Adrie's Blog

Who is paying the bill??

Two days ago, I was talking to a friend in San Francisco. He had just gotten off the phone with his lawyer, and was highly excited and wound up. The main reason for his excitement was the fact that so many lawyers claim to be specialists in a certain field, but yet they don't know in advance how much something is going to cost. Not even when talking about a standard procedure, like setting up a Corp. or an Inc. or something equally simple and routine.

It reminded me of my many years in IT where it was, and probably still is, the common rule to make up a proposal based on hourly rates. That way the supplier would always be on the right side - if something went wrong, fixing it would still be billed to the client. You could even train your student developers charging your clients. We always tried to be fair and offer the client a lower rate for a student, but that definitely was the exception to the rule.

For so called "fixed price" projects it could even be worse - there were/are very few project leaders that are capable of calculating exactly how much a project will run to - let alone will deliver it at a pre-agreed fixed fee. You will always find there are so many margins built into the project cost, that it will be more then enough whatever happens - at your cost. Not to mention the various things that are excluded from the project write-up and will have to be paid for separately - which means the risk for the project manager is minimal. And we haven't even begun to talk about the fact that if a project goes well and is delivered on time, it may actually end up being cheaper then what was quoted for and money should be refunded to the client - but there simply isn't even a word for that in the dictionary.

The same is true in the construction industry, one horror story after another. You deal with someone because he or she has many years of experience but time and time again it turns out to be more expensive and taking much longer then was anticipated or quoted. And you will end up paying more.

I have written about it before - so am repeating myself here when I say: "How difficult is it to do what you promised, and not to ask money for something you have no right to because you were the one that made mistakes. Or you may not have the knowledge and are now building that knowledge at the expense of the client?"

If you don't know something, or have never done it before - be open and honest and tell your prospect. Give him a choice to go with you or someone that does have the experience already. Give him the choice to decide to walk the uncertain path with you - at least it'll be a journey where both of you understand the risks and are willing to take them together.

I once asked my then largest-client "Why do you buy from me?" and even though I had obviously hoped he did because he loved what we did, he answered "because you deliver exactly what you promised, no more and no less". Isn't that what it is all about?