Introduction

A proposal (a quotation) is a document you submit to an existing or potential customer that lists the price for your goods and services. A proposal is usually created based on certain conditions specified by the customer. It is assumed you will commit to the proposed price once you send the proposal to the customer. Therefore, a proposal establishes the suggested sales price and the internal budgets to manage the finished product's production. For the business to profit, the proposal must consider all the costs associated with the project and apply the appropriate markup.

In the proposal, you list the factors that contributed to the price, such as material costs, labour, expenses, VAT, etc. It should also include the payment terms and the time frame for when the project will be completed and when it will be delivered and installed. It is common for quotations to specify the validity period (after the period has expired, a new proposal will be required) and clarify any price changes due to adjustments or modifications to the original proposal.

The customer will accept or reject the proposal at the end of the process. If the proposal is accepted, a sales order will be generated based on the purchase order received from the customer.

Proposal Structure

A hierarchical proposal structure starts with the complete project (Project Root). The project root can then be broken down into modules, stations and substations (modules, stations, and substations can be renamed by each company depending on their needs). This is used to design the structure and track the project's cost through parts, labour, sub-contracts, and any additional expenses required to complete the project. This information is then collated and used to generate the financial breakdown of the entire project, which can be seen in the top right-hand corner of the proposal page.

Each station represents a sub-assembly of the project.

The stations track parts, labour and subcontracts needed to complete work on a station.

Modules are used to group stations together by grouping sub-assemblies into larger assemblies.

Modules allow you to track labour performed for higher-level processes, subcontracts, and additional expenses not covered by parts or labour.

Cost Elements

Each proposal comprises one or more of the following elements: labour, material, expenses and external subcontractors. To complete a proposal, you must record each element's internal costs and the appropriate markups. 

Labour

The labour cost is calculated by estimating the hours required to complete a work and multiplying this by the internal hourly rate. Different rates can be applied to other types of labour (known as processes). The suggested sales price is calculated by adding contingency hours to the estimated hours and multiplying this by the charge-out rate per hour.

Process

Individual processes are automatically added to a new proposal element if their Assign Automatic property is ticked in the Process List screen. 

Procurement

Procurement encapsulates all external costs required to complete the project, such as raw materials, supplier parts, expenses, services, etc. In Integro, they are divided into three main sections: material, expenses and external subcontractors.

Material

Raw materials and purchased supplier parts usually comprise a significant percentage of a project's cost. Therefore, recording as much of the estimated cost as possible at the proposal stage is essential. The material cost is estimated by multiplying the estimated unit cost of the material by the units required. The suggested sales price is calculated by adding a markup to the estimated cost.  

Expenses

Project expenses include all the direct expenses that must be covered while your team works on the project. Project expenses include hotel bills, subsistence, car hire, and subsistence. The suggested sales price (external cost) is calculated by adding a markup to the estimated internal cost.

External Contractors

External contractors are third-party companies that provide services to your business, usually for a fixed price per project. The subcontractor cost is estimated by multiplying the estimated unit cost of the work by the units required. The suggested sales price is calculated by adding a markup to the estimated subcontractor cost.