Re: Guesstimate THIS! (was RE: Contracting Experiences

Subject: Re: Guesstimate THIS! (was RE: Contracting Experiences
From: Elna Tymes <etymes -at- LTS -dot- COM>
Date: Wed, 7 Apr 1999 10:01:59 -0700

Kevin-

> How many of you do we think are quoting complete contracts -- with which you are
> then stuck, unless the client does something drastic that unmistakably justifies
> overruns -- and how many are just signing up for "X" many hours per day (or
> week) until there's no more work to do on this project?

> Also, for either kind of "independent", how important have you found your
> estimating skills to be, in the furtherance of your net worth?

We learned long ago that there are an infinite number of ways for even the most carefully defined project to go wrong, and that the best solution to this is to hedge your bets by billing hourly.  However, we understand that most clients want a fixed bid, so what we do is create an estimate, complete with stated assumptions, and then state that this is still an estimate and that unexpected changes will cause the final amount to vary.  In the course of the project, we make it clear where the project is not going according to plan.  In almost every case the client says some variation on "Yeah, yeah, go ahead" and we proceed.  We also document very carefully where there are deviations from plan, against what happens toward the end of the project about 40% of the time: the client gets a wakeup call from his finance person and demands to know why we were off the estimate.

We've done fixed-price bids maybe four times in ten years, and we've been burned every time, no matter how much of a fudge factor we built in.

That being said, we also have a history of coming in on time and within budget, unless some monumental gotcha creeps into the project.  Our estimates are usually within 10% of the final total, and any overruns are usually because the client asked for something that wasn't known at the time of the original bid. One of the most likely places for a contract to spin out of control is what I call "iterative reviews," where the client keeps reviewing and making changes.  That's why our contracts generally call for only two reviews and why we make it very clear up front that anything more than two reviews will probably cause the project
costs to rise unexpectedly.

Elna Tymes
Los Trancos Systems


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