Closing the Project Deal

They have it in their minds when they bring the high-level project requirements to us that they know exactly what they want. Do you really believe that to be the case? I probably did at some point, but that has definitely changed over the years. They key is to ask the right questions up front that will help you gauge the level of solution knowledge your customer has when coming to you for a project. Some key questions to ask are:

 

• What event or understanding cause you to see the current need?
• Have you sat down with your end users to get their buy-in on the project needs?
• Why are you focused on this technology (if they have pre-selected a solution)?
• Do you have a cost in mind? Is there an approved budget for this effort?
• How soon do you need this implemented?
• How is this process being performed today?

Getting answers to these up front questions will help you to understand how much planning and work they've done to get to the point of meeting with you. If you resolve that they haven't really addressed the need with the end users, then there's a good chance that the client is far from ready to move forward with the project. That doesn't mean, of course, that you can't start right now - it just means that your amount of work has changed. You need to be the one to step in and assess their current situation and real needs. Actually, coming in at this level is better for two major reasons: 1) Your revenue will be higher because you'll be helping them formulate their needs as well as deliver the solution and 2) You'll be helping them go down the right path from the beginning and selecting the right technology to get there. Much better than stepping into and stepping on any preconceived notions that a stubborn customer might have and not want to let go of.

Assessing the client need

Clients of all shapes and sizes come to us with project needs. They have it in their minds when they bring the high-level project requirements to us that they know exactly what they want. Do you really believe that to be the case? I probably did at some point, but that has definitely changed over the years. They key is to ask the right questions up front that will help you gauge the level of solution knowledge your customer has when coming to you for a project. Some key questions to ask are:

• What event or understanding cause you to see the current need?
• Have you sat down with your end users to get their buy-in on the project needs?
• Why are you focused on this technology (if they have pre-selected a solution)?
• Do you have a cost in mind? Is there an approved budget for this effort?
• How soon do you need this implemented?
• How is this process being performed today?

Statement of work

In the statement of work, you're going to discuss or possibly even just bullet point the key areas of work that have been discussed so far. The important part is to document what you've weeded out since the customer contacted you - that's the accurate assessment of the effort. Document key milestones and deliverables. These are important because they likely become revenue generators for you.

Initial effort

Identify what you need to do initially to get the project kicked off. This will be different from what you doing on an ongoing basis on the project. It will probably involve investigation, meetings, one on ones with subject matter experts (SMEs), and development of some project documentation.

Be sure to list any assumptions you're making as this will help the client understand the proposal better and make them ask fewer questions about your cost proposal.

Maintenance or ongoing performance

Here's the heart of the project - this is what you're going to be doing once you get fully up and running. This is where you tell the client how you're going to do what the statement of work is calling for. Again, list any assumptions you might be making. This again will serve to back up your cost proposal.

Now, we'll look at the act of actually negotiating the deal. Why? Because your client usually isn't going to walk right in and accept whatever you want to throw at them. Some might ... who knows? It's happened to me. And I've even had some come in and offer a straight hourly consulting rate higher than what I would have initially asked for myself. Those are nice surprises to stumble into. But usually they'll want a break, just like when you walk into a used record store or a pawnshop or garage sale. You're looking for a deal and so is your client. So usually, no matter what you offer, they're going to ask for more - or a lower rate. Period. So go in offering a lot but for an above average price tag. Don't give the best deal initially. Be prepared to negotiate.

The negotiation

Negotiating skills are not some you're just born with. If you're not talented at what you do, then your estimating and negotiating skills are going to be lacking as well because you don't have the experience to base anything on. And you certainly don't know what you can give away and what you can charge more for. You must be an expert - or at least well versed - in what you're proposing and negotiating if you hope to come out ahead and see any reasonable profit from your efforts.

One rule thumb many professionals and consultants adhere to is the 10% rule. Work up a proposal that you feel comfortable with - one that offers a reasonable return on your efforts but still gives the customer a good price for the expertise they are acquiring. And then increase it by 10%. What you've done at that point is built in an easy negotiating 'give away.' If the customer accepts your proposal without a fight, then you're going to make 10% more than you had hoped. If they balk, you can easily give away 10% (don't make it look too easy) and still walk away with the price you wanted.

What if they want more?

Get it in writing

You have a formal proposal for one reason - to document what's going to be done on the project. Right? Of course if there is any negotiating that occurs and some give and take, your initial proposal is no longer valid. Take everything that has been discussed since that initial proposal presentation and wrap into what you consider to be a best and final version of the proposal - including any price adjustments you may have made.

Once it's in your customer's hands, give them 3-5 days to review and approve your proposal. They key for you is to get a final, official signoff on the proposal as that not only sets the price in stone, but it also sets the requirements, assumptions, deliverables, milestones, high-level responsibilities, and payment schedule in stone as well. You want that - you definitely need that. I'm not saying there will be future disagreements and for most engagements there won't be. But in those very few cases where conflict happens and payments are withheld, you now have something to go back to - something that is signed and official.

Kickoff the project

Depending on the size of the engagement, the kickoff may be large or it may be small. But it needs to happen. This is where you sit down with the client and run through the key parts of the proposal - which have now really become an agreed upon statement of work. You gather your team - if it's more than just you - and you invite every key member of the customer's team meet for at least a high-level project kickoff meeting.

Proposed schedule

Establish your project scheduling tool of choice and then figure out how you're going to collaborate with your client. If you're using MS Project and they aren't, you can use a very effective, yet low cost solution like Seavus Project Viewer to provide project schedule status and viewing as well as collaboration. During this meeting, run through the proposed schedule and make any necessary adjustments.

Meetings and communications

During the kickoff session, establish the schedule and processes for conducting regular status meetings, delivering status reports, and how ongoing project communication is going to happen. The overall responsibility for most of the project communication should fall to the project manager, without question.

Deliverable approval criteria

This is key because it's caused more than one project to run way over budget or disappear altogether. You must establish, to the best of your ability, how any deliverables are going to get approved and what the review and approval process will look like. Establishing this early on can save you much frustration when a customer seems unwilling to signoff on a deliverable which has been handed over as expected.