If you’re still giving away estimates, designs, and planning for free… you’re not just being “helpful,” you’re training clients to treat your expertise like it has no value.
Smart builders in Michigan are shifting to pre-construction agreements (PCAs) and retainers, and for good reason.
Sid Woryn also shares his thoughts on this in our 3-hour Continuing Competency Course. Listen now.
What Is a Pre-Construction Agreement?
A pre-construction agreement is a separate, paid contract that covers the work you do before the build even starts. Things like:
- Estimating and budgeting
- Design input and revisions
- Site visits and feasibility
- Scheduling and planning
- Value engineering
These are real services, not “free estimates.”
In fact, pre-construction is a critical phase that helps reduce risk, improve cost accuracy, and prevent problems before they happen.
And here’s the key: it should be paid work.
Why Free Proposals Are Hurting Your Business
Let’s be blunt. Free proposals often lead to:
1. You're Doing Real Work for Free
Pre-construction work can represent 1%–3% of the total project cost.
That’s not “a quick estimate,” that’s thousands of dollars in professional time and expertise.
2. Getting Used as a “Bid Shopper”
You’ve seen it before:
- Client collects 3–5 bids
- Uses your detailed proposal
- Hands it to a cheaper contractor
You did the thinking, but someone else gets paid.
3. Attracting the Wrong Clients
Builders who charge for pre-construction consistently report something important:
The clients willing to pay upfront are the ones who value your expertise.
Free estimates attract price shoppers. Paid agreements attract serious clients.
How Retainers Protect Michigan Builders
A retainer or pre-construction fee changes the entire dynamic.
1. It Stops Time Wasters Immediately
When a client has to pay, even a small amount, you instantly filter out:
- Tire kickers
- Endless “idea shoppers”
- People who are not ready to build
That alone saves you hours (or days) of wasted time.
2. It Positions You as a Professional (Not a Commodity)
Doctors don’t diagnose for free. Attorneys don’t give away strategy sessions. Why should builders?
Charging a pre-construction fee signals:
- You are an expert
- Your time has value
- Your process is structured
3. It Pays You for Real Work
Many builders structure fees like:
- Flat fee ($500–$2,500+)
- Hourly design/estimate billing
- Percentage of project (often 5–10%)
Some even credit the fee toward the project if the client moves forward. This removes objections while still protecting your time.
4. It Pre-Qualifies Better Clients
A paid agreement answers the most important question:
“Is this client serious?”
If they won’t invest a small amount upfront… they’re unlikely to be a great client later.
What to Include in Your Pre-Construction Agreement
A strong agreement should clearly define:
- Scope of pre-construction services
- What is included (and what is not)
- Fee structure and payment terms
- Timeline and deliverables
- Whether fees are credited to the build
Clear expectations protect both you and the client and prevent disputes later.
The Bottom Line
Charging for proposals isn’t about making more money upfront.
It’s about:
- Protecting your time
- Attracting better clients
- Running a more professional business
- Reducing risk before the job starts
The builders who implement this don’t go back.
Want to Reduce Liability and Run a Smarter Construction Business?
This exact type of real-world strategy is covered in the Michigan Builders License 3-Hour Continuing Competency Course, taught by Sid Woryn, Michigan’s most experienced instructor.
Inside the course, you’ll learn:
- How to protect your business legally and financially
- Real-world contract strategies that reduce risk
- How to avoid costly mistakes before they happen
- Michigan code, business law, and MIOSHA updates
As a Licensed Michigan Proprietary School, this course is designed to help you:
Stay licensed. Keep working. And operate like a professional builder, not a free consultant.
Final Thought
If you’re still giving away proposals for free…
You’re not competing, you’re subsidizing your competition.
It’s time to get paid for your expertise.
Sources
- https://www.buildxact.com/us/blog/preconstruction-costs/
- https://www.ardanconstruction.com/blog/design-build/the-benefits-of-a-pre-construction-agreement/
- https://chonkoconstruction.com/blog/remodeling-renovations/why-you-need-a-pre-construction-agreement-before-design-and-why-skipping-it-costs-more-later/
- https://www.jlconline.com/Remodeling/charging-for-preconstruction-services
- https://learn.aiacontracts.com/articles/understanding-the-preconstruction-phase/
