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Revised May 15, 2006
In spite of the importance of this section, it should not consume a great
deal of your proposal preparation time. Most of the information can be
drawn directly from files of relevant project descriptions in an appropriate
word processing format, which you have compiled expressly for the
purpose of preparing your proposals efficiently.
Project Price/Budget
Your proposed price/budget is the single most important part of your
proposal. Every other part of your proposal is qualitative, but the budget is
quantitative and can be summarized in a single number.
There are two basic kinds of price that can be proposed. The first are
fixed-price contracts in which a single price is quoted. Your service will
cost the client that exact amount. If you can do the work for less, then you
will gain. If it costs you more, then the client will be the winner. A client
often prefers this kind of contractual arrangement when there is some
element of risk involved in the project. A firm price removes the risk for
the client. The fixed price may be in one lump sum on completion of
certain milestones, with the remainder due when the job is done.
The other kind of contract, and the most common one, is where the cost of
services is given a ceiling. Here you are only paid for the amount of work
that you perform, up to the specified ceiling. This kind of contract is used
when there is some uncertainty about how much effort is required. It offers
protection to the consultant in the event the work scope is not well defined
or if there are unforeseen developments. Usually, billings are made at the
end of every month for the labor and expenses incurred.
Regardless of the type of contract, you will need to perform a budget
analysis. The client will usually want a detailed breakdown of your budget
estimate. The cost for each of the following cost categories should be
estimated:
Labor
Outside services
Travel
Equipment
Supplies
Communications (i.e., long distance telephone, courier, fax)
Sub-consultants
Miscellaneous
Contingency
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