draw schedule that totals it, allowances written down as allowances, and a rule that changed work is written before it is built.
Each document names the next one. The estimate says the letter of intent comes next. The letter says the design agreement does. By the time the client sees a contract sum, they have signed two things that were not a price and read one that said plainly it was not a price. The word on the last document surprises no one, because the words were kept straight from the first one.
What to call the thing you are about to send
If the quantities are assumed, it is an estimate. Put the range on it, put the date it dies on, and take the signature line off.
If the scope is defined and the number is fixed, it is a quote. Say so and mean it.
If someone else issued the documents and two other builders are pricing them, it is a bid. Price it from a take-off you did yourself. A cost matrix somebody else built already carries their contingency; your fee on top of it doubles the padding and puts you outside what the owners were told to expect. I wrote the whole process out in how to bid construction jobs.
If it is the whole package, it is a proposal, and it should look like one. That means a link on your own domain instead of an attachment, one rendering off their actual plans, the number explained on the page instead of totaled at the bottom of it, and the four documents behind it in the same type and the same voice. That package is the Bid Room's product, built per job from the builder's own drawing and figures, with the card printed on the page. The marketing plan sets it in sequence with the rest of a season's work.