It’s been a while since I have posted here but I would appreciate any advice on this.
How do you handle getting paid for your proposal fee? Do you have a contract for preparing a proposal, or do you just set your fee and ask for the check?
I have a couple that I was referred to, they want to replace a sunroom on the back of the house and redo the front porch and entry.
An architect has drawn elevations and there are sketchup renderings so I know what the project will require but I don’t have construction dwgs. yet, nor are there any mat’l selections made. In other words, I know that I will need a door and how many windows for the sunroom, but not the mfg. or model.
I gave them an estimate/budget. It has about 15-20% variance based on the unknowns and lack of mat’l selections. They seemed fine with the budget, but I told them if they wanted a fixed price, I would need to be compensated for my time.
I have charged people for proposals before, but usually I either have const. docs and dwgs. or I am providing them as part of my fee.
This project will take some time to research and cost accurately and I feel I should get paid more than a few hundred $$ to do that. Which is why I think I should have some form of contract to present for the proposal fee.
My const. contract is a modified version of The Legal Kit from JLC, but that seems inappropriate for this.
What say you??
Replies
I usually use a modified version of our Design Contract... just deleting the design portion
payment is usually 2... deposit & balance when i submit my Proposal ( Contract for Construction )
Mike,
Are you aware of any type of "boiler plate" contracts for this type of work?
Is there anything similar to The Legal Kit that I could use?
send me an email and i'll see if i can .pdf mine...tomorrowMike Hussein Smith Rhode Island : Design / Build / Repair / Restore
Mike,
I appreciate your willingness to share.
I sent you an email through the forum.
Thank you.
i'll look for it at the office tomorrow
Mike Hussein Smith Rhode Island : Design / Build / Repair / Restore
Good question. All depends on how certain you are that they are only getting one price and getting it from you. Other contractors might not charge for this and if you are insisting on being paid for working up a proposal, then they might say to themselves, let's find someone else who doesn't charge for this service.
What would I do? Not sure at the moment, would have to think about it and see how involved the whole thing is. Most of my estimates involve leg work and research of some kind so I'm used to working up estimates for free. Plus I wouldn't want them to get someone elses price.
Good luck!
Mike,
At this point, I know they are not getting any other prices... but that has little to no impact on whether I charge for a proposal.
And if they decide to find someone who doesn't charge for this service and rule me out because of that, I am perfectly OK with that.
I want to be compensated for the time I will invest to prepare the proposal (I have already met with them twice and provided an estimate/budget for no charge)and need some help with contract language.
I just charged a grand to work up my proposal for a customer I'm pretty certain I'll get the job from. It's a real big job...for me. Upwards off probably over $500,000 for a total reno not including the kitchen cabs.
I told them I'd apply the grand to their last payment "if they use me". I think getting the thousand bucks just shows they're serious and on a job that size a grand gets lost among the paper work the jobs so big....for me.
I just wrote up a simple receipt for the payment stating what it's for and my conditions. It's not like a contract for a job that requires tons of intricate details so...To me the biggie is the actual contact for the job. I too have used the JLC book/cd but I'm not comfortable with that for this kind of job.View Image
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andy,
I don't want to pry into your business operations too much, but if you don't mind my asking, does your $1000 fee cover your costs for preparing the proposal?
I agree that getting someone to commit to paying the fee initially is usually a very good qualifier. It shows they value what you can offer them, but for me on a project of the size and $$ amount you are talking (which is a big project for me as well) I couldn't cover my time invested at $1000.
Do you allow for additional time/cost in your price to cover the work you do preparing the proposal? Or am I just really slow and want to charge too much?
Also, you said you were not comfortable with the JLC contract for a job of that size, what would you be comfortable using as a contract?
Thanks
It is far less than my time is worth but I know the job is pretty much mine if my numbers are fair and in this current economic time I need to get my foot in the door so that eventually both feet and my crews feet can walk in...and set up shop. In my mind also...I'm thinking the time it takes me to figure this job will all get added in to the entire project being it's so large...for me. And yes...I am adding in the additional time in other words. The grand is to be sure my price isn't just fro comparisons sake or just another tire kicker. they also did use My archy to draw up the plans which is another plus in my favor. The reason I worry about using the JLC book/CD ona job this size is because I think an attorney versed in this kind of work should give me the appropriate contract to use in these times. I'd like to think the JLC book/CD is enough....I'm just not really sure with a job this size. I may rethink that.
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Andy,
I hope the job works out for you.
FWIW, I am getting ready to start a new job in the $$ range of yours and would much rather use my modified version of the JLC (modified by an atty.) rather than the AIA docs they have specified.
I don't know if that makes me naive, but I can understand that language much easier than the AIA stuff.
Which contract you using from the JLC book. I'm curious b/c I wouldn't mind using it myself and not have to spend a boat load of money on a lawyer if it's not completely necessary.... Apparently if your lawyer thought it seemed good I'd guess it is....and how much did you modify it? One of the reasons I thought to use a lawyer was b/c of a long discussion a ways back here in the business threads....so many people were going on and on about how that wasn't a good idea. I think they compared it to a DIY'er framing a house after just reading a book on how it's done. The thread got me paranoid...lol.
Thanks broView Image
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Andy,
I use form 1.3- Long Form Fixed Price Agreement. I have used it with success on projects ranging from 25k to 140k over the last 3 years. (Smaller projects have a much shorter form).
Very few people have ever questioned it and the one that did just wanted to make sure I named him as additional insured for the duration of the project.
The largest project I used it on was for two attorneys. They had no qualms signing it. I always figured that they would beat me in court if it ever got that far anyway;). But, they turned out to be one of my best clients and the contract really became an afterthought during the project.
As far as the modifications, I sent a copy of the Agreement to my atty, he reviewed it and made maybe 10 changes. Some were pretty minor re: lien waivers. Some were significant- like the dispute resolution clause was completely changed.
I modify it each time I use it, deleting sentences or adding things as they pertain to the project. And I like to change my pay schedule on each project, to keep me in the black.
As far as people being down on using it straight from the book, I would tend to agree. I mean, what do I know about writing contracts?
But I felt letting an attorney review an existing document rather than starting from scratch was a cost effective option. If they thought it was bad I would hope that they would have advised me of that fact.
I am sure the billable hour for an atty is higher in your neck of the woods but I only had to invest a few hours to get this review done.
Hope this helps.
Thanks...I may look that 'tract over and seriously consider it so yeh...it does help...Mucho thanxo
andyView Image
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As potential client I would want to know exactly what I was getting for the payment.
And in this case it sounds like construction docs and list of material.
Mine to do with as I want.
William the Geezer, the sequel to Billy the Kid - Shoe
Bill,
What I provide is a fixed price agreement that stipulates what I will do, when I will do it and how much it will cost.
In this case it is based on dwgs. from an architect, but it still requires me to build this thing in my head, contact subs, have site reviews, price mat'l, figure a schedule, and make sure that I have everything covered.
You are right that as the owner, it is yours to do what you want. But having a contract with all of my info isn't going to be of much use if you don't hire me, other than to have my price. And if all they wanted was a price, they already had a range from the estimate/budget I provided.