Do you *really* want to avoid price and timeframe adjustments with your digital technology vendor before a project begins?
June 13, 2014
You’re about to get a new online application built for your digital marketing needs. You’ve found an excellent vendor who you know can build it well. The project’s scope had been outlined in broad strokes, and the vendor gave you a ballpark estimate of the price and time it would take to make your online vision a reality.
Working with the vendor, you prepare a thorough technical description for your online application, outlining the production process in detail. The new description lists all the elements of the application user interface and back-end functionality, and defines specific technical solutions that would give your business the edge in the never-ending battle against competitors.
It also becomes clear from the new description that the project will require a bit more work than you and the vendor initially thought necessary.
At this point, should you ask your vendor if there are any adjustments to the price and time frame?
At first, the question may appear absurd. Why would you want to offer your vendor the opportunity to deliver the project later, and at higher price?
However – isn’t it better to have this discussion with the vendor now, rather than in the middle of the project, or, worse, when the project is nearing the deadline – or, worse still, when the project is delayed due to vendor’s lack of commitment because the vendor feels the production team is being underpaid?
At the preliminary stage, before the project has started, you can analyze the vendor’s updated requirements, negotiate them, and include any extra cost into your business plan. Slightly adjusting your business strategy, and possibly the price offered to the end user, can make the resulting web application much more successful (and profitable). Later on, during the production process, should the vendor come back to you demanding more money or time, you can comfortably remind the vendor that you have already factored in adjustments to the price and schedule, and the vendor shouldn’t expect more.
If a vendor comes back to you with the demand for more money or time because you had not thoroughly analyzed the realistic cost during the preliminary stage, and the vendor feels the production team is not being paid for the work it’s doing – that could stall the project near completion, lead to lack of commitment from the vendor (the “underpaid” project will be regularly pushed to the back of the vendor’s pipeline, because the preference would be given to the projects the vendor perceives as more immediately profitable). This could even lead to losing your company’s reputation with the end user, and can cost your company the working relationship with the vendor.
Wouldn’t you be just “hiding your head in the sand” by not requesting the clear and final price / timeframe from the vendor early on, based on clarified project specifications? Being in denial about the very real possibility of a vendor coming back to you with price and timeframe adjustments in the future when your project is already underway is never a good idea.
Build more trust – and more leverage for refusing any future requests – by giving the vendor the fair opportunity to identify all issues related to cost and scope before the project is put in production.
Thinking in terms of Sun Tzu and military strategy, it may be better to give in early so that you can win later.
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