THIS IS GOING TO COST HOW MUCH?

Any customer will deliver the above question on delivery of the first estimate for a project. The nice ones will give you a wry smile but most, if not all, will give you an incredulous look of disbelief at the outrageous estimate that you have just given them. How can what they’ve asked for possibly give them an estimate of this scale – the audacity of it all!

I have found that this is especially true if this is the first job a client has asked you to undertake or quote for. Those who have been with you before may challenge an estimate, but are more likely to accept it provided you have delivered for them in the past and gave value.

Project Estimation – Make It More Than A Guess!

Hand on heart, how many of us have given unsubstantiated quotations/estimates for work without doing a quick due diligence (quick being the time it takes to give a valid quote and not a guess!). I know that I have and have been burned as a consequence. I’m sure you have done this as well.

For me, the couple of times its happened (in fairness, early in my forays into the world of consulting) was because I didn’t fully understand the breadth of what was being looked for by the client i.e. the project scope. My fault – 100%. The client was trying to get good value and I didn’t validate my quotations by asking for the necessary information to make an informed decision.

Now I ensure I fully understand the scope of what is being looked for. This makes sure that I know what is being asked for and when I’m providing the estimate.

I break the quotation down into specific pieces so that the client understands what each element costs and what they are getting in that element.

I don’t try and pad the quotation to “cover” myself. A client will see through this very quickly and creates a sense of mistrust which does not work well for anyone.

If a client raises a concern, whether to chance their arm or out of a legitimate concern on a portion of the estimate, I make sure I’ve the facts to hand and discuss each element in turn.

If the client insists that the project is too expensive and won’t engage at the current price, then I discuss de-scoping or viable alternatives to the implementation options. I highlight the impact of such actions on their business. i.e. pointing out that if they don’t invest X now, then Y will not be able to happen and as a consequence that extra revenue or cost saving will not be achieved.

I will rarely, expect for strategic possibilities, engage in a loss-leading project. The only person that benefits is the client in terms of cash, but in reality the project will not be something that I will have been happy with because I will have done all that is necessary to mitigate the level of loss that the project will make. The client will almost certainly be unhappy with the project as well.  Bang goes a good reference and there is also a good chance that there will be no “word of mouth” work coming out of it.

So don’t be afraid of your estimates/quotations. Gather the facts to back it up. Face up to a challenging client and deal in the details. Show them why it is estimated in the way that it is. If they are reasonable, they’ll agree (or de-scope if they don’t have the cash). If they don’t budge and continue to make noise – are they really worth doing the job for?

How do you manage your client estimation process?

Photo: KevinDooley