Lump Sum

I generally leave some wiggle room by quoting an "estimate" of the total fees.?ÿ Sometimes things go quick and the bill isn't as much as I first imagined and sometimes you have to hit the client for a "little more than anticipated".?ÿ ?ÿ If the client wants a hard and fast number to stick with, make sure your "wiggle room" is adequate.

Dougie,

It really depends on the client.?ÿ I try to be very specific with my proposal scopes.?ÿ That way I can justify more money if the scope creep gets out of hand.?ÿ Even with that, I rarely ask for more money on a T&M.?ÿ The real problem I have is my clients demanding T&M not to exceed.?ÿ That is a suckers bet, all the risk with no possible reward.?ÿ To top that off, they all seem to thing that pay when paid is a fair deal.?ÿ Note that most of my work is for design firms.

P.s.?ÿ I'm going to have a wet day.?ÿ Apparently the rainy season decided to get rain in NW Oregon and we are looking at 4" to 6" by Saturday.?ÿ

I had to go back once about 20 years ago, when my $25k boundary proposal ballooned to $40k after I got into the nuts and bolts of the survey.?ÿ I offered to bill the overage at half-rate, which the owner agreed to.?ÿ It was an expensive lesson.

@john-putnam

Yes, the local weather guys are calling it a "River of Rain"

Aimed right at Dougie!

A good way to soften the potential blow of an increase is to bring it up ahead of time. I've told clients that barring any major problems, this price will hold. If, however, I need to prepare a subdivision plan to clear up the encroachments the cost will be this much.

Sometimes, they just catch you off guard.

Posted by: @john-putnam

Dougie,

It really depends on the client.?ÿ I try to be very specific with my proposal scopes.?ÿ That way I can justify more money if the scope creep gets out of hand.?ÿ Even with that, I rarely ask for more money on a T&M.?ÿ The real problem I have is my clients demanding T&M not to exceed.?ÿ That is a suckers bet, all the risk with no possible reward.?ÿ To top that off, they all seem to thing that pay when paid is a fair deal.?ÿ Note that most of my work is for design firms.

P.s.?ÿ I'm going to have a wet day.?ÿ Apparently the rainy season decided to get rain in NW Oregon and we are looking at 4" to 6" by Saturday.?ÿ

How is it a sucker's bet??ÿ Don't you simply quit working on the project when the limit is reached?

For lot surveys, they are T&M, or at least that is our attempted policy. Too many variables on a small budget.?ÿ

In practice, however, we need to provide an estimated budget. On a small project any issue can double the field time, so that needs to be communicated to the client ASAP...as in, "Do you want to proceed?"

It is easier said than done.

Strange you should ask because I just did one of those lump sum topos where I thought would be locating the fence, rear building line, property line, and a couple of elevations here and there.?ÿ Here is what I sent the client: Done. When I got to the site and saw the complex drainage I realized you would want a lot more than I had envisioned, but I think you have everything you need. Let me know if you have any questions.

In other words, I agreed to do a topo for design purposes, and both the boundary and the topo turned it into a complex survey. That was now my problem to solve, and I did. I dug deeper for the monuments, and took the horizontal and vertical shots the client would need.?ÿ

My take, from the late Gex Williams: Negotiate the best price for the company, then do the best job for the client regardless of the price.

Almost everything I do is fixed fee based on a specific scope and criteria. Usually if a "client" is shopping around, I am not her guy. I have found that once I've done something for a client, they don't ask about price, only time frame and what the complications I see are. No one likes complications and delays.?ÿ?ÿ

Do my best to avoid lump sum.?ÿ It only happens when that is the only way the potential client will do things and I always tell them up front that my lump sum will almost definitely cost them more than time and materials because I will assume a worst case scenario.?ÿ But, if that is the only way they can move forward, they have a number to plug in to their planning.?ÿ Surprisingly, I have ended up with the job more times than not.?ÿ Almost never has the lump sum been inadequate.

Absolutely will not do a typical residential job on a lump sum basis.?ÿ That's because there really is no such thing as a "typical" residential job.

I prefer lump sum provided scope doesnt change. If your regular price doesnt cover things going sideways you're too cheap.

Make money and dont apologize for it.

@thebionicman

Sounds good.  But, never landing a job makes it tough to buy food.  I have no intention of being "the low bidder".

Dan Beardslee was a proponent of fixed fee. But it only works if the scope is also fixed and the fee isn't rock bottom to begin with.?ÿ It does simplify the billing.?ÿ

One fellow I worked for would give a fixed fee price with the proviso that all controlling monuments of record were in place and in substantial agreement with the record. Any work to restore missing monuments was an extra at a per monument rate.?ÿ ?ÿ?ÿ

Posted by: @holy-cow

@thebionicman

..I have no intention of being "the low bidder".

"I never lost even a penny on a job I didn't get." - Wise old surveyor

I will give clients a number to place in their budget.

When that doesn't fit their numbers, they are wanting the surveyor to finance their project in some way.

?ÿ

I'm a big fan of lump sum. I opened my own company three and a half years ago and, with few exceptions, every job I've done has been lump sum.?ÿ

?ÿ

I've been surveying, professionally for almost 25 years now. I can look on Google Earth and study the deeds and see what effort a job will take with pretty good accuracy. There are surprises from time to time. But the good continues to outweigh the bad by a wide margin. If the scope begins to creep, I call the client with a revised fee. If the job is just harder than I anticipated I eat it. If it's easier then I make a bigger profit.?ÿ

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I'm not perfect but my business goal is to provide my potential clients with a proposal for turnaround time and cost and then deliver accordingly if I get the job.?ÿ

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I have a good friend in business, who provides an estimated range instead of a fixed lump sum. There have been times we've compared notes on proposals after a client has selected one or the other of us. I'll have a proposed fixed fee of $2000 for example, he'll provide a range of $1800-2200 and get the job. People hear that lower number and figure maybe it'll work to the lower side of the estimate, which my friend really does try to do. Some surveyors give a?ÿ range and think about the high side while the client is thinking about the low side. This is why I like a fixed fee structure.

?ÿ

Also I don't have to worry about the client seeing me resting under a shade tree in the summer time, or taking a phone call while I'm in the field wondering about my hourly billing.?ÿ

@bstrand

No you just don't stop.  The proposal and subsequent contract state that I will perform a certain task.  If that task is not performed, then the contract is not fulfilled & I do not get paid (okay, I know this is a little over simplified).  As an example, lets say I'm tasked with a design survey / ALTA on a small rail yard.  I base my proposal on an assumed level of rail traffic delays and a yet received title report.  Now lets say that the rail traffic is well beyond what was anticipated and that the title report has some issues.  The result is it takes quite a bit more time to provided the scoped task.  If the contract was truly T&M I would notify the client of the possible fee increase as the problems arise.  If it is T&M not to exceed the client basically see it as lump sum and I'm going to have to fight for any increase.  In most cases I just end up eating the overage.  But on the other hand the project goes way smoother than anticipated, the client gets billed just for the time I spent on the project.  My lump sum fee usually has a little padding added to account unforeseen problems.  That little padding seems to balance out with the underestimating over the course of a year.  With T&M not to exceed I do not get the smoothing effect and the client will get project for the lowest possible cost with no possible downside.

No doubt there are benefits and problems to both approaches.?ÿ What works best for one may not work best for someone else in a different set of circumstances.

A significant portion of my projects are of the one and done variety.?ÿ The initial contact is almost always a phone call from the person who will be in charge of getting payment made for services rendered.?ÿ Normally this means there will be significant discussion as to the scope of work.?ÿ I point out what makes a job simpler and what makes it more difficult, usually focusing on the unknowns that will complicate the effort.?ÿ Frequently I will cite examples of similar projects in that area that have resulted in invoices between $X and $Y.?ÿ That is the range they should expect to spend if we move forward.?ÿ It is rare for the $Y number to be inadequate.?ÿ It did happen, though, about three years ago and the client was extremely unhappy even though I had warned him part way through the job why this would happen if we continued.

I have a buddy in the muffler business.?ÿ You drive up or call up and say your specific vehicle apparently needs a new muffler.?ÿ He says that will be $xxx.?ÿ He does hundreds of the exact same vehicles every year in his shop.?ÿ Folks, we are not in the muffler business.?ÿ Each job presents its own unique issues.?ÿ Any one of those can ruin your day.?ÿ An impenetrable perimeter fence with Maneater the Wonder Dog guarding things while the client failed to mention said fence and said lover of human flesh comes to mind.?ÿ So, in addition to the round trip time to the site you get to cool your heels for an hour or two in Hickville while waiting for the savior to arrive and remove said flesheater from your presence.?ÿ My buddy in the muffler business does not have that problem.?ÿ He also does not deal with rainy/muddy/icy/foggy working conditions when the client suddenly demands the project must be completed by day after tomorrow or the world comes to an end (But, don't charge me for the extra effort required).

Normally when a job is bid it's bid as an estimate or a lump sum, you can make more money if you do it faster than you bid it for, or lose money if it drags on. I prefer to have a client call and say I need X done and I go out and do X and send an invoice for my job. That is almost all of my work.