An estimate and a quote are often confused as the same thing; however, they are completely different. An estimate is a rough order of magnitude of an estimated price which may change and a quote is an agreed fixed price.
The following are the definitions as taken directly from the Cambridge Dictionary:
Estimate ‘to guess or calculate the cost, size, value, etc. of something’
Quotation ‘a statement of how much a job, service, or product will cost’
So, what does this really mean in the building industry?
Estimate
An estimate is used to give a quick indication of a project's potential cost. The detail behind the figures will vary from builder to builder along with the final price. Generally exact specifications have not yet been determined and the builder will be guessing on the fixtures and fittings that will be used.
The advantages of an estimate are:
- It is quick and gives an indication of potential costs of + or – 100%
- allows initial dialog between a customer and a builder.
The disadvantages of an estimate are:
- it can give a false sense of a project’s cost
- builders will estimate on different products, fixtures and fittings making it very hard for a client to compare ‘apples with apples’
- the price is likely to change at either contract signing or during construction.
Quotation (Quote)
A quote is a detailed building cost proposal that a builder will prepare based on the exact client requirements. It will detail all of the products, fixtures and fittings being used. It is individually completed for each project to the client’s exact specifications.
The advantages of a quotation are:
- It requires the client, or their representative to pick all of their materials, fixtures and fittings
- It requires the builder to cost the project based on materials and labour that is required to complete the project.
- It provides confidence and assurance of what will be completed for the price given
- Gives a client further information on how to assess the competence level of the builder.
- Requires a Builder to invest in a project and give a high level of customer service as the quotation that they give for a project they are accountable for delivering for that specification and price.
The disadvantages of a quotation are:
- It can take a long time to complete. Builders will dedicate between 30-50 hours and upwards on preparing a quotation, dependant on the size and complexity of a project.
- It requires a Builder to invest in a professional detailed process and proposal before a contract is signed.
