Re: Contracting a moral dilemma

Subject: Re: Contracting a moral dilemma
From: Robert Plamondon <robert -at- PLAMONDON -dot- COM>
Date: Fri, 7 Feb 1997 06:46:45 PST

David Castro writes:

>I have successfully bid on a fixed-price contract. I signed the contract
>yesterday, and will receive the first payment today. I started working
>on the files last night, and realized that there really is a lot less
>text than I was thinking when I bid the contract (a non-professional
>actually used sufficient white space!).

>My potential dilemma is: what if I spend a lot less hours on the project
>than I calculated for my bid? It is a fixed bid, but I still based it on
>how many hours I thought it would take. If I go over the amount of time I
>estimated, I certainly wouldn't expect to be paid more...but should I
>return whatever portion that I didn't work for?

The way everyone puts together bids is to estimate the amount of
labor in the job, apply an undisclosed hourly rate, and out pops
bid (except I always call them "estimates"). Since estimating isn't an
exact science, some jobs will be harder than you thought, and some will
be easier. If your estimating techniques are okay, it'll average out in
the long run.

My policy is to bill the amount of the estimate (or bid) if things are not
wildly out of line. I don't have a hard and fast rule for how much deviation
would be considered "out of line," but I'm sure I'd just bill the amount of
the estimate for a 25% deviation in either direction. My clients value the
certainty of having a cost estimate to plan against, and I don't like
rattling their cages with altered numbers. Also, I need the surplus from
the slightly easier jobs to make up for the shortages of the slightly
harder jobs.

If the job is much easier than I thought, I bill less than the estimate.
If the job is much harder, I will consider renegotiating. It works out,
though, that my estimation techniques are pretty conservative. Most of
my clients have had the pleasure of seeing an invoice for less than the
agreed-upon amounts, and none have been billed for more.

-- Robert
Robert Plamondon, High-Tech Technical Writing, Inc.
36475 Norton Creek Road * Blodgett * Oregon * 97326
robert -at- plamondon -dot- com * (541) 453-5841 * Fax: (541) 453-4139

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