Business mentor: Quotes must be detailed to reduce danger of blowing out

Q. I've quoted a job, now it is going over budget. What should I do?

A. Dianne Ludwig, director of Gosling Chapman, replies:

You will first need to determine if you have any grounds for revising your quote. You may need to put it down to experience - wear the cost and make necessary changes to prevent this happening again.

You will need to assess what caused you to exceed the budget with the job in question and then review the terms of your original quote.

If the blow-out is the result of your own inefficiencies you have no grounds for renegotiating the price with the client. This is where you need to check your own internal production systems and methods of tracking and managing job costs.

If the job is bigger than you expected, revisit the original quote to see what terms you specified.

If you are clearly going to be working outside the scope of the original brief, you need to communicate this to the client and negotiate a price increase for the extra work. As soon as you are aware of a potential cost over-run, you need to communicate with the client. Early communication empowers you and the client to make choices about how the job progresses.

It also gives you the opportunity to sell the need for the extra work. Clients are more likely to be disgruntled and refuse to pay for additional work if you do not communicate along the way.

It is extremely important when quoting that you adequately describe, in writing, what work you will undertake, what the client's obligations are and, if necessary, what work is outside the scope of the quote.

Then if the brief changes you are in a stronger position to negotiate an adjustment to the price.

All too frequently, quoting problems occur as the original quote was not specific about what, when, how and who.

This information should include your expectations of the client, which may consist of them providing access to information or sites, their availability for consultation, and when you expect them to make progress and final payments.

The client should formally sign off on the terms of this quote before you start work.

Other useful tips for quoting include making the quote valid for a limited period and adding surcharges for events out of your control, for example, petrol price rises or foreign exchange movements.

You will need to have in place good internal cost tracking systems so you can monitor a job's progress against its quote. This may include tracking costs incurred while a job moves through your factory/office, and breaking the overall cost into sub-components, enabling early identification of cost over-runs.

* Dianne.ludwig@goslingchapman.com



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