Richard,
Great advice there from Greg. I do a lot of lump sum fee work, but as an independent project manager in property development and construction (coding my own web project ideas is a hobby yet to pay any dividends) In terms of how you go about it I suggest - 1. Write your scope / role in broad but concise terms to provide to the client (but this is just as much for your own benefit as follows); 2. List your deliverables and describe them. I guess for software you need to describe the functionality / limits of functionality to be achieved as well; 3. Determine your lump sum amount by listing in a spreadsheet, in sequence, every step and item of work you need to achieve the end result, and estimate your number of hours for each, then apply your hourly rate. The more you break this down, the more realistic it will be with respect to the real cost to do the work, and the less dependent the amount will be on the accuracy of your hour estimates for each item. If you know the client and they are straight forward people consider providing this to them and asking if that's the way they see the task as well. As many times as I've had to cut the estimate to meet expectations or get the job I've also had good sensible clients say they believe more time would be required overall. Of course they may use your list to get prices from someone else but at least that helps prevent a less competent person getting the work by failing to identify all the work items required; 4. Work out the things to advise that will change the cost and the parameters you need them to work within ie; respond to my queries within 1 business day, provide a client rep responsible for that, reprice if project duration > X months through no fault of your own, no allowance for any matter becoming protracted etc. Use these qualifications in your offer. Lump sum fees can be very uncomfortable for you and the client (and ruinous to your financial wellbeing) if you don't manage it every step of the way through the job. Maintain a good relationship with the client, don't be talking fees all the time or much at all, try to accommodate errors and stuff-ups on their part generously, but when the scope changes be quick to say Yes, I can do that, it's a great idea, and here's an estimate of costs to implement it (include reworking costs). Paul .. From: [email protected] [mailto:[email protected]] On Behalf Of Richard Jones Sent: Saturday, 3 August 2013 6:52 AM To: ozDotNet Subject: RE: Estimate Time and Cost before signing a contract Thanks Greg, Very good advice provided, Greatly appreciated. I will review what you have written and come to a decision. Richard _____ Date: Fri, 2 Aug 2013 22:47:56 +1000 Subject: Re: Estimate Time and Cost before signing a contract From: [email protected] To: [email protected] Hi Richard, Fixed price quotes can be a great way to make good money and to lose hard earned money, you have to take care and make sure you know what you are getting yourself into. Businesses like them, because they know their maximum exposure. I find that there a far too many clients, who think that they can estimate software development time, but they have little (no) true experience in software development. Some thoughts. Make sure that scope is clear with at least one bullet point for every deliverable that you know they are expecting and also clearly state that anything not listed in the deliverables will be cost plus later. This also helps them make sure that they have asked for everything they want / expect. I also typically have a list of non-deliverables, where we have discussed some feature and agreed that it would be included in a later version. Make sure that the contract is not a one way street, if you are expected to take the risk on a late delivery, you should also get the reward of getting it in early. If the client is asking you for a fixed price, then you should have the option to do the work where, when and how you like. This also ties the client into waterfall development, once you give them a version for test / review, there will be a stack of change requests coming in AT THEIR COST! I have found that some projects more than double in size with the change requests, that is why they have to be managed. Take care doing a few for free, or you will set up an expectation. Look out for clauses like: "Must be easy to use", "Must be documented to our standard", "Must be fully commented", "Must follow our coding standard", "Must be approved by our standards group", "Must be approved by our DBA", "Must interface with our un-documented system", these are all open ended non-objective unclear requirements. My standard way of sizing a project is loosely based on (very loosely) function point counting, I count the number of database tables and simple screens and multiply this by a factor that I have worked out over the years of my realistic productivity, then I add on a margin for complex logic, complex screens, client liaison time, documentation, testing and general stuffing around that all projects have. Number one piece of advice, if you feel you don't have enough information to make a meaningful estimation, then do your best (worse case) guess and at least double it. After I have done this, I look at the number and ask if it feels right or not, if not I adjust it. When you come to a final number, round it to a number that is not quite so analytical, the last two or three digits should always be zeros. If they say sign now or loose the contract, you say, that is fine, I will sign after I complete the analysis at $X per hour, if they don't like that, you have to make the call on risk / reward ratio. Your analysis time should be charged or you are setting up an expectation that you will do work for free. Follow every conversation with an email to the client sponsor, CC to who you were talking to "As per my conversation with Fred, you need xyz and do not need abc. This will be provided with an increase in the project scope of X days and Y dollars. Please confirm your agreement by return email.". Good luck Regards Greg Harris On Fri, Aug 2, 2013 at 7:51 PM, Richard Jones <[email protected]> wrote: I have been asked by a potential client to work out time and cost estimate before I have signed a contract to perform the work. They indicated they didn't want a recruitment company. To me this seems a bit strange, as I have never experienced this before, I have usually signed a contract got in and did the work, however, this is different. They have indicated to me that they think this type of work will take 3 months, however, they would like me to confirm/demonstrate time and cost. Has anyone had this type of work?, any helpful comments/suggestions would be grateful. No virus found in this message. Checked by AVG - www.avg.com Version: 2013.0.3392 / Virus Database: 3209/6544 - Release Date: 08/01/13
