I once worked for a prime contractor (who was much younger and less
experienced than I). Time after time, I had advised "never agree to fixed
price". But, on a very major project (about $100,000 total) for a huge
enterprise, the IT department put enough pressure on him that he agreed to
fixed price. We did all the work, he paid us subs, and would have had a tiny
profit; but the client kept coming back for reams and reams more
documentation, and he eventually ended up personally doing about $25,000
worth of work for free.
His reasoning had been that if he did not agree to fixed price, he would not
get that work and would never get any more, either. But, it turned out
that, due to a corporate merger/acquisition, he never got any more work,
anyway. Did the IT department have a clue that the application was going to
be trashed within a few months after that? I don't know, but I do know that
was the first step in driving him out of business. He went to work for
someone else for a while to recover financially, though, and now is back in
business for himself, wiser, I hope, about the type of contract he accepts.
Or maybe his wisdom is "don't do development work" -- he's doing network and
infrastructure support now. <GRIN>
I still give the same advice (in full agreement with Arvin): never agree to
a fixed-price contract, unless it is self-timing "the following four-hour
class"; never, under any circumstances, agree to a "best estimate with fixed
upper limit" contract.
Larry
Arvin Meyer MVP said:
In the consulting profession it's called "scope creep". Generally those
that do this are very poor clients and will argue at billing time that
they didn't get what they expected. You may not get paid at all. It
happens.
My advice. Assuming you have finished that part, submit a bill for what
was agreed to in the first contract. When and if you get paid, tell them
that because of the scope creep, you are unable to continue working on a
fixed price basis and will need to do further work on an hourly basis.
Give them a fair price for your hourly time.
If they pay for what you've done and refuse to deal on an hourly basis,
walk away. If they don't pay, and it's a considerable sum, consult an
attorney, or for lesser amounts small claim court might be the solution.
Or it just might be that you've learned an expensive lesson, and you'll
need to cut your losses.
In any case, you cannot continue to be taken advantage of.
--
Arvin Meyer, MCP, MVP
http://www.datastrat.com
http://www.mvps.org/access
http://www.accessmvp.com
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