What procedures will be adopted for working on the project completely depends on the budget allocated to that project? The cost is very important information to be considered before working on the project. The businessmen with limited resources and budget constraints are required to take the cost into consideration.
What is the cost proposal?
A cost proposal is a document which is submitted by a contractor to tell the estimated cost. On the basis of the information provided in the cost proposal, two parties can negotiate and make plans about working on the project.
What is the purpose of using a cost proposal?
Many organizations ask their contractors to submit the cost proposal because it enables them to know the estimated amount they need for working on the project. With the help of the information about cost, the business can make several important decisions.
Some businesses also decide not to start the project because of lack of funds. The project cost proposal includes all types of costs such as administrative costs, cost on the provision of facilities, direct costs related to the project and a lot more.
Tips for making a cost proposal budget:
- The main focus of the proposal is always on the direct cost of the project because it covers most of the cost. Many contractors include all the costs in the proposal as direct costs. The cost of administrative tasks and direct costs should never be mixed. If you are providing information about the indirect costs, make sure that you provide all the documentation that can justify those costs. Moreover, these documentations should be able to prove that the said costs are necessary for the project.
- There are different methods that are commonly used for cost estimation such as price quotation, comparison between current and historical costs, etc. Choosing the right cost estimation method is very important if you want the cost estimate to be accurate and correct. As a professional contractor, you should always be able to choose the right method.
- While budgeting a project, the cost proposal should be able to explain how the project will incur the cost. The costs should be itemized in the proposal appropriately for better understanding of the company.
- The details of the cost should be described in the proposal. These details are very important for the client.
- Try to keep the cost low as much as possible. There can be many ways by which you can minimize several types of costs. Sometimes, a company prefers those contractors who propose the lowest estimate of the project.
Proposal
Project cost proposal is a document written by a business to another business that defines the correct and exact line of cost. It guides and elaborates the details about the amount of investment or the total cost need to be required for a certain project.
Sample Proposal Template
Company: XYZ
Construction Company
California, CA
Client: Jim Douglas,
ABC
Enterprises Limited
Cost Proposal for Recreation Centre
Executive Summary
XYZ had a discussion with ABC Company on 15th June and in that meeting, we were provided with the details about the project and were asked to prepare the cost proposal for the construction of a Recreation Centre on Orange Street Vallejo, California. This recreation center will be used to hold meetings, events and playing sports and other entertainment activities.
The project cost proposal will provide all the necessary information regarding the construction and designing of the Recreation Center.
Company Introduction
XYZ is a leading construction company in the USA. For almost 30 years, we have shaped the skyline of major sites in the region, including X tower, Y theme park and Z bridge of California. Our priority is delivering a quality product while maintaining the highest standards of safety and health. Our highly effective team, accurate planning, and resource deployment is the key to the deliverance of high standard projects within record timeframes. Our team comprises of skilled workmen and expert engineers. Our trained operators maintain a full range of heavy equipment for construction in our operation areas. We provide consultations and solutions to our client’s requirements during the projects whenever required.
Services
We cover all aspects of building construction and contracting services and offer feasibility studies, designing and décor and financial opportunities for projects.
Our specialty fields include:
- All types of building construction
- Oil & gas and industrial plant construction
- Infrastructure and civil works construction
- Industrial equipment procurement and installation
Project Details
Employees are a company’s greatest asset and it is most important to keep them happy and content. Creating a recreation center for them is an excellent idea and it will help enhance productivity as well as keep the work stress level low. This center will be built on the AAA plot in Orange Street Vallejo. It will cover an area of 2,200 sq. /Feet. It will be a two-story building.
Outdoor
There will be a tennis court, a swimming pool, a bicycle path, and a playground along with other sports activities. There will be more than one main entrance to provide more route for people arriving from different streets.
Indoor
Amenities such as restrooms, drinking fountains, and telephone facilities will be provided within the center. Moreover, there will be a locker room and shower for all the facility users. A mini-mart will also be constructed to provide snacks and refreshments.
Project Phases
Our company will complete this project in 6 months.
Phase 1: Assessment and Planning
Our project team will visit the site and complete the site examination thoroughly. Our architects and engineers will make a 3D design and get your approval.
Phase 2: Pre-Construction
Groundbreaking will be done at this stage and the site will be prepared before the beginning of the construction.
Phase 3: Construction
Using the design as the guide, our team will assign tasks for the completion and allocation of resources and the process of building the Recreation center will start.
Phase 4: Project Performance
Many times the project managers have to make adjustments to keep a project on track or the client company isn’t happy with something; this is the stage where we ask for another approval from the clients.
Phase 5: Design and Modeling
At the end of the construction, our team of engineers and interior designer will beautify the center and design it.
Phase 6: Project Close
At this stage, our team will officially complete the project and will move on to the evaluation and documentation of the project. A final team meeting will be held and led by the manager to officially mark the project ends. An inspection of the whole building will be done.
Cost Allocation
We will allocate the following amount to each phase of the project.
| Phases | Cost allocation |
| Phase 1 | $10,000 |
| Phase 2 | $40,000 |
| Phase 3 | $338,500 |
| Phase 4 | $10,000 |
| Phase 5 | $40,000 |
| Phase 6 | $5,000 |
Cost breakdown
Manpower
| Work type | Number of people | Rate/Week | Total |
| Machine operators | 6 | $600 | $3,600 |
| Engineers | 2 | $1500 | $3,000 |
| Labor | 15 | $500 | $7,500 |
| Interior Designer | 1 | $2000 | $2,000 |
Equipment
| Equipment | Quantity | Cost per unit | Total |
| Bulldozers | 1 | $1,255 | $1,255 |
| Skid loaders | 2 | $860 | $1,720 |
| Wheel loaders | 3 | $1,880 | $5,640 |
| Vibratory rollers | 1 | $1,200 | $1,200 |
| Motor graders | 2 | $2,000 | $4,000 |
| Vibratory soil | 1 | $1,400 | $1,400 |
| Compactors | 2 | $800 | $1,600 |
Other services
| Services | Cost amount |
| Permits and Government Approvals | $30,000 |
| Test and Completion approval | $10,000 |
| Transportation Fee | $10,000 |
| Interior design | $40,000 |
Approvals and Permit Fee
- Our engineer will ensure that each of the state regulations and codes is met during construction.
- We will get approval for ‘Land title and clearance’.
- We will get the building ‘plan and layout approval’.
- NOC: Our Company will obtain a no-objection certificate from the water pollution board and other pollution boards in order to get approval for the sewer and water supply in the area.
Permit Fee Details
| Permit | Charges |
| Building permits Fee | $1,500 |
| Records management Fee
|
$10 |
| Grading and final inspection Fee | $2,000 |
| Development charges | $40,000 |
Terms and Conditions
- XYZ will be responsible for providing transportation for all the equipment to and from the construction site.
- XYZ will be responsible for all equipment provided and the cost and charges incurred in the operation and maintenance of the equipment during the rental period.
- 30% of the payment shall be made at the time of acceptance of the proposal.
- 40% of the total payment shall be made at the time of the midway review.
- The remaining payment shall be made at project closing.
- During the contract term, our company will provide commercial insurance for all the equipment.
Contact us
You can contact us in any of the following ways:
XYZ Construction Company
Phone: 084-1113443
E-mail: XYZ@gmail.com
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