Nickels and dimes

September 2013 » Columns » PROJECT MANAGEMENT INSIGHTS
Christine Brack, PMP

Everyone says they don't want to nickel and dime clients, and yet getting paid for doing work and providing service is the reality of how your business runs. This idiom exists for a reason, and for this industry, it means the expenses, the extra work, the scope creep, and the small amounts that just add up that would be really nice to have reimbursed.

There is certainly a fine line on how to handle these, and it is valid to say that clients with budgets don't want to be badly surprised with a bunch of additional costs. It's like the documentation and shipping fees we're tagged with when buying a car or closing costs when purchasing a home. None of us like it. Sometimes they can be negotiated away; sometimes we just pay it.

I was with a firm recently where several project managers were unsure what the firm's "policy" was regarding the nickels and dimes. Following are a few important things to consider:

Project managers legitimately don't know
Your team may really not know what to do – especially if you have hired new project managers or promoted ones internally. This isn't the kind of thing that is discussed immediately the first day in the role. You've been in business long enough to have even the loosest of opinions or at least some general guidelines. Maybe it's time to have a refresher discussion or at minimum a check in to see how they're handling these extras. Chances are good there is someone who can benefit from your advice and that of their peers.

Accommodate to changes
Some methods and costs of doing business have changed during the last few years and it likely has impacted you too. For the firm I was visiting, permits now take longer, and resubmissions are more expensive. This was something they absorbed without hesitation in the past – now the cost is three to four times that amount. The same goes for extra project meetings attended beyond what was estimated. Should the client reimburse for this or should you accept it as the routine of having the project?

One size doesn't fit all
There is no easy answer to that last question, which is why it's good to have an initial policy – and some shared experiences around the table. With full disclosure of what might be required and approximate estimates, reimbursement of these extra costs becomes more palatable to clients. If they have worked with other professional service firms, they may even expect these charges. For my client, they asked upfront and discovered the agency did reimburse – albeit with some caps – but they respected the notion that they should bear most of that cost. For other clients, their budgets won't budge for one dollar beyond what was slated, so things like permit submissions and extra meetings have to be woven in the final fee.

It adds up
Nickels and dimes can add up to large amounts of dollars for you. When working with firms on this issue and doing some forensic accounting of project costs, we've often found alarming amounts of money given away in these small instances that were never reimbursed – or never even requested to be reimbursed. It requires some digging, but when finished, you'll be more informed of what these extras are costing you, which clients readily reimburse, and which items you want to target as part of a new policy. It should never be undertaken to get anyone in trouble, but rather to measure what you are really giving away – and could be getting back.

As we talked about these scenarios and others, the faces of the project managers lightened up considerably; having additional support from their leaders and advice on how to handle future situations, they have greater confidence in their role.

Christine Brack, PMP, is a principal with ZweigWhite specializing in business planning and project management best practices.
She can be contacted at cbrack@zweigwhite.com.

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