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Summary of Consulting Potpourri Meeting
Held 20 January 2001

Introduction

The regular January, 2001, meeting of the NorthWest Network was held on the topic of consulting. It consisted of discussions of a number of small topics of interest to consultants. Prior to the meeting, a survey of possible topics was distributed to members to set the priorities for the meetingís planning. The following chart shows the results of this survey.

At the meeting, another vote was taken to determine the priorities for the meetingís discussions. The topics selected and discussed at the meeting are given in the following list. Click on a topic to jump to it.
Contracts vs. Proposals and Letters of Agreement
Work for Hire vs. Retaining Copyright
Changing a Projectís Scope
Roles & Responsibilities of Project Participants
Fixed Price vs. Hourly Rate
Use of Brokers


Contracts vs. Proposals and Letters of Agreement

At the meeting held 20 January 2001, the following points were made during the discussion.

The difference between a contract and a letter of agreement is that a contract holds both parties to specified performance requirements, whereas a letter of agreement does not. It doesnít matter what the title of the document is; it only matters whether there were requirements specified. Donít think one is the other.

Contracts and proposals / letters of agreement have different advantages and disadvantages as shown in the following table.

Contracts ...

Proposals / Letters of Agreement ...

Watch out for giving away more than you expect

Quicker

Must have your lawyer review

Gives the consultant more control because you are not held to specific performance requirements

If changes are made, clientís lawyer must review

Also gives the client more ďwiggle roomĒ

Takes longer to set up because of legal reviews

Continuous communication is important to avoid misunderstandings

Holds consultant to specific performance requirements

Can use a master contract with a new attachment for each project. This is faster than a new contract each time.

Continuous communication is important to avoid misunderstandings; many contract disputes would have been avoided if better communication were used

A statement of work should be prepared for both a contract and for proposals / letters of agreement. This document specifies the deliverables and the actions to be performed. It also sometimes lists client requirements.

According to Kevin Callahan, for a good book on this topic see Consultant & Independent Contractor Agreements, Stephen Fishman, NOLO Press. It includes a CD ROM with 16 contracts. Kevin found it at Barnes and Noble.

To see other topics from the 20 January 2001 meeting, click here.

Work for Hire vs. Retaining Copyright

At the meeting held 20 January 2001, the following points were made during the discussion.

The author retains the copyright unless it is specifically transferred to the client.

An important provision of a contract is the ownership of copyright. This can also be covered in a (non-binding) proposal or a (non-binding) letter of agreement.

Should you file your copyright with the Copyright office? You donít have to do this to retain your copyright. However if you do file, the transgressor will have to pay the legal fees when they lose.

Intellectual property is expensive and time consuming to protect. It is usually easier to license the copyright as part of what you are doing for your fees. (See next item.)

Similarly, teach them to use your copyrighted process. They will not be as good as you are with all your experience; perhaps they wonít be able to do it at all and will call you in again to do it correctly. Meanwhile, you avoided a sore point and charged additional fees for their training.

Donít threaten to sue; START to sue. Send the lawsuit initiation form letter to the transgressor and tell them that you will file it on a specified date if they donít correct their behavior. (This is basically what your lawyer would do.)

To see other topics from the 20 January 2001 meeting, click here.


Changing a Projectís Scope

At the meeting held 20 January 2001, the following points were made during the discussion. (This topic will be covered in more depth at the May meeting on project management.)

Changing the scope is mostly a problem when there has been a fixed price agreement. If the project is hourly, the extra work is simply billed.

However, on an hourly project where the change of scope will cause you to go beyond your estimate, be sure to explain this (a) as soon as the change of scope is requested and accepted, (b) in regular reports of project status involving time and budget, and (c) in the final report at the end of the project.

When the projectís scope changes, issue an addendum to the contract or letter of agreement explaining the change and its effects on time, cost, and deliverables.

Sometimes a good client wants a change of scope in a fixed price project but doesnít want to pay extra for it. When this happens you will have to balance the good will obtained or retained versus the additional fees. Often, the negative effects of obtaining more fees are greater than the fees are worth.

Always match a scope change with a dollar change and a schedule change, even if it is small. You donít want people to think that scope can be changed with no consequences.

If during work on the project you uncover additional information that changes the project scope, formally redefine the project (time, cost, and deliverables). Then get this redefinition confirmed and approved.

Learn all the important stakeholders of the project. They may be making decisions outside the immediate group (e.g., influencing the decisions of the clientís project overseer). If you find this, get them directly involved so you can get their input and deal with it. If you donít get them involved, at least get their input on large changes in scope.

Come to the May meeting for more in-depth information on project management.

To see other topics from the 20 January 2001 meeting, click here.


Roles & Responsibilities of Project Participants

At the meeting held 20 January 2001, the following points were made during the discussion.

Consultant is Responsible for ...

Client is Responsible for ...

Being respectful of SME time; being ready to work with SME when SME is available

Psychological commitment and involvement (consultant should do things to help this along, such as regular review and approvals)

Notifying client of effects for which you are responsible

Providing SMEs and their time and commitment to do their assigned work

Notifying client of real causes of their problem and other factors that affect it (donít just develop training when that wonít solve the problem)

Providing the supporting structure (organizational development) needed to implement the entire change

Recommending an effectiveness evaluation, especially a long-term, on-the-job evaluation

Access to information such as records, reports, software, network, etc.

Planning the project for a reasonable amount of time

Providing logo and its rules for use

Competent project management

Providing any required format and styles (including a template if they use one)

Managing all the stakeholders

Providing any legal requirements

Quality of work, including grammar, punctuation, spelling, etc.

Conducting reviews in a reasonable time

Making enough copies for reviews

Consolidating multiple reviews into one official review for the consultant to use, including deciding which of several disagreeing reviewers to follow

Intermediate and final signoffs (and sticking to them)

Making copies for pilot

To see other topics from the 20 January 2001 meeting, click here.


Fixed Price vs. Hourly Rate

At the meeting held 20 January 2001, the following points were made during the discussion.

Clients tend to prefer fixed-price agreements. This way they know what they are spending. Knowing this makes it easier to get funding approval.

You can only do a fixed-price agreement if there is sufficient knowledge of the project scope to make a solid estimate of the work.

A way to get around a lack of sufficient information for estimating the project is to break the project into phases and contract for the phases separately. In this way, you can have (1) a small hourly project that determines the project information (a feasibility study), (2) a separate (possibly hourly) project that creates the design, and (3) a larger fixed-price project for the development and testing.

One place where fixed-price agreements are impractical is for new applications because no one knows what will be encountered (too many unknowns).

An agreement that is midway between fixed-price and hourly is the not-to-exceed-$xxx type of agreement.

When a not-to-exceed agreement is done, however, there must be a provision specifying when and how the project may exceed the limit. Good client relations includes notification and approval steps in advance of exceeding the limit.

In a fixed-price agreement, only be responsible for what you can control. For example, if you are the project manager, donít assume responsibility for the performance of the project workers.

Several people stated that they estimated a fixed-price agreement as follows: (1) make your best estimate of the time and fees, (2) add 25% to cover typical contingencies that you couldnít anticipate.

To see other topics from the 20 January 2001 meeting, click here.


Use of Brokers

At the meeting held 20 January 2001, a short discussion was held at the end about using brokers. Please contact someone who was at the meeting for information about this.