Business Word

Pricing a Documentation Project Is Part Science, Part Art

by Peter Zvalo

Determining a price to charge for documentation services is among the most important — and most challenging — tasks facing a contract writer or editor. The key to arriving at a price that is realistic, fair, and competitive is establishing a clear scope of the work that is to be performed. When both the client and the contractor have a solid understanding of what needs to be done to meet the client's requirement, the more accurate the price estimate is likely to be, resulting in an arrangement that is satisfying to both customer and supplier.

In my experience, most documentation projects are performed on a fixed price basis rather than on a per-diem basis. This means that the price for the job quoted in the proposal or contract will not change unless the scope of work described in the proposal or contract changes as well.

Fixed Price Vs. Per Diem

Occasionally, a requirement does not lend itself well to a fixed price arrangement. In such cases, a contractor is likely to quote a per-diem rate (a specified dollar amount for each person-day worked), and specify a limit on the cost of the work. Typically, such proposals include the statement: "The cost of our work will not exceed XXX dollars." The client is billed for the time and materials consumed on an agreed-upon schedule (usually monthly). When the budgeted time is consumed, the contractor's work on the project ceases until a new arrangement is negotiated. (Of course, if the requirement is met using less than the maximum time quoted, the client only pays for the actual time needed to complete the work.)

While the per-diem option may, at first glance, seem to be the most advantageous for the client, this is not necessarily the case. The client actually gains more flexibility with the fixed price approach. Once an agreement has been reached on the scope of work and the resultant price, the quantity of actual resources consumed becomes an internal matter for the contractor, and is generally of little interest to the client. The focus of attention turns to producing a quality product as quickly and efficiently as possible. If the contractor underestimated the quote, the client comes out ahead because he or she gets the finished product at less cost than they would have paid under a per-diem arrangement. Most corporate clients prefer fixed price contracts because they are easier to administer and improve the likelihood that the project will reach completion within the specified budget.

But does a fixed price contract result in shoddy work? In the documentation field, this is unlikely because when writers and editors try to cut corners, the results are plain to see: typos and grammatical errors, poor document organization, lacklustre document layout, and wrong or misleading factual information. As most documentation professionals know, satisfactory documentation is achieved only through painstaking attention to detail with in-depth research, careful writing, effective editing, and thorough proofreading and quality assurance. And doing these things well takes time. When you bypass critical steps in the documentation process you run the risk of producing a substandard product, which will ultimately tarnish your reputation.

Fixed Price Contracts and Scope of Work

A mutual understanding between the client and contractor on the scope of work is critical for establishing a fixed price. Items that should be documented in a proposal or contract and that help to establish the parameters of the scope of work include the following:

• A general statement of the requirement;
• The nature of the product (e.g., communication planning document, flyer, brochure, user manual, on-line help, web site, etc.);
• The final deliverable (e.g., printed copies, electronic files, film, etc.);
• The tasks to be performed by the contractor in meeting the requirement (e.g., researching, writing, editing, developing graphics, laying out text, translating, and so on); and
• The process to be used to develop the final deliverable (e.g., number of drafts, client responsibilities during review cycles, etc.).

Where possible, quantifiable specifics about each of the points above should be included (for example, the anticipated number of interviews to be conducted, the number of original graphics to be developed, the type of electronic files to be supplied, the number of copies to be printed, and so on).

Specifying a page limit (or word limit) is essential. Usually, the inclusion of a simple statement in the proposal such as: "The document is not expected to exceed XX pages" will suffice. This puts an easy-to-measure limit on the scope of the project, irrespective of the specifics of what actually needs to be done.

The more precise you can be when developing a fixed price contract, the easier it will be to identify situations in which the job has expanded beyond the scope of the original contract. If you find yourself rewriting a document after the fifth review cycle, and the proposal called for a two-draft review process, this is a good indication that the project is outside the original scope of work.

Keeping a Project Within Budget

As a documentation contractor, you want to build a reputation for delivering quality products not only on time, but also within your original budget.

The first step toward this goal is to quote a price that is both realistic and competitive. To do this, you can either rely on your intuition and experience, or you can make use of computer programs that partially automate the process of calculating the work effort and resulting price.

You should also try to control the project scope after you have won the contract. This is most effectively achieved through good communication with your client. When submitting drafts for client review, for example, include a memo that stipulates the purpose of the draft, who should review the draft, and any known deficiencies of the draft. In this way, you will be better able to exercise some degree of control over the client review process, and thereby help to ensure that the drafts receive the proper approvals within the client's organizational hierarchy. Another useful tool is to submit weekly or bi-weekly progress review reports that summarize the current status of the project and upcoming milestones. With either tool, you demonstrate your grasp of the project's status, while building a useful paper trail that you may need at a later time to justify a possible change in the project scope.

Going Over Budget

Sometimes, despite your best intentions and those of your client, the nature of the project evolves into something that could not have been anticipated at the outset. What at first appeared to be a straightforward assignment that should have consumed 25 person-days turns out to be a much larger task.

However, if the project is under control, you should be able to predict a change in scope well in advance of actually breaking the bank. For example, when you see that a document originally estimated not to exceed 20 pages is going to be 50 pages, you should alert your client to your concerns as soon as possible so that a new, mutually agreeable arrangement can be achieved. This could mean scaling back your role in the project, scaling back the scope of the document under development, or amending the price of the original contract to accommodate the increased costs associated with the added scope of work.

Running to your client with requests for more money is clearly not a strategy that should be pursued for every project and is one that should not be taken lightly — your credibility as a contractor could be on the line. In some fixed price arrangements, your only choice to save face (and hopefully to earn repeat business from the client) is to take a loss. Hopefully, you will make up for it next time, a little older and wiser for the experience.