Re: Contracting Moral Dilemma

Subject: Re: Contracting Moral Dilemma
From: Robert Plamondon <robert -at- PLAMONDON -dot- COM>
Date: Tue, 11 Feb 1997 07:09:10 PST

A recent experience of mine comes to mind. I am having the engine in
my pickup truck rebuilt, which is costing me over $2500. I haven't
had this truck for all that long. Now, suppose the mechanic had
pulled off the oil pan and discovered that the previous owner had
rebuilt the engine not 10,000 miles ago, and that the low oil
pressure I'd been experiencing had been due entirely to an incompetently
installed head gasket.

Should the mechanic go ahead and rebuild the engine, as contracted,
or should he call me up and tell me the good news, charging me only
for the work that's actually necessary?

Personally, I am fiercely loyal to the second class of mechanic.

If you consider yourself to be a "contractor," doing what the client
bids you to do for a fixed price, as if you were an automaton, you
would tend to conclude, logically, that you should deliver the
agreed-upon product for the agreed-upon price, regardless of
circumstances.

If you consider yourself to be a "consultant," the client is largely
paying for your professional judgment and advice, and you cannot
ethically paper over actions that are not in your client's interests.

What I recommend you do is to set a "windfall hourly rate": a rate
considerably higher than your ordinary rate, that is the maximum you
will charge to a client for your labor, regardless of how valuable the
product is or how clever you were in solving their problems. Being
clever and producing valuable work is, after all, what they're paying
you for. Set it to double the rate you normally charge, to give yourself
a reason to smile when you are unexpectedly masterful. That is, any
time savings caused by superhuman cleverness are pocketed unless you
spend less than half the estimated time on the job, at which point
you should be merciful and share the bounty with your client. You'll
still end up billing less than the estimate fairly often if you're a
creative thinker. (Returning to my mechanic example, virtually all
auto shops charge by the amount of labor listed in a book of standard
repair times, not by the actual time spent. They do not actually
time each job. Setting a "windfall hourly rate" far above the rate
you use for estimates gives the same effect unless you REALLY slash
a job down to size, which is easier to do with an intellectual task
like writing than a mechanical task like machining a set of heads.)

But only use this for your own cleverness, not for projects that turned
out to be massively different from what you based your estimate on.
(After all, to some degree misestimates are going to be your fault.) If
you assumed the manuals you were to update were 500 pages long, but they
were really 250 pages long, you should alert the client to this discrepancy.
In many cases, the client will still spend the entire amount of the
purchase order on you, having you toss in extras or take on another
project. In any event, it establishes that you are looking after their
interests even when their backs are turned, and that you do not in any
way have an adversarial relationship with them. As I said before,
small deviations from the estimate (I like 25%) should be ignored, but
large ones require that you consult with your client.

(Finally, you should never use a bargain-basement hourly rate when
doing project-based consulting, rather than hourly consulting. You
are assuming more risk and more autonomy, both of which the client
expects to pay for. And don't reveal your hourly rate when pricing
work by the job. My dentist doesn't reveal his hourly rate, and neither
should you.)

-- Robert
--
Robert Plamondon, High-Tech Technical Writing, Inc.
36475 Norton Creek Road * Blodgett * Oregon * 97326
robert -at- plamondon -dot- com * (541) 740-6509 * Fax: (541) 453-4139
http://www.pioneer.net/~robertp

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