Shortening the gap between expectation and outcome.

After 10 years running Hot PJ I decided late last year to start a new business – designing and producing second language resources for beginners. My business partner is a language teacher and linguist, and I am a second language learner and designer – so the fit was perfect.

We set to work on the business plan, product research and development (the fun stuff), setting up the website and other marketing collateral, and all the other bits and pieces a new business needs to successfully get off the ground.

I find myself in the position of a client again – covering ground with business advisors and professionals I had covered years ago when setting up Hot PJ, and consequently since forgotten about.

Armed with the benefit of hindsight, I recommended to my new business partner that we have a shareholders agreement drawn up from day one, should any problems arise and we decide to part company.

She agreed and I sent our lawyer we use at Hot PJ a brief email explaining what we wanted to do. As many may know, most lawyers in medium to large firms have junior lawyers and assistants, and it was to one of them our project was passed. It was here our problems started.

Some time later, and with little communication with us, we received a draft of the agreement. Not only did you need a law degree to understand it, but it also contained many basic mistakes and inaccuracies about the set up of our company.

As you can imagine, this impacted on our confidence in the agreement and the lawyer who drafted it. He had not bothered to find out our needs, or to even confirm some of the basics before working on the agreement. As most people know, failure to do the necessary research and preparation work at the outset is a method sure to fail.

To cut a long story down, after many months of un-replied emails and phone calls which outlined our concerns, (during which time we received a bill and follow up statements), we severed our relationship with the law firm and shifted to another.

But my story does not end here.

Our second attempt was with a lawyer recommended by our local Chamber of Commerce, and after a free initial meeting with him we felt confident that he understood and could meet our needs within a budget we could afford.

We received a draft agreement soon after, containing less jargon than the first. We concluded the agreement after one additional review meeting. It arrived neatly indexed in a folder. Wow, that was impressive.

Then came the bill. That was impressive too!

70% more than the top end figure the lawyer had indicated it would cost.

So we queried it.

Some time passed, and after a reminder from us, we received an explanation. The agreement had come out at the ‘top end’ of costs, and an additional document had also been prepared.

You may ask, so what’s your problem? – the lawyer had done more work and it is not unfair to expect to be paid for it.

True, but as the client who is paying for it, shouldn’t I have been told before the extra work commenced that there would be additional cost?

Nobody likes this kind of surprise, even more so when you are a start-up business on a very fixed budget.

So what to do?

Pay up and shut up? After all, there is nothing wrong with the work done.

I believe there is another issue at play here. I believe it should go without saying that the customer be advised of any cost increases before the additional work is commenced. After all, it’s the client’s money that is being spent.

After many years of working alongside clients at Hot PJ, I’ve learned that scope changes happen all the time, infact they can be almost guaranteed. A job will evolve as it comes together, and it is always necessary to try to cover this when first scoping and pricing it.

I believe it is the responsibility of the project leader or primary contact, to point out any scope changes to the client that will impact on price. Sure, no one likes hearing that costs will go up, but believe me, it is preferable than receiving a nasty surprise when the bill arrives.

I wish I could say this was the only incident where scope changes had resulted in a problem. But alas not.

Another provider decided a project we had commissioned was complete when the point was reached where the hours worked matched the price being paid, blaming scope changes. Never mind that we were left with a 3/4 completed project.

This is despite our instruction to be advised of any requests that were outside scope and would therefore cost more.

The moral of this tale is to be mindful of any requests that might change the scope of your project and the impact they can have on any work you undertake with external suppliers. Of course to know this you must discuss with your supplier at the outset what will and won’t be included, and get it in writing.

Always ask to be advised as soon as any requests change the scope and cost of your project, then you will have the opportunity to decide whether you can proceed with them or set them aside for the sake of budget.

Posted on October 1st, 2008 by Wendy Riley-Biddle
Filed under: General