Comprehensive vs Itemized Proposals
As an Austin Builder I interact with many clients. Each has his or her preferred way to do business. A client asked me, recently, if I itemize my proposals. I replied that the proposals I submit are comprehensive and extremely detailed. A few days later he sent me an email with an attached itemization chart. He indicated that the attached document contained the format he desired for my proposal.
Was he acting in his best interest? Perhaps. There is a polarizing argument for and against itemized proposals. A few years ago I worked with a prominent remodeling firm that insisted upon the practice. Subsequently, there are many builders who provide no more than a hand-written order blank form. I believe there is a minimum standard for any contract or proposal. The document must protect both the client and the builder. We have found that most banks require itemization as a matter of course when financing a project. Austin Builders, by-in-large, avoid itemized proposals for one reason. When reviewing the proposal, the client will ask to deduct a task he or she feels they can do. They believe in this way they can save money on the project. The unavoidable result is that the builder is forced to price each component as a stand alone event.
The Danger of Stand-Alone Pricing
Let me give you an example. You request a bid for the prep and painting of 10 individual doors. Subsequently, the total budget for the proposal is $500.00.
You decide you can paint 9 of the doors. The last door , however, requires more prep than you know how to do. You instruct the builder to paint only the one door for the individual price of $50.00.
It is not feasible for the contractor to buy the materials needed. He can’t drive to your project and roll out his tools. He cannot provide the labor, clean up or roll his tools. He is unable to perform the necessary administrative duties involved with processing a job for only $50.00.
Under these circumstances, the individual door price would likely be around $200.00. If the contractor had priced the original job at $200.00 per door or $2,000.00 to paint 10 doors, he would have priced the job outside of a competitive market value of the job.
Itemized proposals may give the homeowner an appearance of controlling costs for his project. The truth is the itemized proposal is a guarantee that you will pay the highest price.