Memo 50: When coordinating with others, you have to charge; When the scope changes, your price need not change simply

When coordinating with others, you have to charge; When the scope changes, you price need not change simply;

(A) Prices need not be reduced by crossing out a line item

Please see below:

Hi Koshy,

Sorry to do this, but we will need to remove line item 5 from the invoice. The structural steel components of Lift 11 have already been modeled by a different company. We will be receiving the model soon and will send that to you to work on the other parts of the scope that you priced for.

Do you mind sending through an invoice without Line item 5 so we can put it through with this months invoices?

This is not uncommon. Clients are wont to shop around for the lowest price. Which I don’t mind.

Except it is a PITA to manage with admin, invoicing and purchase orders. Second, when I price a job, I look at the overall make-up of a job. If they remove an item, piecemeal, then that changes the make-up, of the job entirely – viz you can think of it like this: e.g. when you go to MacDonald’s you can purchase the following individually:

1. Burger – $8
2. Fries – $4
3. Coke – $2
4. Total: $14 (as separately priced items)

or you can purchase them in a combination for $10 for example (discount):

1. Burger – $3
2. Fries – $4
3. Coke – $4
4. Combination: $10

And then after you agree on purchasing all three, imagine then a customer cuts the scope and says: “actually I only want the burger”……………. Well then if you want just the burger, the price does not remain at $3, it will have to rise to $8. You do not have to cut the price in line, if the customer changes the scope. If I can afford to drop the customer, then I may refuse the discount entirely – and ask the customer to take the entire job elsewhere. I suppose this puts a spanner in the customer’s works, but then again, so is being a clever dick by asking for a job in bulk and then cherry picking parts by price after one has already been given in bulk, and asking others to manage the coordination overheads. And if the client says they will “manage” it – what if they miss something? Of course, at that stage, then you have to raise the matter.

(B) The Risks of Coordinating with Others

• The second thing to note – if you are coordinating with someone else’s work – who is responsible for making it work?
• If their work is wrong, will it not delay my portion of the work? Will it not cause problems and add costs?
• If there is a problem, then I want to be remunerated for finding out that a problem exists, pointing it out, and also providing the solution.

There is a coordination cost involved when dealing with others. Which I hate doing because I cannot control a third party – I have no idea if they are using the latest drawings, or have captured all the information required in order to make the job successful.

Here is my reply:

Please find attached an invoice with a credit note applied – i.e. line item 5 eliminated.

Please note there may be coordination overheads associated with managing third party drafties and their models – that may be something we can address if such a need arises.

any issues pls LMK.

And the client respond as such:

Hi Koshy,

Yes, no worries. We will see how we go.

Thanks,

Very good – our client understands this. We have asked permission and warned him in advance that the coordination costs exist, and the client has agreed. We are experts at managing coordination, and do not be shy about charging for that expertise. It is better than our clients pay our invoices than for their job to meet with disaster because there were too many chefs in the kitchen – or worse, that there weren’t any chefs there at all

My philosophy is this – getting two detailers to manage a job is one too many. It must either go entirely to the other guy, or entirely to us. There is a very significant coordination cost associated with this, and that cannot come for free. Remember, a house divided by two detailers cannot stand.