The smart money series: 5 traps of fixed-fee contracts

mouse trapFixed fee contracts. We love and hate them at the same time. It’s not that they’re bad in themselves, rather they must be done right. When drafting a fixed fee contract with a client, here are 5 traps to avoid:

  1. The missing information. When doing a fixed fee arrangement, make sure to be as specific as possible on what is included in the contract, and what is not included. This can be the number of hours of work included, or the number of revisions allowed on a plan. Also, any extras should be specified along with the rate at which these will be billed. This helps settle disagreements.
  2. Is it finished yet? Be very careful how you define a work as completed. Is it after the required hours have been worked? Is it if the customer accepts the work? Is it based on specific requirements provided by the client? Being specific about when work is done helps curtail the “one more thing” problem with clients who always want more.
  3. Forgotten costs. When putting together the proposal for a fixed fee contract, it’s important to think about all your costs. That includes time spent by administrative personnel, or travel expenses, or even luncheon meetings. You should also think about technical support costs, and factor those in.
  4. What about after? The fixed fee contract should also include the cost of post-project support. Just like the cost of customer service is built-in the products we buy, so should we include it in our fixed fee contracts – unless we exclude it.
  5. How full is the glass? No one wants to think about problems we might have in a project. We all want to feel competent and able to complete our projects on time. However, when estimating a fixed fee contract, pessimism rules. Planning for the project to take longer builds leeway for us down the line.

What about you? What are the potential problems with fixed fee contracts?

Abak version 7.5: my favorite features

A constantly changing environment.

A software version is a particularly perishable product. Indeed, to remain on the fore scene the software must be regularly updated, and host new features to meet the growing demands of its users and to maintain a good position to face dynamic competition.

Abak Software Inc. performs two updates per year. Beyond the continuous improvement of features the software must also meet the requirements of trend (Web), ergonomics and aesthetics. This is the case with Abak Web, the flagship of the range Abak, a complete overhaul of your Abak Classic, ergonomics and redesigned ‘look’ revisited.

 

My favorite functionalities in version 7.5

Version 7.5.0 of Abak Web includes numerous improvements, fixes and new features. Abak Web makes it particularly convenient and user friendly for the project manager to build the architecture of its phase based projects, to validate the time sheets of his or her colleagues assigned to the project, and at any time, wherever the project manager might be, to track project progress through various financial reports.

But there is much more:

  • Search function. Looking for a client or project for example has never been easier. Just enter one or more letters from the client name or project, in the search window and the software presents its selection.
  • Approve time directly in the project: It is possible to approve the hours worked on a project from the Project window, in Abak Web. When a day is approved in a project, it is no longer possible to enter time for that day.
  • Access to invoices in the customer history. At any time in Abak Web it is possible to check invoices for a specific customer.
  • Sending multiple invoices in the same email message when they have the same billing contact and the same contact in CC.
  • The non-billable time can be included in the budget monitoring reports.

There are many more new features to explore in Abak Web. Yours to discover!

Free webinar: presenting Abak 7.5

Abak 7.5 is available for download and offers many new features!

In Abak Web, we’ve introduced several new modules:

  • Reports
  • Supplier invoicing
  • Client invoice lists
  • Datebook

We didn’t forget about Abak Classic either:

  • Sending several invoices in the same email
  • Approval of time bank periods

Free webinar: Abak 7.5
August 22, 2pm Eastern Time

Register now and see these new features in action!

Is your monthly fee high enough?

perpetual calendarClients that pay a monthly fee are great: they provide stable income and the opportunity for bigger-scale projects to develop with the client. They are also a sign of trust from the client.

Monthly fee contracts are also tricky: how can we set a fixed monthly amount that covers all costs for that client? When is work outside of the contract and to be billed separately?

Here are a few pointers:

  1. Start with a short-term contract with your client. Doing a 3-month or 6-month contract at first will allow you to see the actual work involved monthly for that client, as well as expenses. This will help you not only figure out if the fee is appropriate for the work, but also show documentation to your client on actual time and expenses incurred.
  2. Write it down. Precisely. It doesn’t matter how nice the client is. It doesn’t matter how long you’ve been doing business with them. Spelling out exactly what work is included and what work is not included – especially what is not included – will provide a base to settle disagreements, should they happen. It also adjusts everyone’s expectations.
  3. Figure out if it’s profitable for your firm. After a few months (even a year) of working on a monthly-fee contract with the client, you’ll have enough data to compare costs and revenues and decide if your profit margin on those contracts is high enough. Sometimes, low-margin contracts are a step in the door to bigger, higher-margin ones. Sometimes, they don’t pan out.  It’s important to decide if, as a business, you’re willing to keep low-margin contracts.

What about you? What are your thoughts on monthly fee contracts?

Introducing free management webinars: managing and estimating project expenses

In August, we are proud to introduce a new monthly feature with Abak: free management webinars.  Our Beyond Billing webinar series are short presentations of about 30 minutes that cover a variety of subjects, from project management to business metrics and cost tracking.

Our first Business Management Webinar, on August 9th, will focus on managing and estimating project expenses.

Do you sometimes feel like project expenses are out of control? How can you budget project expenses accurately and then ensure that actual project expenses remain within the budget? What should you do when project expenses threaten to go over-budget?

Find out with our Beyond Billing Webinar, August 9th, 2pm Eastern Time.

Free webinar: estimating and managing project expenses
August 9, 2pm Eastern Time
Register here!

Why not? It’s free!