Contract Killers

By Andy Budd


No, I’m not talking about hiring a hit man to take care of a difficult client, although I’m sure we’ve all been there at some stage. In this article I’m going to be discussing the tricky situation of quoting for web design and development projects, and the various types of contracts you can agree upon. Enthralling stuff, I know, but I hope that I can show you a way to make the arrangements between you and your clients fairer, and less risky, for both sides.

YOU ARE NOT A BEAUTIFUL, UNIQUE SNOWFLAKE BUT YOUR PROJECT IS
As designers and developers, we sell a service rather than a product. Selling a product has it’s own problems, but you generally know how long the product will take to build, how much it’s going to cost, and what profit you plan to make. With a service, even if you have created something very similar before, there are many factors that come into play.

All clients are different, and have different needs and expectations. One client may give you little or no feedback, while another may want to be involved at every step of the way. Some clients will have a single decision maker, while others will need to take into account a boardroom full of opinions. Some clients will be quick to approve milestones, while others may take longer or require multiple iterations. None of these styles is right or wrong, but they all have implications on the time and cost of a project.

Fixed-cost, fixed-scope contracts tend to favor the client, while putting the majority of risk onto the supplier. The supplier is forced to scope the project thoroughly, and the chance of under-quoting is high, so to offset this, suppliers will add a large contingency to the project in order to cover these unknowns. While most savvy developers will also charge for the scoping process, some write this off as part of the sales process. This can be expensive and is a risk unto itself.

To get around these problems, many of the larger IT companies work on a time and materials basis. A rough estimate will be calculated, but final cost will be based on actual time spent. This is very attractive to suppliers, because if the scope changes or if clients are indecisive, they can charge accordingly. Unfortunately, this puts all the risk on the shoulders of the client.

THE THIRD WAY
Using our best user-centered methodology, let’s look at the concerns of each party and see how they might be aligned.

Client concerns:
- I need a functioning site that meets my business objectives.
- I need to know how much this project is going to cost, so I can set a budget.
- I need to make sure that the budget doesn’t overrun by too much.
- I don’t want to be over-charged by some unscrupulous suppliers.
- I need to know when the project is going to be finished.

Supplier Concerns:
- I want to create the best site possible so it looks good in my portfolio.
- I need to know exactly what it is my client wants
- I need to be able to alter the scope based on new or clarified information.
- I want to avoid scope-creep eating into my profitability.
- I need to know when the project will finish so I can schedule in new work.

You’ll notice that our client and supplier concerns are remarkably similar. Both parties want to do the best job possible, on time and on budget—so how do we align these goals?

Associated Link: Full article: Contract Killers in Digital Web Magazine

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