How to Write a Contract Proposal

by Billie Nordmeyer; Updated September 26, 2017

The contract proposal is a fundamental part of a business deal, but it means different things to different people. To a sales person, it’s a tool used to close a deal. To an attorney, it’s an offer and the basis of an acceptance. To a small business owner it’s a reflection of a business strategy.

A well-written proposal fulfills all of these objectives. To be well-written, the proposal must contain certain elements, including the requirements and the costs of the product or service.

Purpose of a Proposal

Two or more competent parties – individuals, persons or organizations -- create a legally enforceable contract when one party offers to do or not do a particular thing and the other party accepts the offer. It starts when one party creates a proposal when he offers to do or not do something. The proposal specifies the terms and conditions of the offer, such as a transfer of property.

The Elements of a Proposal

If you submit a proposal in response to a request for a proposal, or RFP, that document will specify the format you must use. Otherwise, your proposal might include these six elements:

The Current State

The existing situation or current state is an issue a potential customer would like your company to address. It might be a problem, such as the inability to process invoices, or a result a company wants to achieve, such as attracting 3 million visitors to a website.

Project Goals

Based on the customer's current state and your knowledge of the company, describe the goals you plan to accomplish or the customer's need you will address.

Recommended Methodology

The goals a customer sets for a project will determine the method you will use to achieve the objectives and the scope of work it will include. In developing your methodology, consider its costs, the benefits it will produce, the resources you’ll require and the time needed to complete the project using the proposed method. For example, in regards to a billing system, your work would include the implementation and integration of the appropriate functional solutions, related controls to meet audit requirements, and standardized reporting and export functionality.

Project Time and Cost

Your recommended methodology will determine the project’s time and costs, which should be specified for each step of your recommended methodology. Also state how you will bill your customer and when your company will expect payment for your services.

Company Qualifications

In light of your methodology and the proposal’s evaluation criteria stated in the RFP, state the reasons your company is a logical choice for the project. This is an opportunity to state your company’s competitive strengths. When writing this section, consider the evaluation process the client describes in the RFP. For example, describe your company’s experience performing work similar to that you describe in your proposal.

Project Benefits

Specify the benefits of working with you to accomplish the desired objectives. It’s important that you describe the advantages of your proposed solution in terms that are important to customer, such as cost savings or efficiency. In addition, your statements should have a one-to-one relationship with the client’s criteria that’s stated in the RFP.

About the Author

Billie Nordmeyer works as a consultant advising small businesses and Fortune 500 companies on performance improvement initiatives, as well as SAP software selection and implementation. During her career, she has published business and technology-based articles and texts. Nordmeyer holds a Bachelor of Science in accounting, a Master of Arts in international management and a Master of Business Administration in finance.