Defining the terms "Estimate" and "Bid"

[Mule]

Thought this might be a good topic for discussion....here are websters definitions for and estimate and a bid....Now I know that resi customers get these two terms mixed up, what's your take???

ESTIMATE..


to form an approximate judgment or opinion regarding the worth, amount, size, weight, etc., of; calculate approximately: to estimate the cost of a college education.

an approximate judgment or calculation, as of the value, amount, time, size, or weight of something.


a statement of the approximate charge for work to be done, submitted by a person or business firm ready to undertake the work


BID....

to command; order; direct: to bid them depart.

to express (a greeting, farewell, benediction, or wish): to bid good night.


Commerce. to offer (a certain sum) as the price one will pay or charge: They bid $25,000 and got the contract.

Cards. to enter a bid of (a given quantity or suit): to bid two no-trump.
to summon by invitation; invite.

to command; order; direct: I will do as you bid.

to make a bid: She bid at the auction for the old chair.

Cards. a. an offer to make a specified number of points or to take a specified number of tricks.
b. the amount of such an offer.
c. the turn of a person to bid.

10. an invitation: a bid to join the club.
11. an attempt to attain some goal or purpose: a bid for election.
12. Also called bid price. Stock Exchange. the highest price a prospective buyer is willing to pay for a security at a given moment.

?Idioms13. bid fair. fair 1 (def. 30).
14. bid in, Commerce. to overbid all offers for (property) at an auction in order to retain ownership.
15. bid up, Commerce. to increase the market price of by increasing bids.

 

[electricalperson]

the terms we learned estimate is the cost for you to do the job and the bid is the price your going to sell the job at

 

[Dnkldorf]

Mule.

Bid, proposal, quote, estimate......yada yada...

It's all the same thing.

It is a agreement that states what you are willing to do x amount of work for x amount of dollars, or pesos, or krugerrands....

IMOWM

 

[Rockyd]

Bid, proposal, quote, estimate......yada yada...

They are all very different, and a court room would teach you that. I agree with electrical person in his definition. Oral contracts are hard to enforce. Maybe it's only because there only worth the paper thy are written on? Written is simply the best, and the more it is spelled out, the better for all involved.

In documentation, written word supercedes numbers, etc. There are lot of things that the school of hard knocks can teach...

Hey Mule, good thread!

 

[electricalperson]

we have a business law book we use in class that says oral contracts are good but get it all in writing. mike holts estimating book and dvd are good

 

[satcom]

Mule, you picked a great topic, there are many that don't know what each one means, or when they should be used.

 

[Rewire]

They are all very different, and a court room would teach you that. I agree with electrical person in his definition. Oral contracts are hard to enforce. Maybe it's only because there only worth the paper thy are written on? Written is simply the best, and the more it is spelled out, the better for all involved.

In documentation, written word supercedes numbers, etc. There are lot of things that the school of hard knocks can teach...

Hey Mule, good thread!

These terms are interchanged in the field I have noticed that when the contractor wants more money it is an 'estimate" and when the customer doesn;t want to pay it's a "bid"

 

[Dnkldorf]

Mule, you picked a great topic, there are many that don't know what each one means, or when they should be used.

OK, so this is all you have to say?

Les, why not break it down, as you relate them to the electrical industry.

How do you give an estimate to someone, with the definition of an estimate being what it costs you to do the job, and how a bid is what you sell it for?

Are you providing estimates, then if accepted you somehow contact the end user and tell them the estimate you gave them is wrong, and you now need to provide them with a bid?

Everyone of you, in many,many posts, claim you charge for estimates, or are you charging for bids?

I would like to see your breakdown of what each one means, including proposal and quote.

 

[Rockyd]

You mean like this?




Individuals with authorization to sign change orders shall be:
Name & Title: __________________________________________________________
Name & Title: __________________________________________________________
ELECTRICAL CONTRACTOR SHALL NOT BE LIABLE: Theft by others. Items installed, are considered sold. For failure to perform if prevented by strikes, or other labor disputes, accidents, acts of God, terrorism or war damages, governmental or municipal interference, shortages of labor or materials, delays in transportation, non-availability of the same from manufacturer or supplier, or other causes beyond Electrical Contractor's control. In no event, shall the Electrical Contractor be liable for special or consequential damages whatsoever (roto-zipping, etc); however caused.
EXCLUSIONS: This proposal does not include concrete, forming, painting, patching, trenching, core drilling, venting and sealing of roof and wall penetrations. Electrical Contractor recommends specialist contractors for the aforementioned activities. All waste created by Electrical Contractor will be removed to a specific area on the construction site. Electrical Contractor not responsible for liability due to terrorist acts (domestic or foreign), or for spores or molds, EIS, regulatory, permit, or inspection fees, power, communications, or tele-data billings to project.
LIGHTING FIXTURES AND EQUIPMENT SUPPLIED BY OTHERS1) Price includes installation of lighting fixtures furnished by others, if lighting fixtures are on job at time of electrical trim out. (2) Price does not cover the warranty of lighting fixture and equipment supplied by others. (3) Price does not cover the assembly of lighting fixtures and/or equipment supplied by others. (4) Price does not cover lighting fixtures weighing more than fifty (50) pounds. (5) Fluorescent lighting fixtures supplied by others shall be, assembled, pre-whipped, and pre-lamped with in-line fuses. (6) Equipment supplied by others shall be installed by others, except lighting fixtures according to conditions above. (7) Electrical Contractor shall not be responsible for Owner-provided lighting fixtures and equipment. Losses due to theft, damage, vandalism, etc. are not the responsibility of this Electrical Contractor. Electrical Contractor shall not receive nor store Owner-provided lighting fixtures or equipment.
MATERIALS AND EQUIPMENT: All material and equipment shall be as warranted by the manufacturer and will be installed in a manner consistent with standard practices at this time. It is agreed that title to all material required according to this proposal will remain the property of the Electrical Contractor until paid in full. It is understood that this Electrical Contractor shall have the authorization to enter upon owner/contractor for the purpose of repossessing material and equipment whether or not installed without liability to owner/contractor for trespass or any other reason.
NATIONAL AND LOCAL CODES: Electrical installation shall meet the 2005 National Electrical Code. Errors in design by the architect and/or engineer are not the responsibility of the Electrical Contractor. Any additional outlets, wiring, lighting fixtures, equipment, etc. not indicated on blueprints and specifications that are required by others (i.e. inspectors) shall not be part of this proposal.
NON COMPETE CLAUSE: Owner and all representatives of owner/contractor are not to contract or employee any contractor employees for a period of one (1) year from the completion of any of any electrical work performed by this contractor with said Owner/Agent within an area of a fifty (50) mile radius from this job site.
OWNER/CONTRACTOR DEFAULTS: Owner/Contractor will be in default: (1) any payment called for under this proposal and all authorized change orders becomes past due;(2) any written agreement made by the owner/contractor is not promptly performed; or (3) any conditions warranted by the owner/contractor prove to be untrue; (4) failure of owner/contractor to comply with any of the conditions of the proposal. Electrical Contractor's remedies in the event of owner/contractor defaults, Electrical Contractor may do any or all of the following (1) Suspend the work and remove it's material/equipment from the premises; (2) remove any Electrical Contractor-supplied material/equipment, whether or not it has been installed and whether or not it has been placed in operation. In this regard, owner/contractor agrees that Electrical Contractor may enter upon owner/contractor property for the purpose of repossessing such equipment without liability to owner/contractor for trespass or any other reason; (3) retain all money paid hereunder, regardless of the stage of completion of the work and bring any appropriate action in court to enforce its rights. The owner/contractor agrees to pay all costs and expenses, attorney's fees, court costs, collection fees (including fees incurred in connection with appeals) incurred by Electrical Contractor in enforcing its rights under this proposal.
PERFORMANCE: Contractor agrees that where a written construction schedule is provided with the signing of this proposal and fails to comply with said schedule, Contractor shall pay all overtime costs necessary to complete construction in a timely manner. If a written construction schedule is not provided with the signing of this proposal, Electrical Contractor shall not pay for any overtime to complete project and any overtime required shall be considered an extra and authorization shall be required according to change orders referred to above. Reasonable time shall be given to Electrical Contractor to complete each phase of the electrical job.
WARRANTY: (1) Warranties apply exclusively to the electrical installation of the material, lighting fixtures, equipment, and other items supplied by the Electrical Contractor, (2) Warranty does not apply to material, lighting fixtures, equipment and other items supplied by others. (3) Warranty does not apply to extensions or additions to the original installation if made by others. (4) Warranty shall commence from the final electrical inspection date for a period of one (1) year. (5) Warranty does not apply for acts of God, "others" improvements, sabotage, vandalism, or terrorism or war damages, governmental or municipal interference. Warranty does not apply if any payments according to this proposal become past due including change orders.

 

[growler]

I can honestly say that I don't get residential customers that want an estimates based on any sort of time and materials agreement. What residential customers want is an accurate job cost estimate and they are willing to acceptable extra charges for additional work or change orders.

When a residentail customer ask for an estimate they want a job quote. I know what the want and what to give them without an argument over semantics. That's why it's best not to pull any quotes from the nether regions and hope it works.

If you give someone a quote for say $1600 you are much better off to give them a not to exceed $2400 unless you can show where the extra cost were incurred.

If you give an estimate for $1600 and you can show where you have added cost above the original agreement most people will accept that.
Added fixtures, recetpacles that they requested and signed for ( change order).

Sure people love those ambiguous verbal agreements because they know that you don't have a leg to stand on if they decide that you are over priced or they just wish not to pay.

The bad thing about the T&M estimate is that you have to sell the job twice, once before you do the work and again when you go to collect.
With a quote (bid) you sell the job once and when it comes time to collect you have the agreement and any change orders, then it's pretty well cut and dried. Nothing ambiguous about it, this is what we did and this is what you owe.

You can't get any more honest than that, the customer buys a dozen eggs and the customer gets a dozen eggs. No one gives a darn about how long it took the chicken to lay them.

 

[Dnkldorf]

You mean like this?

No, you posted terms of a proposal. And this proposal has a final cost at the end of it

The proposal stilled called for x amount of something to be done, along wth these terms, and what this proposal will cost x amount.


If you keep the terms, and change everything that says proposal to quote, what is the difference?

 

[satcom]

I can honestly say that I don't get residential customers that want an estimates based on any sort of time and materials agreement. What residential customers want is an accurate job cost estimate and they are willing to acceptable extra charges for additional work or change orders.

When a residentail customer ask for an estimate they want a job quote. I know what the want and what to give them without an argument over semantics. That's why it's best not to pull any quotes from the nether regions and hope it works.

If you give someone a quote for say $1600 you are much better off to give them a not to exceed $2400 unless you can show where the extra cost were incurred.

If you give an estimate for $1600 and you can show where you have added cost above the original agreement most people will accept that.
Added fixtures, recetpacles that they requested and signed for ( change order).

Sure people love those ambiguous verbal agreements because they know that you don't have a leg to stand on if they decide that you are over priced or they just wish not to pay.

The bad thing about the T&M estimate is that you have to sell the job twice, once before you do the work and again when you go to collect.
With a quote (bid) you sell the job once and when it comes time to collect you have the agreement and any change orders, then it's pretty well cut and dried. Nothing ambiguous about it, this is what we did and this is what you owe.

You can't get any more honest than that, the customer buys a dozen eggs and the customer gets a dozen eggs. No one gives a darn about how long it took the chicken to lay them.

Good information, and well presented.

 

[aline]

How do you give an estimate to someone, with the definition of an estimate being what it costs you to do the job, and how a bid is what you sell it for?

Are you providing estimates, then if accepted you somehow contact the end user and tell them the estimate you gave them is wrong, and you now need to provide them with a bid?

Everyone of you, in many,many posts, claim you charge for estimates, or are you charging for bids?

I would like to see your breakdown of what each one means, including proposal and quote.

For me if a customer asks me how much to wire their house according to the prints they're presenting to me and I give them a verbal price without actually sitting down, doing a take off and coming up with a price then I have given them an estimate on what I think it will cost and make it clear to them it's just an estimate.

When I have completed the take off, came up with the exact price, put it in writing and present it to the customer for them to sign, it is now considered a bid and not an estimate.

So in other words, for me it doesn't become a bid untill I present the total price in writing for them to agree to.

Also I don't charge for estimates or bids. (It's factored into the bid along with all other overhead expenses.)

What I charge for, is a dispatch fee to send someone out to provide an estimate or bid.
If I were charging to provide an estimate or bid, it would be a lot more than my dispatch fee.

 

[Dnkldorf]

For me if a customer asks me how much to wire their house according to the prints they're presenting to me and I give them a verbal price without actually sitting down, doing a take off and coming up with a price then I have given them an estimate on what I think it will cost and make it clear to them it's just an estimate.

When I have completed the take off, came up with the exact price, put it in writing and present it to the customer for them to sign, it is now considered a bid and not an estimate.

So in other words, for me it doesn't become bid untill I present the total price in writing for them to agree to.

Also I don't charge for estimates or bids.

What I charge for, is a dispatch fee to send someone out to provide an estimate or bid.
If I were charging to provide an estimate or bid, it would be a lot more than my dispatch fee.

So all these posts made by you about how you gave someone an estimate, and were too high, are false, because you never gave them a bid?


It don't make any sense.

Are you now saying that you consider:

Estimate= a ball park number that you provide somehow, that is not final or contractual.
Bid= Final price provided, after you completed an estimate, and is contractual.

Then what is your definiion of quote and proposal?

 

[Rockyd]

If you keep the terms, and change everything that says proposal to quote, what is the difference?

Something for a lawyer (I, or who ever I represent, is going to have a legal representative to back up what is being done, better able to explain in legalese, than i can) to figure out. The more that is wrote, the less the lawyer gets to walk away with.

Example-

You call me and want an estimate how much it's going to cost to change a 125 Amp service out to a 200 Amp service?

I respond that it's about $2300 dollars. My next question is "Would you like someone to give you a written proposal?"

If you say you would like that, then I ask if I can send a representative for a service call fee, to come out and make a proposal? The fee will be waived if we receive a signed proposal. We're either going to make a commitment of some sort, or at least get paid to make a professional decision as to what your needs might be...I leave the ball in your court.

I want to sell you a service, and knowledge, Not about to proceed any further than neccesary without the proper thank you form in business (that would be monetary exchange for the service with your written approval)

This is not a bait and switch gig, it is a gaining of understanding, and potential for us to enter into an agreement. I want you to be aware, as am I, that wording, and intent, expressed in written words have serious meaning. As a contractor, or a contractor's representative, am authorized by the state, to be doing this. You contacted me, so can we make a deal?

 

[electricalperson]

i think when you give someone an estimate you estimate the cost of the job and give them the price

but the term estimate really means the cost of the job for the company and the bid is the final price.

i suppose you can give people estimates for small jobs and estimate large jobs and bid on them

estimate is just a word with 2 meanings and each meaning is different depending how you use it.

 

[aline]

So all these posts made by you about how you gave someone an estimate, and were too high, are false, because you never gave them a bid?


It don't make any sense.

Yes. You are absolutely correct. I'm sure most people reading my posts understand what I mean and it makes sense to them but if it makes you feel better to label them as false by all means do so. From now on, just for your sake, I'll try to make sure I use the term bid and estimate correctly in my posts.

Are you now saying that you consider:

Estimate= a ball park number that you provide somehow, that is not final or contractual.
Bid= Final price provided, after you completed an estimate, and is contractual.

Then what is your definiion of quote and proposal?

If the quote or proposal is a final price in writing, presented to the customer to sign, then it's a bid.

The title of the document I present to the customer is not titled "Bid" but is titled "Proposal". Hope that makes sense, or should I make sure I use the word proposal in my posts instead of bid.

Example: I provided a proposal to someone and my price was too high.

If I were to give someone an estimate in writing the title of the document would be "Estimate" and the wording in the document would clearly state that the price is an estimate and the final price would need to be determined.

 

[Dnkldorf]

Something for a lawyer (I, or who ever I represent, is going to have a legal representative to back up what is being done, better able to explain in legalese, than i can) to figure out. The more that is wrote, the less the lawyer gets to walk away with.

I hear ya.

I'll stick with my prevous statement that they are all basically the same, similar to a toilet being called a john, hopper, or a commode.

 

[Rockyd]

Dnkldorf,

I see by your profile you are a Veteran's advocate. Good on you, but as a member of a the electrical community, I think what Aline says, makes perfect sense to me, it seems to not sit with you very well. Asking for a fixxed price is like asking an Artist for a fixxed price for commisioning fee for a portrait - you get what you pay for. Just make sure your doing business with honest people. I maynot be able to identify the honest people out there, but I can sure identify the thieves! You will discover that this forum has very high standards, and that all the posts in this thread are about as clean as it gets.

 

[Dnkldorf]

Dnkldorf,

I see by your profile you are a Veteran's advocate. Good on you, but as a member of a the electrical community, .

Rocky, I am an electrical contractor also.

And have 2 other businesses going.

I know who they are, and they know me quite well.
I'll leave it at that.