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The Exciting World of Proposals and Contracts

By on August 16, 2015 in Business Practices with 0 Comments
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As a painting contractor, writing proposals and performing contract administration are just two of the many job functions you will find yourself involved in. How well you manage these tasks will be critical to your company’s success. This includes creating a professional proposal, drawing up and submitting the contract and negotiating with the owner or general contractor.

Types of Contracts

There are commonly two types of contracts: prime contracts and subcontracts. The first is when you are providing the only work involved on a project, and are dealing directly with the owner or their representative. In this case you will be the prime contractor. The second is when you are bidding to provide work on a portion of a project that involves several trades, and is being managed by a general contractor. In this situation you are the subcontractor.

 Prime Contracts

Several basic contract forms are available through the Internet, your local stationary stores or from any number of trade catalogues or book outlets. One such source is the Craftsman Book Company at www.craftsman-book.com., or at www.calform.com. Customized forms are available through this source for House painting, Commercial work, Wall covering, Interior, Exterior, All-Purpose, and miscellaneous forms including Lien Releases, Notice of Cancellation, and Change Orders.

Another excellent resource is BNi Building News at www.Bnibooks.com. A variety of materials and information can be found through this organization, as well as several excellent seminars covering topics on the following subjects:

  • Mechanics Lien Law
  • Public Works Construction
  • Construction Claims
  • Employment Law
  • The “Greenbook”

 Mandatory Content

Whatever source you use to obtain your contract forms, you should be aware of certain mandatory items that must be included in your contract documents.

You will want to provide your company’s name, address, phone number and the bid date. The contract must also have your contractor’s license number displayed. An accurate description of the work to be done can be written on the form itself, or attached on a separate sheet; Stipulate “per attached scope of work”. Also include a payment schedule outlining what percentages will be paid and when. It is also highly advisable to put a limit or expiration date on your offer. I also suggest that you include the following statement:

All work to be performed in a workmanlike manner according to the standards of the industry. Any alteration or deviation from the above specifications involving extra cost of material or labor will only be executed upon written orders for same, and will become an extra charge over the sum mentioned in this contract. All agreements must be made in writing.”

Below is a sample Proposal and Contract.

PROPOSAL & CONTRACT

July 16, 2015

J & B Construction

4452 Brighton Ave.

Portland, OR 97210

Re: Painting for Primary Care Center – Benton, CA. Per attached Scope of Work.

All of the above to be done according to the standards of the industry, for the price of:

Fourteen thousand nine hundred eighty eight dollars. $14,988.

 The entire amount of contract to be paid upon completion.

Any alteration or deviation from the above specifications involving extra cost of material or labor will only be executed upon written orders for same, and will become an extra charge over the sum mentioned in this contract. All agreements must be made in writing.

Name and Registration Number of any sales                            Respectfully submitted,

person who solicited or negotiated this contract.                   By

 

Name________________________________No._________                        ____________________________________

Contractors are required by law to be licensed   AAA Painting Contractors

and regulated by the Contractors State License   18825 W. 4th St.

Board. Any questions concerning a contractor    Westlake, CA. 94227

may be referred to the registrar of the board             (917) 424-6011

whose address is:                                                                    Contractors St. Lic. #1437185

 

Contractors State License Board                       The buyer may cancel this transaction at any

789 North St.                                                              time prior to midnight of the third business day

Ontario, California 91138                                 after the date of this transaction.

This proposal is good for the next 30 days only.

ACCEPTANCE

You are hereby authorized to furnish all materials and labor required to complete the work mentioned in the above proposal, for which I agree to pay the amount mentioned in said proposal, and according to the terms thereof.

 

ACCEPTED_______________________________    Date___________________________

 

NOTICE TO OWNER

Under the Mechanics’ Lien Law, any contractor, subcontractor, laborer, material man or other person who helps to improve your property and is not paid for his labor, services or material, has a right to enforce his claim against your property.

Under the law, you may protect yourself against such claims by filing, before commencing such work of improvement, an original contract for the work of improvement or a modification thereof, in the office of the county recorder of the country where the property is situated and requiring that a contractor’s payment bond be recorded in such office. Said bond shall be in an amount not less than fifty percent (50%) of the contract price and shall, in addition to any conditions for the performance of the contract, be conditioned for the payment in full of the claims of all persons furnishing labor, services, equipment or materials for the work described in said contract.

    

 Subcontracts

When you submit a bid for a project to a general contractor, you are a subcontractor. In most instances, the proposal you submit will not be the contract that you will sign should you be awarded the job. In this type of transaction you will almost always be asked to sign the general contractor’s own contract.

 Submitting

 Depending on the situation, there are a number of ways in which you can submit your bids. If you are dealing with a homeowner or small business owner, little formality is usually observed. Most of the time you will simply hand deliver the proposal in person or email them with a quote, following that up by mailing a hard copy to them.

When involved with more substantial bids, such as when submitting to institutions or larger businesses or general contractors, you should observe more formality. You can also supply a list of references for some of your more impressive jobs as well.

Conclusion

 The proposals you submit say something about your company; be sure they are professional in all aspects. Be sure to follow up with your customers to track results. Whether you win or lose, you should keep a record of these results as they will tell you where you are relative to your competition.

Thanks to Lynn Jackson for this guest post.

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