Proposal Scope & Fees
In order to write an effective proposal, it is imperative to understand the project at hand. Every project is unique and requires different considerations. However, one common thread will always be evident: A successful proposal will answer all of your client’s questions before they have even asked them. A well-written proposal will help the client make an informed decision based on their needs and the services you can provide according to your area of expertise. The most important elements in a proposal are the scope and fees.
Scope and fees is the section where you define what the project encompasses and its cost. You must be thorough and clear when defining the scope of a project. This will avoid any misunderstanding between you and a potential client. Keep reading to learn how to define the scope of a project and how to calculate the fees associated with it.
Defining the Scope of Work
An engineering or architectural project has a scope—a list of specific goals, deliverables, tasks, cost and deadlines. A poorly defined project will be difficult to start and manage. A vague scope will leave gaps in understanding and will cause unnecessary delays.
A well-defined scope provides a detailed roadmap to a project’s completion. It establishes clear and measurable goals with expected costs and time of completion. It ensures that the project is not just about “making something”, but also about achieving an objective within a defined budget and timeline.
Also, a well-defined scope of work is the key to a profitable project. When defining the scope of the project, you must research the type of project you are bidding on to better understand all its implications. If you take on a project without doing proper research, then you could end up underestimating your cost and losing money.
To better illustrate this point, imagine you submitted a proposal for the structural design of a stairway and your client accepted it. No problem, you have designed stairways before, so you know how much time and money it’s going to take. The only problem is that you have only worked with wood and concrete, and your client needs a design with glass and steel. This obviously presents new challenges and the whole project ends up taking twice as long. If you charged your client a flat rate, you now have a loss. This is the importance of understanding what the project requires and clearly defining your project scope.
Establishing Clear Expectations
When defining the scope and fees for a project you must clearly outline what the project encompasses and what it does not. For example, if an architectural firm is hired to design a single-family house, the firm may explicitly exclude any fences, gates, or external structures. This will avoid any misunderstanding between the client and the firm.
You want to leave as little as possible open to interpretation to prevent what is commonly known as “scope creep”. Scope creep is the unauthorized addition of tasks to a given project. In the previous example, had the firm not explicitly excluded any external structures, the client could expect the design to include a fence for the quoted price. A vague scope statement may cause a discrepancy between what the client expects and what the company is willing to do for the agreed price.
How do you write an effective scope statement?
A scope statement is the section of a proposal that provides details about the work to be done. A scope statement provides an understanding of the project’s context. It includes the objectives and deliverables, and thoroughly describes the work being proposed. It also clarifies the roles and responsibilities of different stakeholders.
To write a scope statement, make sure to consider the following factors:
- The overall purpose of the project
- The specific tasks that need to be completed
- The required resources and equipment
- The timeframe for completing the project
Calculating Fees
In order to calculate fees for a project, you must first understand the nature of the project and its associated costs. You need to consider different factors such as the complexity of the project and the time for its completion. Fees can be charged by either an hourly rate or a fixed cost based on the number of hours required to complete the project. It all depends on your business model and how much work it takes to produce the final result.
Time is money!
Time is one of the most important aspects to consider when pricing your services. You need to factor in the hourly wage of the people working on the project. For this reason, it is important to develop an accurate timeline for the project’s completion. When you underestimate the time of completion, it will cost you; it will lead to unhappy clients, added labor costs, and it will limit the company’s ability to work on other projects.
To learn how PASconcept can help you keep track of everyone’s worked hours on a project, watch our webinar PASconcept Intuitive Timesheets below!
A Fair Price
When it comes to pricing, you do not want to scare potential clients with high fees, but the project needs to remain profitable. You must have a comfortable profit margin while also being able to compete in the market. PASconcept offers a task estimator where you can calculate the resources needed to finish a task and what the minimum charge should be in order to remain profitable.
Get in touch!
PASconcept makes it easier than ever to develop proposals. Our step-by-step wizard turns your proposals into a live document. You can save unlimited templates and develop a proposal without filling out the information every time. Learn more about our Smart Proposals feature here, or request a demo today!
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