As a home builder, why should you switch from quotes to detailed proposals?
Explore the advantages of detailed proposals in managing home building projects effectively.
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Duayne
A lot of builders don’t put time into this part because they’re not getting paid for it.
Amelia
Duayne, one of the things that we talk about in Live Life Build is that we don’t talk about quotes; we talk about proposals. When you’re putting together a cost for the project, a presentation about what this project is going to cost your client, it’s a proposal.
Why do you think many builders overlook the importance of the proposal in their projects, in how they think about it, and in how they approach putting it together?
The Critical Role of Proposals
Duayne
A hundred percent a proposal is just as important as your contract. Knowing what we know now in business, the proposal can help you cover many other areas. Like setting expectations, dealing with contractual obligations, and setting clear scopes of work so everyone knows what they’re doing.
But so many builders, I believe, do get into a bit of a trap where they do think that that’s all they’re providing is a quote. And over the years back, when we got involved in tendering, some of the prices or quotes you would come up against were a single page.
And for me, that is just a recipe for disaster. If you want to have a great relationship with a client and a great outcome from any project, you need to give them a proposal.
A proposal can help you solve so many other areas of your business.
Amelia
As an architect, I’ve been on the receiving end of some of those kinds of quotes where it is literally, you know, it might be a couple of pages, or it might be three lines that just literally says the cost of this project based on drawings XXX is this amount of money.
And you’re like, how am I supposed to explain this to a client, let alone make the client understand? Yeah, okay, I’m going to choose this builder and spend this amount of money with it.
It’s crazy that the builder has missed this incredible opportunity in this communication with the client to actually put forward something that’s far more informative and also helps them explain why the project is costing what it’s going to cost.
Leveraging Proposals for Client Engagement
Duayne
And that’s a really important one because your proposal, like my mindset back in the day, before we did what we do now, was that I always believed that if I put as much information as I could into a proposal, even if I was dearer than other builders, my goal was to get the clients asking me questions, not so much me, the other builders.
I wanted to put them in a position where they’re like, this other builder’s only, like he’s not told me all this. So I now need to go back to him and I need to ask him all these questions.
It was really funny because any client who gave us the opportunity back in the day to sit down with them and compare, go through our proposal, I was a bit cheeky at the time. I would ask if they didn’t mind. I’m happy to sit down and go through proposals and compare them. And it was a really, really good experience for me because I got to see it. It enforced what I was thinking was going on.
And when we’d go through my proposal, I’d have all these scopes of works and list any issues I’d picked up in the drawings. I’d list out materials that I was going to use. I’d list out details that I thought might be required for the job so I wasn’t just telling the client what they were going to get. I was helping solve issues that would ultimately become a variation through the job, and so when they gave me an opportunity to compare, it was so easy it was very very unusual for us to come up against another proposal.
I was always reviewing my proposal against someone else’s quote, and it just made it so easy for us to build relationships with the client. Ultimately, that’s led to where we are now with the PAC Process because we just kept growing and growing and growing off of our proposal.
Setting Standards and Expectations
Amelia
When you actually take this mindset that you’re creating a proposal for a client, that’s a much more professional way of presenting a price to a client for their project. And if you’re asking a client to spend even fifty thousand to five million dollars for a homeowner investing in their project, this will be a lot of money to them.
If they’re building their future family home or renovating their future family home, my experience with homeowners is that they will be spending the most amount of money that they can afford without financially crippling themselves. It’ll be a huge investment.
If you’re presenting something that explains clearly,
Sets the expectations
Go through in detail what’s included in the project and
Gives them that line item scope so that they can see that you’ve thought about things that they haven’t thought about in terms of how to build or renovate their future home,
that positions you with professionalism, expertise, and experience that immediately sets you apart from anybody they’re looking at in terms of you being the right fit for their project.
Duayne
Yeah. And the software that we use for our proposals is amazing. It allows us to not only give the client a scope of work, it’s got all of our company details on it. They can look us up, they can do their license checks, it’s got all of their details, the job address, the plan numbers, and we quite often will put in a spiel about what they’re going to get when they work with DP’s Constructions, but we also set in our proposal our payment terms.
We are now using our proposals to actually start informing them. Even though we’re doing the PAC Process, we’re talking through things. The proposal is generally the first point that they’re actually getting in a document because this is coming before the contract. So we’re setting a standard. They’re learning what it will be like to work with us. And by the time we get to a contract, everything flows smoothly.
But my goal with the proposal is that every single person can look at it and know whether the client can look at it and know exactly what doors they’re getting, arc trays, timber claddings, and how many coats of paint. I can look at it and know exactly what I’ve priced. My supervisor can look at it and know what trades are to do on-site and what he has to manage.
Ultimately, the scopes of work that we put in our proposal are the same scopes of work that we’ve done up in the very beginning. We’ve sent them to our trades, which have priced a scope of work. So they’re not just giving us a figure on a piece of paper, either.
From Quotes to Proposals
Changing your mindset from quote to proposal, doing the PAC Process, or having a process that allows you, because I think the other big part of this is a lot of builders don’t put time into this part because they’re not getting paid for it.
It takes a lot of time to put together a very detailed and outlined proposal, but it is a massive shift in your mindset. When you start delivering proposals that are setting your client up for the way they’re going to work with you, how you’re going to execute your projects, clear scopes of work, I know what I’m doing, supervisor, trades, employees, everyone knows what they’re doing. We can refer back to it through the job and see what plumbing fixtures are allowed and how many square meters of tiles we’ve allowed.
It not only makes it a better experience for the client, but our business runs better because we’re not double-and-tripling doing things along the way or getting to a point where we’re far out; it’s rough in stage. What are we allowed for electrical? What are we allowed for plumbing?
Our proposal is a detailed document that runs the project.
Amelia
And then it’s very clear if there’s any disagreement or discussion on site later on where a client says, well, this is what we discussed, or this was what was here, and you can say, well, no, actually this proposal I’ve shown you here exactly what this price reflects and what was allowed.
Then, you’ve given an accurate assessment of what your estimation was at the beginning that you’ve got to call back on. This enables you to ensure that the work you did to create the price flows through into the delivery of the project as well.
Duayne
Like you said, Assumptions is the Mother of all F-ups, which was what happened in my business. So many situations we got ourselves into were simply because we weren’t giving the client enough detail, which, and again, that’s what started growing and improving proposals and obviously getting to a point where we built our own software.
I laugh about it now. But I hear builders out there all the time, whinging that they’ve done a fit-out and the client’s not happy with the doors, or they’re not happy with the skirting, and there have been arguments, the client wants them to replace things, and I’ll be like, well, did you tell them what they were getting? What do you mean? Did you show them an example or did you have a product code they could get online and look up?
I laugh now. I used to do that. I used to assume that every job we did had flush-ready coat panel doors. It had standard splayed skirting and arc trays. But I didn’t ask the question or worse, I didn’t inform the client what I’d allowed in their project.
So when those situations come up, and the client’s on-site or you’re having a walkthrough, they’re like, oh, did we get a decision on that? What’s that skirting you’ve installed down there? Oh, that’s just what we do. That’s our standard for all of our jobs.
The client didn’t know that. So our proposals—I believe the more detail you can give a client, and we do everything, including telling them the types of hinges we will use on the doors—just remove all that unnecessary assumption, and everybody is on the same page.
Amelia
If you’re a builder who regularly does similar projects, much of this can be in a template, a document you have as part of your project pricing system.
It may take work to set up all of these standard items that you regularly use into a template, but it gives you a head start when creating a project price and putting together a very detailed proposal.
It just irons out so many issues, causes of confusion, and protects you as a builder in the long run as well.
Duayne
Never, ever make assumptions. Show your clients as much detail as possible. At the end of the day, if it is standard to you and there is something that you want to use as a standard on every single project, that’s fine. But take the time to detail your proposal so your clients know what they’re getting.
Amelia
Stop doing quotes. Start doing proposals.
If you want to know more about effective alternatives to quoting that can improve your client interactions and project outcomes, read our blog: 6 Reasons Not to Quote as a Builder [and What to Do Instead]