How to quote a general contracting job

A remodel quote wins when the owner can hold it against the plans and see what is included, what is only an allowance, and what would change the price.

Scope: the plans, the specs and what’s excluded

Tie the quote to the drawings and specifications by date or revision, and describe the work trade by trade or room by room. Where the specs leave a finish open, name the grade you priced. List exclusions as plainly as inclusions, such as rot behind finishes or lawn repair after the dumpster leaves, and state your assumptions: working hours, who pulls the permits, and which fixtures the owner supplies. Then say how surprises are handled: you stop, price the extra work as a change order, and carry on once the owner signs it.

Lump sum, cost-plus or time and materials

Method	How it’s priced	Put on the quote
Lump sum	One fixed price for the scope	Every inclusion and exclusion
Cost-plus	Your costs plus a fee or markup	The fee, and which costs it applies to
Time and materials	Hourly labor plus materials	Rates and an estimated total
Allowance	A budget for items not yet chosen	The amount, and how overages are billed

Markup and margin are different numbers, so decide which one your price is built on. As an illustration, $10,000 of cost marked up 25 percent sells for $12,500, and the $2,500 difference is a 20 percent margin on that price.

Give the costs owners forget their own lines: permits and inspections, the dumpster, dust protection, final cleaning and supervision. Set each allowance at what the owner is likely to choose, not at a figure low enough to win the bid. Price upgrades the owner is weighing, such as heated bathroom floors, as optional add-ons outside the total, so a yes to one doesn’t reopen the bid. Put a valid-until date on the quote, and don’t let it outlast your subcontractors’ bids.

Deposits: what some states allow

Ask for enough to cover what you must buy before work starts, such as special-order windows. The FTC tells homeowners not to pay the full amount up front, and notes that some states limit the down payment a contractor can ask for (FTC). The rules differ in their triggers as much as their amounts. For example:

• California: on a home improvement contract, the down payment is capped at the lesser of $1,000 or 10 percent of the contract amount, and a contractor furnishing the bonds or joint control the section lists is exempt (B&P §7159.5).
• Maryland: no payment for a home improvement may be demanded or received before the contract is signed, and the deposit taken at or before signing may not exceed one-third of the contract price (Bus. Reg. §8-617). New homes and apartment buildings of four or more units aren’t home improvement there.
• Massachusetts: on a residential contracting agreement over $1,000, a deposit due before work begins may not exceed the greater of one-third of the total price or the actual cost of materials or equipment, special-order or custom-made, that must be ordered before work begins to keep the project on schedule (c.142A §2). That means renovation, repair and similar work on a pre-existing, owner-occupied building with one to four dwelling units (c.142A §1).
• Pennsylvania: no payment for a home improvement may be demanded or received before the contract is signed, and on a home improvement contract over $5,000 the deposit may not exceed one-third of the price, or one-third plus the cost of special-order materials designated in the written contract (73 P.S. §517.9). Home improvement there is work priced over $500 at a private residence, not new homes or emergency work.
• Florida: §489.126 caps nothing, but an initial payment of more than 10 percent of the contract price for repair, restoration, improvement or construction to residential real property sets two clocks running: you apply for the necessary permits within 30 days of it (unless the work needs no permit) and begin within 90 days after all of them are issued, unless you have just cause or the payer agreed in writing to a longer period (Fla. Stat. §489.126).
• New York: the contract must carry a notice that, apart from hourly or time-basis payments for work already performed, you are legally required to deposit all payments received before completion as Lien Law §71-a(4) provides, or may instead post a bond, contract of indemnity or irrevocable letter of credit guaranteeing their return or proper application (GBL §771). This applies to contracts over $500 once your home improvement contracts with all customers exceed $1,500 in any 12 consecutive months (GBL §770).

What the written contract must show

Some states spell out what goes on a contractor’s paperwork. California requires a licensee’s number in all construction contracts, subcontracts, calls for bid and advertising (B&P §7030.5); Florida, a contractor’s registration or certification number on each offer of services, business proposal, bid, contract or advertisement (Fla. Stat. §489.119); and Pennsylvania, a contractor’s registration number on every contract, estimate and proposal with owners in the state, where you’re a contractor unless your home improvements totaled less than $5,000 in the previous tax year (73 P.S. §517.6).

California requires a written home improvement contract, signed by the parties before work begins, once the aggregate contract price exceeds $500; each change needs the same before its work starts, and the contract must incorporate a change-order form (B&P §7159). It must also tell the owner that a change order isn’t enforceable against them unless, before its work begins, it states in writing the scope, the amount added or subtracted, and the effect on progress payments or the completion date, though the same notice says a contractor’s failure to comply doesn’t rule out recovering compensation for work performed through remedies designed to prevent unjust enrichment. Service and repair contracts that comply with §7159.10 follow their own rules.

When the owner signs at home

Selling the job in person to an owner who signs at home can bring in the FTC Cooling-Off Rule: unless one of its exclusions fits, it reaches consumer sales of $25 or more agreed at the buyer’s residence, even when the buyer invited you (16 CFR 429). The owner may then cancel up to midnight of the third business day after the sale. You must explain that right orally at signing, place the rule’s cancellation statement in bold of at least 10 points next to the signature line, and leave a dated copy naming you and your address, plus two completed copies of the Notice of Cancellation form. After a timely cancellation, return every payment within 10 business days of their notice. State laws giving the buyer an equal or greater right still apply. In California, the buyer of a home improvement under a home solicitation contract may cancel up to midnight of the third business day after getting a signed, dated copy, or the fifth for a senior citizen; service and repair contracts have their own right (Civ. Code §1689.6).

California adds two rules after a declared disaster. A home improvement contract to repair or restore residential premises damaged by a sudden or catastrophic event, where the President, the Governor or a city or county has declared an emergency, carries the statute’s “Seven-Day Right to Cancel” notice instead of the three- or five-day one, letting the buyer cancel until midnight of the seventh business day after receiving a signed and dated copy (B&P §7159). And a home solicitation contract to repair or restore residential premises, signed from the day a disaster damages them until midnight of the seventh business day after, is void unless the buyer, their agent or their insurance representative solicited it (Civ. Code §1689.14).

Lead-safe work in homes built before 1978

In general, EPA requires certification of anyone paid for work that disturbs paint in housing or child-occupied facilities built before 1978, and it names remodeling among the covered activities (EPA). That means certified under EPA’s program or your state’s, because some states are authorized to run their own program in place of EPA’s (EPA, firm certification). No more than 60 days before a covered renovation, the firm gives the owner EPA’s Renovate Right pamphlet and gets the owner’s written acknowledgment, or mails it with a certificate of mailing 7 or more days ahead; where the owner lives elsewhere, an adult occupant of the unit also receives it under the rule’s own options (40 CFR 745, subpart E). Ask when the house was built at the walk-through, and price the containment and cleanup in.

Three mistakes that lose the job or the margin

1. Allowances set to win the bid. A low allowance makes your price look sharp, then returns as an overage the owner resents.
2. A blank exclusions list. Whatever the quote doesn’t exclude, the owner will read as included.
3. Markup taken for margin. Adding 25 percent to cost and calling it a 25 percent margin leaves you five points short on every job.