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Estimating & Bidding

Proposal

In Plain English

A contractor's formal written offer outlining price, scope, and terms for a project.

Definition

In construction, a proposal is a contractor's offer to perform a defined scope of work for a stated price and under specified terms. Proposals are common in negotiated contracting and for change order pricing. The term is sometimes used interchangeably with bid, though proposals often include more detail about approach, schedule, and qualifications.

Why It Matters in Bidding

In negotiated and best-value procurement, a proposal is how a contractor competes on more than price, since it can present approach, schedule, qualifications, and clarifications alongside its number. Proposals are also the standard vehicle for pricing change orders, where the contractor's stated scope, exclusions, and assumptions directly determine what gets paid and where disputes later arise.

Example

Rather than a flat hard-bid number, the contractor submitted a proposal that itemized its price, listed key exclusions and allowances, and outlined a phasing plan to keep the tenant operational during the renovation.

Related Terms

BidRequest for ProposalChange OrderScope of Work

Frequently Asked Questions

A bid is usually a price submitted against a complete set of documents, often in a low-bid competition with fixed terms. A proposal is broader: it offers a price plus the contractor's approach, schedule, qualifications, and conditions, and is common in negotiated, best-value, and change-order pricing where factors beyond cost matter to the award.
A strong proposal states the scope of work, a clear price or pricing basis, and the terms, then adds inclusions, exclusions, allowances, and assumptions, a proposed schedule, and relevant qualifications or experience. Spelling out exclusions and assumptions is critical, since ambiguity there is a frequent source of later disputes over what was promised.
When a change is directed, the contractor submits a change-order proposal detailing added or deleted scope, labor, material, equipment, markup, and any schedule impact. The owner or architect reviews and negotiates it before it becomes an executed change order, so the proposal's clarity on scope and assumptions governs what the contractor ultimately gets paid.

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