Home' micenet eMag : micent April 2016 Contents LEGAL ISSUES | MATT CROUCH
t is a fact of life in the meetings and travel
sectors that very often what the client
wants is not articulated clearly or
thoroughly at the outset.
I have written many times before: You
need to get your contracts right. Not only do
you need to ensure that the contract says
everything it needs to say, but it is also
essential that it needs to be complete from
That means before you start work or
supplying anything! It is a timing issue...
The commencement of work is usually an
indicator that the contract has commenced.
If you start work before that contract is
complete (and agreed with your client), you
risk all kinds of disputes, including that you
will not be paid for the work you are doing if it
does not match what was already discussed
at the start-date.
Getting the contract complete means,
among other things, at least getting the price
agreed and the scope and timing of the work
you will be doing. There are many other
matters that should be considered of course,
like liability, intellectual property ownership,
termination and cancellation – but these are
for another discussion. Inherent in all of this is
the fact that suppliers (particularly service
providers) often give a quote or estimate of
cost in advance of the job.
Clients like to have certainty about the
costs they will incur – for suppliers this can
be a challenge, as we’ll see... A quote is an
This time Matt Crouch delves into the vexed task of price quotes and
estimates, variations and the link to the scope of work you are promising to do.
ALL TOO HARD?
advance statement of the price that the job will cost the client. If you provide a quote, then the
client can expect you to honour it. This gives the client the certainty it may be seeking = happy
client! But if you quote $110 (incl GST) and seek to invoice $200, the client will be
understandably unhappy and may refuse to pay. But what if the work that you are actually
required to do turns out to be more (or less) than quoted? This brings us back to the necessity
to properly describe the work that we are promising to do in the specification or scope of work.
When you are describing your services, you need to ensure that the words you use are
accurate. The golden rule for service providers is “Promise work, not outcomes!” If this sounds
like a lawyer’s weasel-worded approach to this issue, think for a moment on what you can
guarantee in this life. Very little! There are almost always factors that were unknown at the
beginning and that are genuinely beyond your control.
And clients have an uncanny knack of not telling you everything at the beginning and asking
for that bit extra that you weren’t really intending to include in your pricing. Sound familiar?
Quoting suggests finality. If you are happy to create that expectation, you may need to qualify
your quote, eg: ”We will charge you $X but if (describe scenario) happens then we will charge
you $X plus $Y.” As an alternative, consider styling your early pricing communications as an
estimate. We lawyers do this a lot – there are often way too many variables to give quotes. Also,
if a service provider is asked to give a fixed quote, they will often build some “fat” into the quote,
to cover the extras that often come up.
An estimate of price/cost is obviously a more flexible animal. You could say, for example: “We
will charge you at the hourly rate of $220 (incl GST) for our work. We estimate a total of
$6600.00 (ie, 30 hours) to do the work set out in the scope of works, but there are several
factors that could require us to do more work than estimated [then list them!].”
For clients that require more certainty than this, you could provide a cap: “We will not charge
you more than $Y for this work.” Again, however, note the necessity of ensuring that your
specification is accurate, because your fees are capped. It is also a good idea to set out what
your scope of work does not cover: “Please note that this work does not include...” It is also a
good idea to expand on what you mean when you give an estimated price. You might say: “This
is an estimate only and we may need to revise our estimate if [this or that] occurs.”
And then there are variations. Assuming that you have properly quoted/estimated the price
and accurately articulated the specifications of the work, variations are much easier to manage.
In those circumstances it will be much easier to say “What you are asking us to do now is
outside the scope of our work/price and we will have to charge extra” – and then agree on what
that extra work entails and what its price will be. And always get such variations in writing. m
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