c&g powerpoint quoting and estimating

City & Guilds Construction

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PowerPoint presentation

Quoting and estimating

Unit 301: Principles of organising, planning and pricing construction work



Aims and objectivesAim:

• Introduce learners to quotes and estimates.

Objectives:

• Describe what quoting is.

• Describe what estimating is.

• Explain the difference between quoting and estimating.

• Describe the information required to prepare a quote.

• Prepare an estimate.

• Prepare a quote.



IntroductionEvery business has to give its customers prices for its products or services. There are several ways you can do this.

Many businesses, such as hairdressers, use a standardised price list that remains the same for every customer. Other businesses, such as builders, have to provide tailored prices for the specific products or services a customer wants to buy. This is usually done with an estimate or a quote. Larger, more complicated projects are often priced on the basis of a detailed tender document drawn up by the customer.



QuoteWhat is a quote?

A quote is a promise to do work at an agreed price. It should set out what work will be done for the agreed price. If you were given a quote(or a ‘fixed estimate’) you should not be asked to pay extra, unless you ask the trader to do extra work – or the trader had to do extra work in order to do a satisfactory job, and they couldn't reasonably have known that they would need to do this work when they gave the quote.

If you accept a quote, you will probably have to pay what was quoted.



EstimateWhat is an estimate?

If you were given an estimate, you might think you agreed a price beforehand. However, unlike a quote, an estimate is not an offer to do the job for that amount but just the trader’s best guess as to how much the work will cost. This means that the trader can charge you more than the estimate. However, any extra charged must be reasonable. If you don’t think the extra amount charged is reasonable, you can dispute it. You should use the estimate as a starting point for negotiation with the trader.



The differenceThe difference between a quote and an estimate is whether or not you can dispute the cost of a service.

A quote is a fixed price (unless stated) and cannot be disputed, while an estimate is an approximate price that may increase or decrease within a reasonably agreed amount.



Information required in an estimateWhen you prepare an estimate it’s good practice to give the customer a written copy, including a full breakdown of costs.

Your estimate should include the:

• overall price

• breakdown, listing the components of the price

• schedule, detailing when work will be done or products delivered

• terms and conditions

• time period the estimate is valid for

• payment terms or schedule.



Information required in an estimate continuedYou must include your full business contact details in your estimates. If you have a letterhead, it's a good idea to print your estimates out on this.

It is advisable to get signed acceptance of your estimate and to make sure your customer is clear about what has been agreed.

Include a disclaimer stating clearly that the estimate’s price is subject to change. Agree in advance how any variations will be costed. These can arise if the client changes their requirements or if a job turns out to be more complicated than expected.



Information required in an estimate continuedIf you think price complications are likely to arise, it's a good idea to supply a number of estimates based on different scenarios. This will help to avoid any disputes with your client as the work progresses.

When you start to work or supply a service, you should keep good records of any cost over-runs, along with how and why they occur.



Information required in a quoteQuotes commit you to the price you specify, so they are usually used when:

• the work you're quoting for has clear requirements – in terms of time, labour, materials, etc

• your costs are stable

• you’re confident that the work won’t turn out to be more complicated than expected.



Information required in a quote continuedIt's good practice to give your customers a written quote.

This should include the:

• overall price

• breakdown of the components of the price, indicating what is covered and what is not

• period the quote is valid for

• schedule for when the work will be done or products delivered

• full contact details of your business

• payment terms or schedule

• company details.



Information required in a quote continuedJust as with an estimate, it is advisable to get your customer's written confirmation that they’re happy with the price you have quoted and the work that this includes. This should be done before you carry out the work, or provide the goods or services.



Estimate and quoteYou now need to prepare an estimate and a quote for a given scenario.



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c&g powerpoint quoting and estimating

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