The versatility of the proposal and its relationship to tasks and invoice records can be simplified by first examining how you normally use it. The proposal is used for three common purposes.
- Change Requests
We will assume that invoice records for the customer will match the level of detail in the proposal. This may not always be the case, but for these guidelines it is a best practice.
We will cover the following common proposal processes in relationship to your project task list, aka work breakdown structure (WBS).
- Little or no resemblance to the WBS. We propose to our customers based on a summary of the deliverables they can best understand. That summary has little resemblance to the tasks we manage in the project to complete the deliverables.
- Similar resemblance to the WBS. Our proposals start with a high level WBS, sometimes the root summary task level and we manage detail within that structure. This is a most common practice for delivering to customers who are more technically knowledgeable and have a detailed understanding as to how work is managed in the projects delivered to them.
- Exact resemblance to the WBS. For a proposal to have an exact resemblance to the WBS is rare. This process is most often the starting point for large contracts or government contract work. In some cases, the invoicing may have the detailed WBS and time entry records included as part of the contract agreement even if the proposal is more like the earlier-mentioned “Similar resemblance to the WBS.”
Little or no Resemblance to WBS
Follow the very easiest instructions for your proposal details. What do you tell your customer you will deliver and how do you word that in their order agreement? Place the exact same detail in your proposal and you’re done.
- Place labor and expense entries in the proposal as separate line items, just as you do when invoicing with your accounting system.
- Do not create project tasks from the proposal or proposal line items from the project tasks. The feature to do this is optional and not relevant for this process.
- If you perform the optional invoice record process, the invoice record will be made from the proposal to align with your customer’s understanding of their deliverables.
Similar Resemblance to the WBS
Two different methods may work best for you depending on how you normally determine the proposal to the customer. The result of either method is essentially the same. You choose what works best to help most easily add line item data into your proposal. A general rule is to the first method if you propose first and then build the project, and the second if you build the project to help determine what you should propose.
- Add the proposal line items to the project to create the project. This is best if you know the fixed bid pricing you want on the proposal for each time and expense line without initially calculating it in the project prior to writing the proposal. Manually enter each line with quantity and rate information. You may then add the lines from the proposal to the project, but keep in mind that the calculated rates within the WBS will overwrite the rates which are maintained as static rates in the proposal. Proposal values always remain fixed and require manual changes, unlike the dynamic rate calculations made within the project’s tasks.
- Add the project work and populate the proposal from the work. This assists in preparing the proposal line items with quantities from the tasks and calculated rates which you will likely round or adjust prior to customer presentation. The rates are based on the calculations within the task and often have curious results due to multiple resources working on the task(s) at different rates. It is important to make sure rates and contracts are properly applied to the project and tasks prior to using this method or your rates are likely to appear unusually low. The proposal uses the billable rates.
Exact Resemblance to the WBS
It’s best to avoid this because the WBS often changes throughout the course of the project with no need for change orders. Invoice records from time and materials projects can be created directly from the time and expense entries without using project proposals. The primary reason for the use of the proposal is to separate the communication with the customer from the detailed WBS and the invoice records. Trying to maintain the proposal to match the WBS adds project management work with no real benefit.
Having stated the above, there may be special circumstances for using this process which will not be part of our documentation for best practices.