10. Be Sure to Have a Well Designed Scope of Work
Including a specific scope of work in your contract can save a great deal of aggravation and money. If we don't have a clear scope of work in the contract, the only way I can see of performing this work is on an hourly basis with no upset limit. Even then we need to have a written understanding with our client as to our ultimate goal.
|
How do you get a retainer? You ask for it!
9. Propose a Fixed Fee for Your Reimbursable Expenses
While it won't work for every project or client, receiving a fixed fee for reimbursable expenses has the potential of producing a substantial profit. When firms are working on a familiar project type for a good client, I have seen fixed fees produce a 30%+ profit. Of course you need to price it properly and make every effort to keep your costs in check but it is worth the effort. Think if the time saved on copying, collating and invoicing alone! The client also benefits by having price certainty for their project.
8. Include a Contract Termination Date in the Contract
All good things must come to an end. Including contracts. By putting a reasonable contract termination date, you reinforce the project schedule and set up the case for invoicing hourly for any services beyond the termination date.
7. Limitation of Liability
Include a limit of liability clause in your contract. The amount should be limited to the amount of your fee. Why should we have unlimited liability to the client when we are receiving a $5,000 fee? You won't always be able to get it included, but give it a try.
6. Royalty Clause
Many firms are worried about ownership of documents but pay little or no attention to their intellectual property rights. I personally couldn't care less who owns the paper documents but I do care a great deal about someone reusing my ideas as presented in the documents. For this I want to get paid a royalty. Include a royalty clause in the contract to compensate you for your ideas and guarantee you a consulting roll in any reuse or adaptation.
5. Payment is Not Contingent Upon 3rd Party Reimbursement
I am not necessarily talking about being a sub-consultant to the prime. I have experienced some unfortunate situations when working for a "not for profit." After the work was performed I was then told they needed to apply for a grant or do fundraising before we could get paid. Of course they acted surprised that I wasn't aware of this. Be careful when doing work for Non-Profits, many of them have no problem spending your money to further their cause.
4. Include a Schedule of Deliverables
Yes in item number 10 I talked about a carefully defined scope, but I am getting much more specific. Include a drawing list and schedule of other specific items they will receive. It avoids "confusion" by the client as to what they will get.
3. Define What is not Included in the Scope of Work
This is particularly important when dealing with the non-professional consumer of A/E service. By non-professional, I mean those clients or institutions that are not regularly involved in design and construction projects. For example they might expect that a professional rendering or landscape design is included in your base fee. I have also had the experience of an experienced developer claiming that professional renderings are always included in basic services. Let's not go down that road and layout in detail what is not included in basic services.
2. Retainers
Be sure to ask for a retainer on every project. How do you get a retainer? You ask for it! Especially with a new client or one you have had a bad experience with. There is no commitment from the client until they write a check. If you don't have the nerve to ask for a retainer, have one of your junior project managers ask, they don't know any better. More about this in a future issue of my newsletter.
1. Right to Stop Work for Non-Payment
What a radical thought! Let's include a clause that say if the client doesn't pay within 60 days, we have the right to stop work and withhold all work produced to date. I know that many of you will say that we already have this right or we can't stop working in construction. Well to this I say there is no reason that I know of to legitimately keep this right out of the contract. If the client objects to this clause, proceed with the project at your own financial risk. Do I want to stop work? No. But I do want to use this clause to force a face-to-face meeting in which we resolve the non-payment issues. If they won't agree to the meeting, I stop working until the issue is resolved.