1. Proposal Types
In RedTeam Flex, a Proposal refers to both a main contract Proposal and a Change Order Proposal, both of which are typically sent to the Customer for review. Proposals can be one of three different types: Fixed Price, Time & Materials, and Construction Management.
These Proposals can have their fees described as a percentage of a project's Total Cost or Total Price.
Fixed Price Proposals
These are the most commonly used and are the default settings for all new projects in RedTeam Flex. All of your pricing is set in the Estimate, using cost codes and amounts that are either manually entered or inserted from the Vendor's Quote (by selecting as Best).
Indirect costs (company-wide overhead markup rates) are applied and a Profit is calculated on the total direct & indirect cost.
The Profit/Fee can be entered as a percentage of Total Cost or Total Price, or may be entered as a flat Total Contract amount, which will automatically calculate the profit percentage for you.
Time & Materials (T&M) Proposals
Allow you to specify negotiated markups with your customer for profit, material, labor, and subcontract. T&M sheets are created in RedTeam Flex and submitted to the customer for approval.
This is especially useful when a customer or owner asks you to proceed with work in the absence of an agreed-upon price and time impact.
T&M Proposals are typically used for Change Orders when the relationship requires more transparency, but they may be used for a main contract as well.
Construction Management (CM) Proposals
allow you to propose negotiated rates with your customer for profit, material, labor, and subcontract. These negotiated markups and unit prices are set at the Customer Facility level.
Unlike T&M Proposals, CM Proposals do not allow you to exceed the Total Price you set here in the Estimate, which is recognized as the Guaranteed Maximum Price (GMP).
You can adjust the Proposal type while your Project is in Request status. You can promote/demote to Request status if you have the correct permissions.
For assistance promoting/demoting to Request status, please contact your System Administrator or contact us using the chat bubble on the bottom left corner.
💡Tip:
It is possible for a Potential Change to have a different Proposal type than the original Contract
i.e. you may have T&M Changes on a Fixed Price Project.
You will be able to select the Proposal type for a Potential Change once it is in Request status.
Steps:
Go to the Cost Estimate Step on the Project Setup form, and scroll to the bottom of the page. Click the Type of Proposal dropdown and select the Proposal Type from the list.
2. Percent of Total Cost vs Percent of Total Price
What is the difference between the Percent of Total Cost and the Percent of Total Price under the Estimate?
When putting together your Total Price for your bid to the Customer, you have two options for the calculation of the Fee:
- Percent of Total Cost: calculates a percentage of the Total Direct & Indirect (overhead) Costs in the Estimate.
- Percent of Total Price: calculates a percentage of the Total Price, which includes Direct and indirect Costs plus the Fee.
Many construction contracts allow for the Fee to be calculated on the overall Total Price rather than on only the Total Cost, which can help add some extra dollars to your overall contract price.
Steps:
From the Project's home menu, select Estimate. The Project must be in Request status to change Pricing.
Scroll to the Price Adjustment section at the bottom of the Estimate. Use the Fee dropdown to toggle between Percent of Total Cost and Percent of Total Price.
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