How not to get stung in business!
Nobody likes being stung whether it is by a bee or a wasp or in this case in business. Recently a client of mine was stung in business (not by me I might add!).
She ordered a piece of work to be done and was expecting an invoice. But what she hadn’t planned for was the surprise she got at the final cost. It was way over what she was expecting to pay.
The cost of the work was significantly higher that expected and my client wasn’t a happy bunny to put it mildly. It left a bad taste in her mouth.
Karen’s top tip:
You should never receive an invoice and be surprised by the final cost or the time the work has taken or by the final result.
How to avoid unwanted surprises in business
In Project Management, projects are driven by three constraints - scope, time & cost and these will directly effect any changes we are making in our own businesses.
When you are trying to grow your business, if you have a good understanding of these constraints you will be able to get things done quicker and cheaper and more importantly you will never get an unwanted surprise.
What do the 3 constraints mean?
Scope – this is the work you have agreed to have undertaken and should be an exact specification of what you want doing and (just as important) what you don’t want doing!
Time – how long it is going to take for the agreed work to be completed? Does the work have to be done by a specific date (e.g. opening a new shop) or is it more flexible.
Cost – how much it is going to cost for the agreed work or how much have you budgeted for the work.
All 3 constraints should be fully agreed between you and the supplier, or if it is your business, between you and your client before any work is started.
The reason the 3 constraints are shown on a triangle is that 1 cannot change without affecting the others. Project Management is all about balancing these 3 constraints and it is true for small businesses.
If once the work has started, there is a change in 1 of the constraints it will cause changes in the other 2 and you can bet your bottom dollar that this will happen - because that is life!
Coping with changes
For example: you have agreed with a web designer that they will create a 5 page website for your business and that it will be up and running within 21 days at a cost of £600
What happens when…
1. COSTS decrease
i.e. you don’t want to pay as much!
Maybe you thought you had £600 but now you’ve realised you only have £500
Then the SCOPE will have to be reduced (the Web Designer can only create 4 pages for the new price) or the TIME will increase (it will take the Web Designer a week longer) or both!
2. SCOPE increases
i.e. what you’ve agree to happen changes for some reason
You decide you want a shopping function adding or that you need some training to update the website yourself
This will, either COST you more or take more TIME or both!
3. TIME decreases
i.e. you need the work completing quicker
You now need the website finished in 2 weeks
This will have a knock on effect of either increasing COST (the Web Designer may need to change priority on work or contract somebody else to do the job) or a decrease in SCOPE (less gets done) or both! e.g. You might get 4 web pages in 14 days!
If you make any changes to the original SCOPE, TIME and/or COST, then make sure they are agreed by both parties and in writing. You’d be surprised how many people don’t do this!! And suffer the consequences.
Hopefully you can now see how TIME, COST and SCOPE are interrelated and how if one changes, it effects the other two?
There is also another constraint in Project Management called ‘Quality’. It’s no good doing the work to agreed TIME, COST and SCOPE, if the quality isn’t good enough. But that’s a whole topic for another day.
Back to my client....
Are you wondering how she coped with her surprise increase in cost on the invoice?
Well she did the right thing; she contacted the supplier and expressed her shock and surprise that this cost was not agreed.
They had a discussion and as the supplier is an honest and genuine person, they came to an agreement on the cost that they are both happy with.
WIN – WIN!!!
It could have turned out very differently for my client.
The moral of this story for both business owner and supplier is make sure that TIME, COST and SCOPE are fully agreed and understood up front.
All business transactions should be a WIN – WIN for both parties involved. If not, I would bet that it is one of the Project Management 3 constraints that have caused the problem.
