by Bruce Morris

Internet projects are supposed to be fun.

Why do some projects sing along and others flop? This is cool work. This is New Media. Everybody has brightly-coloured hair and obscure body parts pierced with strange objects for uncertain reasons. Artists and anoraks, ponytails, suits and propheads all work together to build whizzy streaming media things that are changing the world forever. Can't we all work together on this? Can we trust the suits not to screw everything up? It is possible to outsource some massive Web development projects and reach a comfortable monetary conclusion for both sides with very little violence occurring.
March 18, 1999

Imagine this bizarre but more and more common scenario: You arrive at work one morning to discover a tidy sum has been allocated for an Internet/intranet/extranet project and you get to run it. Happy day. Let’s go to the pub! You’re confident you can handle it having just worked on the Internet Project from Hell working with the New Media Agency from Hell. (Hey, admit it - you were probably the Client from Hell). The Project Manager on that one was waaay too loose but this time you get to run things. You’re not going to make any of those mistakes again. This time you’re going to do it right. This time you’re going to get everything in writing up front with solid, no wiggle-room contracts. And you’re not going to use the New Media Agency from Hell again. Good thinking. This sounds like a good start.

Most people involved in Internet development have received almost exclusively on-the-job training. And you’re a recent graduate of that school - and the Agency people probably are too.

Contracting out a Web project is really not much different from contracting for the construction of a house, section of motorway or a ship. It’s a project to be planned, specified, started, finished, paid for and a product to be used. One side (the Client) wants a widget built with certain features and is willing to pay someone expert in their field, to build it. The other side (the Agency) is willing to build it for a profit. (Notice how quickly and naturally I slipped into using the word ‘sides’ as if the relationship is a competition or battle).

For things to work out well, the client needs to feel the agency can do the work and can be trusted to do it as specified, on time and within budget. The agency needs to know the client won’t be a big pain in the ass constantly delaying for approvals and scheming for you to do extra, uncompensated work. It is nice to know the client can pay and is organized enough to deliver the materials or specifications needed to build the widget. In other words, it helps if both sides trust each other.

As most of us learned in some forgotten bitter way shortly after we started to walk, trust is something to be bestowed very sparingly if at all. It therefore follows that most Client/Agency relationships are going to be a bit lean on trust. Let’s face it: most people want to get more than they give. Especially in the business world. Enlightened business practices allow you to take advantage of and channel normal human greed and set up business relationships where benefits flow to each party based on how well they work together. Basically: ‘if we can work well together on this one and both of us get good value, there will be more work for us all.’

Global trade has only evolved because clever men have devised ways to build long-distance business relationships that rely on procedures and law rather than on trust built on face-to-face relationships. The courts can, theoretically, equitably settle even the thorniest business disputes. But you and I don’t want to go to court to settle our business disputes. You and I don’t want t have business disputes at all. We want to set things up from the beginning so we can all work together without receiving more than the occasional light sucker punch.

How Do I Get the Project to Run Smoothly?

I hate to boil things down to a simple, over-used cliché but here goes: it all comes down to good communication. Let’s get real simple and divide this communication stuff into two lots. Communication up front about exactly what both client and agency are expected to get and give. And communication about progress during the development process.

Up Front Communication

At the very simplest this means you need to nail down all the details in the contract before you begin work. Realize the project will change before it’s complete and build in a method to compensate everyone for any extra work as it inevitably arises.

Progress Reporting

On the agency side, if you ever have a feeling you really don’t want to talk to your client, for whatever reason, something went wrong, spent too much, big mistake made, they been bitchy lately, whatever. That is precisely the time you need to call them immediately. This works both ways. If the client is going to be late with some vital piece of text needed for the project to move forward smoothly it’s probably going to be better to let everyone know about it quickly rather than save the guilty knowledge for some more ‘convenient time’ to drop the bomb.

If you’re worried about keeping to budget (can I see a show of hands here? Everyone put their hand up I see) frequent project reports with amounts spent to date and projected costs needed for completion are vital.

Money Arguments

Through no fault of my own, at one point in my life I found myself in the custom homebuilding business. While strolling through a nearly completed house one day with a client couple, the wife said something along the lines of "I wonder what this room would look like with crown molding?" A couple of weeks later during the final walk-through of the completed home with the client, the wife was steaming mad. There was no crown molding in the room and in her mind she had clearly requested it. I had already learned after building many homes that if I wanted to get paid for putting extra molding up, I needed to have the request for additional work in writing, signed, and the extra charge and any delay caused by the change specified. So I had not installed the extra molding (or many other feature creep items this lady had ‘requested’ but not agreed to pay for).

It’s no different for Internet development projects. The single biggest thing you can do to make projects go more smoothly, and I’m talking to both client and agency, is simply keep careful track of changes and costs. When I say ‘simply keep careful track of’ I mean jointly keep track of. Quietly keeping a careful list of all time spent on changes and associated costs and presenting the bill at the end of a 6-month project will probably not have the results you will be hoping for. Although it may seem extreme, the best way to be sure everyone is aware of this cost tracking is to have both client and agency sign change orders and exchange associated purchase orders. This is simply normal business practice out in the real world. Perhaps we can adopt this practice in the Internet business world to our advantage.

In my experience the biggest single cause of strain in the client/agency relationship is confusion about what is included in the price and what is not. The client thought the whizzy ShockWave animation (read ‘crown molding’) they talked about in those early meetings was clearly understood to be part of the project. The agency Account Manager, Project Manager or whatever he was called who was at that meeting is ‘no longer with the company’ and no one remembers the animation when it comes time to settle up.

It is difficult to write detailed specification documents for Web projects. There is tremendous difficulty specifying precisely what is expected in a fast-paced industry typified by half-finished, shoddy, commercial software which is custom-built in many cases.

So what I’m really building up to with all these client-side, agency-side horror stories is you (or someone) needs to do some tedious preparation and paperwork. You need to write a Request for Proposal (RFP) and, at some point, a proper project specification. But don’t sull up on us – this (as they like to say) rocket science – this is still the Web after all. It’s not going to be that bad.

Writing the RFP

I could get out of this one easily by simply referring you to the article I wrote in the July 1998 issue of Internet.Works "What You’re Proposing". The article covers writing Requests for Proposal for Web development projects in more detail than almost anyone would can stomach in one sitting. But I’ll leak a little bit of the secrets out here.

The reason to carefully prepare a RFP is to make sure the proposals you get back cover everything you want to get done. In one way or another you need to list, in as much detail as possible, every feature of your project that you expect an agency to deliver so they can estimate how much work it will take for them to deliver the project.

RFPs should be as specific as possible. List in as much detail as you can each feature you want, when you want it and who will supply each piece needed. Ask for some of the features to be priced separately so you can have some flexibility in comparing pricing from different agencies. If you don’t know exactly what you want, and there’s know shame in this, you might give some thought to hiring someone to help you develop the ideas for your project more completely and write the subsequent RFP for you.

There are a couple of very common problems in the client/agency relationship that few bother to plan for. Who’s paying for the time need to look for and fix typographical errors? Who got paid to spell it wrong the first time? Who’s going to pay for all the time needed to work around all the bugs in the half-finished software imposed on us? Probably not the people who wrote the buggy software in the first place. So be sure you specify who will.

How Should the Contract Work? Or:

The Agency/Client relationship can easily be an adversarial one. The Client wants as much as they can get for as little money as possible. The Agency wants to deliver as little as possible for the most money possible. With a beginning like this it’s amazing we can get anything done at all.

There are two contractual models in common use for Web development projects:

Fixed price – specify the hell out of things and carefully track changes to the original specification and associated costs. In this scenario the client needs to carefully watch the changes and not go over budget. The agency needs to be sure the client is aware of the cost and schedule implications of each change.

This method works well if both agency and client are careful to keep track of project changes. The nature of the Internet development business currently almost precludes this working well. Web developers don’t want to have to keep track of things that carefully. Software proposed turns out to be buggy or unusable. The market changes during project development and the features need to change. For whatever reason, work will need to be done over again. The vendors point fingers at each other. Budgets are busted, timelines are trashed. Reputations are ruined. Well maybe not quite that bad but you know what I mean. Typical young Web designers are not going to keep careful track of all the time spent tweaking a GIF to look the way you want it to.

As the scenario continues, here’s the biggy: the account managers have not been careful about documenting the extra time spent on client-requested changes and cool new features not covered in the original proposal. They thought they would just go ahead and do them to keep things sweet. But now things have gotten out of hand with the client starting to expect all sorts of little extras to be thrown in. It’s time to give them a bill for all the extras that have been piling up over the last month or two. But nobody wants to tell client how much it is.

So what do you do? The client will flip out when they see the bill. Here’s the deal. It’s too late. You’re probably going to have to eat it. Educate clients early in the project by introducing them to a written change request procedure very early in the relationship. Most people realise you have to pay extra if you want something extra. After the contract is signed, when the project first gets going, when the first change is suggested, the account manager needs to gently mention that a written quote of the cost of the new feature will be calculated and presented the next day. After a quick signature the work can start on it. It’s important that this be done with something that is very clearly out of scope so there will be no impression you are about to begin nickel-and-diming the client into the almshouse.

Believe me on this one. If you can introduce a clear change order process early in the relationship, life will be much easier for everyone. Everyone’s happier if they know up front what the rules are. I know account managers are timid about this sort of potentially-alienating-the-client type of thing. But clients accept the process much easier than you might think. It goes down surprisingly well if presented properly. And just think of the alternative: the current mess you have now.

If the agency doesn’t have the details of the project carefully delineated before the start and if they aren’t consistent with project tracking and change orders, they have to build the cost of the inevitable extras into the original quote. Attempts to justify this sort of thing are represented by thin covers of many hours billed for time spent by account managers and various, expensive Directors of one sort or another. You rarely ever see these people but they must be doing something. However it’s accounted for, agencies that don’t project up front and track costs carefully just build a ‘chaos quotient’ into their estimates to allow for the client getting a bit out of control with changes. It may well cost about the same in the end, it’s just nice to have at least a vague idea up front of what the delivered project will cost.

Cost plus – In this scenario the agency goes to work at pre-agreed hourly (or whatever) rates and bills you for the amount of work they do. If you ask for all sorts of extra stuff, they do the work and bill you accordingly. If you blow your budget, that’s your fault. The client needs to be sure they are aware of how much they are spending as the project moves along and how much is needed to complete the project. The agency just gets to work. A good account manager will keep the client informed of project progress, costs, and estimates of materials, time and how much of all that is needed to complete the project.

This, in my opinion, is the best way to go about things. I’ve spent several years on both the client- and agency-side and feel the adversarial relationship is lessened with the cost plus model. If you have a reasonable working relationship between client and agency (‘trust’ may still be too strong a word here), if the agency believes there is more work to come if they do a good job, the flexibility offered by this model can outweigh the uncertainties.

To be successful, this model requires either very deep pockets on the part of the client or, more reasonably, careful project estimating and tracking on both client and agency side. In this contract model the uncertainty of profit for the agency is removed from the equation. They know they will profit for the work they bill. Alternatively, a fixed price contract means the agency may make quite good profit if they work efficiently or actually lose money on a project if they don’t. In return for assured profits for the agency, the client should insist on quite a high level of project tracking. If the client has a strict budget, it is vital to track costs on a short timetable to prevent budget overruns.

Although the client may still feel the hours worked may be overstated with this model, the biggest causes of bad feeling between client and agency are.

Good Relationship Model

In spite of all the hot air I expended earlier about not trusting anyone, by far the best business model is based on trust built up after working together a bit. The best business deals are the ones where everyone makes money. A good client (I know you’re gonna laugh but I’m serious about this) should be careful the agency makes money whenever they deal with each other. And it goes without saying a good agency will make sure the client is satisfied, no, make that ‘astounded’ with your service.

If the client knows from experience that they’re not going to get stuck with extra charges or shoddy work, the tension level is going to be low. If they know the project will be done on time barring acts of God and buggy software and the cost will be as agreed, the client should also be happy to make sure the agency is compensated completely and quickly.

If the client feels there is a bit of flexibility in things when needed, they can spend more time worrying about if the agency is making plenty of profit or not. (Even I have a hard time swallowing this one but it sounds good).

The cost plus business model seems to work well for me. The agency bills for time and materials and pre-agreed rates and the client pays a pre-agreed percentage based on those costs. If you are worried an agency may run up costs to build up their fee, you might work out a cost plus fixed fee arrangement. I’ve also had good luck paying the agency a monthly retainer to keep certain staff devoted to my projects only and being billed for time and materials with a pre-agreed level of support.

This all sounds right pompous written down here but what it really boils down to is you have to find someone you can work well with in an agency that is capable of doing the work for you. Then you have build up a method of working together over time. Something like:

"Here’s the deal: You forgive me an occasional sin and I’ll forgive you an occasional sin and we’ll all live happily ever after. Just be damned sure you get the job done on time."

"Just be damned sure we get paid promptly. Now let’s go to the pub."