Thoughts on ways to improve the management of professional services firms

Sunday, November 11, 2007

On saying no to clients 2 - the importance of a discipline of practice

My last post dealt with the problems we all face in saying no to clients at the time we are seeking the assignment. In this post, I want to talk about how to say no to the client during the assignment itself.

This one is really hard. You have worked to get the job. Now, mid-way through delivery, the client may be demanding changes to scope, changes that add to costs. Sometimes the changes may only be small, yet the aggregate effect can be significant.

In fixed price charging, you see your profit margin shrinking. In time based charging, you see the client's bill blowing out.

As a second example, what do you do if it becomes clear that the assignment won't deliver the expected results? When and how do you explain this to the client? What do you do if a better approach emerges, but this requires changes to approach that will cost more?

A final example, one especially relevant to those working in a public policy environment. You have done the work, prepared a draft report. Now the client demands changes to the report. These may be a series of minor drafting changes that do not add to the substance, but simply reflect different drafting styles. But they can also involve requests to alter conclusions and arguments.

Management of these types of problems requires an effective and professional discipline of practice.

To begin with, you need to know job costs. If you are not keeping and/or monitoring your time records, then costs can blow out before you realise.

How often have I heard my independent colleagues suddenly complain towards the end of a job that they are losing money, essentially working for nothing? How often have you heard clients complain about the unexpected size of bills, or seen monthly performance reports suddenly show substantial write-downs?

If you know your costs, then you are in a much better position to manage client client requests. If the job is within budget, then you normally don't have to think about saying no. If the job is running or may run out of budget, you have to information you need to at least discuss the matter with the client.

Good cost records are a subset of a broader issue, the need for an effective and professional project or assignment management approach.

As a professional, you want to do the job in the most cost-effective way, given the specific client requirement. This includes identifying and resolving problems as early as possible. As a general rule, clients hate surprises. Jobs often blow up where a client is faced with a sudden, unexpected, problem.

A good project management approach also includes a process for agreeing variations to the scope of the assignment. I am not talking here so much about formal agreements, but rather a standard approach that ensures that you and the client are aware of and agree on the significance of changes.

This does not have to be complicated. A simple email noting agreed variations or actions is normally sufficient.

The key point to note is that you are the professional. You know or should know what is and has to be done, how much it is likely to cost. The client cannot be expected to know this. So, at least as I see it, you are responsible for alerting the client where a proposed change or action is likely to have significant effects on cost or outcomes.

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