What is an Estimate Proposal?

An estimate proposal is a simple business document that provides an informed guess on the cost or approximate price of the job and the scope of projects and services delivered by the contractor to the client. It is an essential tool to inform and explain how contractors use estimation when calculating their expected costs and developing an estimate service to accomplish a project. This document is prepared by contractors before or during the process of drafting a bid as it includes an accounting of taxes, equipment costs, labor costs, subcontracts, and overhead, as well as a markup of the profit from the contractor.

According to a statistical report published by the U.S. Bureau of Labor Statistics, there is a 2% projected decline in the employment of cost estimators from 2021 to 2031. Although there exists an employment decline in this type of job, there are about 18,5000 openings projected for cost estimators each year on average this decade. This means there will still be some demand for cost estimators because many businesses and corporate firms need accurate and reliable cost projections to guarantee that their products and services are profitable. That’s why preparing a systematic estimate proposal is fundamental for contractors in various fields and industries such as construction, engineering, design, and software development to propose their contractor estimates to their prospective clients properly.

Examples of Estimate Proposals

Many constructions, engineering, and design agencies and companies have significant roles in the development and implementation of estimate proposals. If you are one of the new contractors responsible for preparing estimate proposals, consider some notable examples of estimate proposals you will use for project planning and execution. 

1. Cost Estimate Proposal

A cost estimate proposal is a document that contains primary goals, objectives, and desired outcomes in calculating a budget based on direct costs, indirect costs, and other critical factors that reaches the financial commitment integral for a successful project. It is used to propose specific tasks, preparation of estimates, standardize frameworks for the estimates, availability of valid data, independent review estimates, excluded costs, and revision of estimates for relevant program changes. As a vital part to facilitate good project management, it helps the project manager to make a proposal of the most accurate project budget possible based on the project scope. 

2. Software Development Independent Estimate Supplier Proposal

Create an independent estimate supplier proposal for a software development project. When software cost engineers make this proposal, they need to carefully determine and measure the size of the software that will be developed using an international standard unit of measurement. That’s why they need to integrate relevant historical data in the estimate. Typically, they perform a function point analysis to quantify the amount of functionality given to the user by a software application in an international standard. Also, they need an accurate Project Delivery Rate (PDR) expressed in hours per function point to make an estimation of the number of effort hours required for different project activities in the project scope.

3. Pre Construction Budget Estimate Proposal 

Do you need to prepare a budget estimate proposal and construction estimate for the pre-construction stage of a house repair and home improvement project? Make a pre-construction budget estimate proposal to define the overview of the pre-construction stage and estimates and the evaluation of the estimation and budgeting process. For the overview of the pre-construction stage and estimates, describe the evaluation of quotation standards, backlog, and analysis of the priority of quotations to be submitted, organizing the process, tools for accuracy and productivity, measurement of the risks, and qualitative and quantitative data analysis report. Additionally, include the project description and schedule, design cost model, bill of quantities, sources of cost data, and many other aspects of the estimation and budgeting process.

4. Revenue Estimate Proposal 

When preparing a revenue estimate proposal, you need to complete a scope or work plan for all new projects and programs proposed for funding. Specify the title of the project and include the project description, name of the submitter, main objectives, justifications, timeline, and impact on other programs. Highlight the benefits of the project to inform the readers of the revenue estimate proposal and the use and advantages of the proposed projects and programs.

Different Types of Estimation Methods

Estimation methods are commonly used by project managers and other professionals to create rough calculations of what is required to complete a project successfully. They implement different types of estimation methods after the project initiation stage to record the predetermined project limitations. Take note of the estimation methods that you need to be familiar with while creating an estimate proposal for your new project or program.

Top-down Estimation: It is a type of estimation method that breaks down the project into different stages and tasks based on the work breakdown structure or WBS of your new project or program. This technique allows major stakeholders to set an overall project or small business budget or timeline without having awareness of all the specifics. Bottom-up Estimation: In this estimation method, it enables project managers to observe the project’s individual phases first so that they are able to indicate the overall project cost or timeline. Often selected over top-down estimation, bottom-up estimation is more accurate, but it takes a bit longer to put important details together. Analogous Estimation: Also known as the comparative estimation method, the analogous estimation method aims on developing a comparison to similar past project requirements to prepare an estimate for the current or existing project. When you have little to no data on your ongoing project, use analogous estimation to give you and your team a rough idea of what is needed. Three-Point Estimation: Project managers use this estimation method to determine the amount of work needed for an individual task based on three figures which are your best guess, optimistic guess, and pessimistic guess. It guides them to create a logical prediction of the timeline of the project completion. Parametric Estimation: A parametric estimation is an estimation method that utilizes historical data from similar projects while making some adjustments for the differences that exist between past and current projects. It uses a set of algorithms to calculate the estimate.

How to Write an Estimate Proposal

Creating an accurate and detailed estimate proposal is a fundamental way to deliver your services to your client effectively and complete your project to help you become fully aware of completing your new project or program. Use an estimate proposal while writing your project implementation plan as well to attain project success.

Step 1: Fill up with Basic Information

When filling up the basic information of the dealer and the customer, you need to define the company name, contact number, and the name of the sales representative. In the customer information, add the name of the customer, and full address that includes the city, state, and zip code. Make sure that you write the basic information of the dealer and customer correctly.

Step 2: Show a Rough Project Timeline

Provide an approximate project timeline so that you can give the client a rough completion date for the project. Doing this allows your client to know how long the client can anticipate the project or program to go on. Also, estimate the labor costs as well.

Step 3: Determine the Project Needs and Cost Estimate of Materials

Analyze the scope of your project plan and determine its needs. If you need an engineering or interior design specialist to assist you in completing the project, you need to subcontract workers to get on their roles. Then, set a cost and quantity estimate of the materials. Be flexible while adding the details of this section in your estimate proposal.

Step 4: Indicate Your Terms and Conditions

Always remember to include the terms and conditions regarding your services. You may also add any possible exclusions and inclusions to make sure that no one can surprise you or the client negatively. Be clear, specific, and professional as music as possible.

Step 5: Prepare the Final Estimate Proposal

Look at the format and outline of the draft of your estimate proposal and scrutinize it for any potential grammatical and spelling mistakes. Include all vital information that must be incorporated in the proposal. Proofread, edit and revise the estimate proposal document carefully if needed. Last but not the least, prepare the final estimate proposal.


What is the difference between a bid and a proposal?

A bid contains extensive information as it covers project costs and timelines of one’s job. On the other hand, a proposal provides more specific details with the aim to get into an agreement and partnership with another business.  

What is a job estimate?

A job estimate is a document comprised of major information about the services a professional will offer for a specific project. It includes the costs and timelines of the project intended for a client to help them set their budget. Also, it guides the business owner to carefully and systematically plan for a project.

What are some examples of an estimate proposal?

Some examples of an estimate proposal are an estimate engineering change proposal, an independent estimate supplier proposal, a budgetary estimate technical proposal, a compensatory afforestation estimate proposal, a compensatory afforestation estimate proposal, a human capital depreciation estimate proposal, a budget estimate proposal, a cost estimate of election campaign proposal, a job bid proposal, a preliminary estimate proposal, a revenue estimate proposal, and a pre-construction budget estimate proposal.

How to write a construction estimate?

When you write a construction estimate, you need to consider reviewing the scope of the construction project and provide an approximate timeline. Next, determine the specific work you must do to subcontract out and build up an estimate of the cost of materials. Then, observe your competition and perform some background research to check what others are costing their work and materials. Include some terms and conditions of your construction services and any other exclusions and inclusions. Make your estimate look formal and professional by avoiding the use of any industry jargon or abbreviations that the customers won’t understand. Finally, submit your estimate.

What are the major types of estimates?

The major types of estimates are ballpark estimates, budgetary estimates, and definitive estimates. Ballpark estimates are rough preliminary estimates according to the top-level client objectives and a wide margin of uncertainty due to unclear deliverables. They must be a price range used to start the conversation about money and give a rough idea of what the client can pay. A budgetary estimate is an initial assessment and quick estimate of the projected funds available to a business firm or agency and it is used when allocating money into the budget of a business firm or an organization. While a definitive estimate is the most accurate estimate generally prepared during the planning stage or late stages when the comprehensive project scope is available.

Whether you are creating an estimate proposal for a construction, engineering, and design job or a software development project, it is essential and efficient for your work to use a systematic and well-designed estimate proposal template. A well-designed estimate proposal template will surely help you to outline the major points of your estimate for the project you will be working on. We have several sample estimate proposal templates such as engineering estimate proposal templates, printable expense budget estimate proposal templates, standard estimate proposal templates, graphic design estimate technical proposal templates, and human capital depreciation estimate proposal templates.