How much extra money would have ended up in your pocket If you had been able to invoice 80% of the out of scope hours you did not charge for last year? ($5,000-30,000)
It staggers me how much out of scope work architects will do for free just to keep everyone else happy.
1) Maybe you fear the argument that unexpected fees might trigger - the client is already complaining about fees, so its just easier to do what needs to be done
2) Or maybe you justify by saying that your reputation is on the line, you need the project done right …so you just do the extra work without charging
Imagine being able to charge for 80% of the hours you currently give away for free now. Your billable hours go up and so does your income.
- Discover how eliminating ‘out of scope’ grey areas happens before the project starts
- Learn how to get specific about what is NOT included is as important and listing what IS included
- Discover how to upgrade the client into higher fee packages (without any resistance) after the project has started.
Once you use the Blue Line Strategy you’ll never go back to your old way.
CLICK HERE for Video Transcript
This happens all the time, and it’s an issue with how you're going to deal with it. You can either end up fighting over it, which is unpleasant, or you can end up doing the work for free, which is also unpleasant. Neither of those outcomes is very good. The best thing to do is try to cut it out before it ever happens. So, is there a quick fix? Yes, there is—the blue line strategy. When you’re doing your proposals or agreements, you typically list what you’re going to do for the client: blah, blah, blah, blah. You list all the things you’re going to do. That’s okay if you’re dealing with someone who really understands what each of those things means. However, most of your clients don’t. They don’t know where blah blah stops and where it finishes. It’s all a mystery. So when something comes up that is outside of blah blah, they often think it’s included or they assume it’s included. To make it simple for people, you need a blue line. You deal with this stuff every day, and you come in with all these expectations and assumptions that a client understands what they’re doing, when often they don’t. Here’s what’s really important to do when you’re writing out your proposal: list what you will do. Then, list what is not included. List what you will not be doing. These are likely to be the most common things—the things that often cause problems. You already know what they are, so you will put those in as not included. You might include things you currently do for free because you feel you have to. You might include things that are definitely not included but often come up as an expectation. Here’s the key part: there’s a client signature section. They will sign on the page that lists what you will not do, which are the things that have caused problems for you in the past. When that out-of-scope thing comes up in the future and they say, “I thought that was included,” you can pull out the sheet of paper with their signature on it and say, “No, it was clearly stated, and you signed right beside where it says what we will not do, and there’s your signature.” This will cut any issues off at the head. When they look at a piece of paper they have signed, it’s simple. Here’s another way of doing it. Give three options: a basic package, an advanced package, and a premium package. You can call them whatever you want. The line items are up to you, but notice how the basic package has some stuff, the advanced package has more, and the premium package has even more. The things that are likely to cause problems might be included in the higher value packages. If it comes up later and someone says, “I thought that was included,” you can pull out your pricing sheet that was part of the agreement and say, “No, it clearly says external renderings are part of the advanced package. You chose the basic package. Would you like to upgrade to the advanced package?” They can either upgrade or be quiet because you have an efficient, elegant way of pushing back. These things might not be the right ones for you. The question is, what goes in the higher value packages? One common issue I hear from architects is miscommunication or over-expectation by clients around interior architecture and interior design. Those are two areas you could consider. Of course, it’s up to you what you put in the advanced and premium packages. These areas take up a lot of time and effort. You might not mind doing them, but it’s a lot of work. Maybe those are options for you. Let's sum this up. Key points: People will agree to almost anything if you set clear expectations upfront. Don’t just tell them what you’re going to do. I’ve given you two examples of ways to tell them what you’re not going to do. If they just want to pay the basic price, then make it clear what they’re not getting. A high-value architect is more likely to have high standards and control the process than a low-value architect. Being upfront about how you work and what’s not included and stipulating the process is what you would expect from a high-value architect. A low-value architect plays the role of the humble servant and will do anything the client asks. We don’t want you to do that. You define yourself by what you say no to. It’s much easier to say no when you can point back to a document that allows you to say no because it’s been clearly stipulated. They can see that what they asked for is not what they’re asking for now. That’s the blue line strategy. I’m sure it will help. It will not only save you time from working for free, but it will also save you from fights. I think it will make you money because you will find a lot of people will upgrade to the higher value packages, either upfront or later when they discover they need it and hadn’t paid for it. |
$100K Success Story - The Blue Line Strategy in Practice
AMI Mastermind member Bob Murphy (Murphy Partners, Toronto Canada) shares his new approach when clients request out of scope work, based on the Blue Line Strategy. His staff immediately sends them an Additional Services Notice (ASN) explaining why their request is billable as an additional service, which gives them an easy way to sign off and authorize the work for an additional fixed or hourly charge.
In just a short time this has resulted in $100K in additional paid work, with just $2500 challenged; all other instances were quickly approved. Watch this short video as Bob explains the process, and Mastermind members ask for clarifications and make their own comments about this approach.
CLICK HERE for Video Transcript
Speaker 2: Okay, this is a story in three parts. Part 1, the nine-word email, more or less. I sent an email following up on a project we had proposed a long time ago. They kept postponing the decision, and finally, I sent another email asking whether it was dead, and they said yes, it’s dead. That was the bad news. The good news was he said he had a colleague looking for an architect on another project, and he was going to refer me. So, this was a nine-word email plus a referral, but that's not the main part of the story. The main part is, like many of you, I’ve always been a sucker for a sad story, and we always try to help, help, help. Sometimes, you know, they say no good deed goes unpunished. Well, we have often been the victims of our own generosity, giving away free services and succumbing to the nibbles. We started to look at what those nibbles were costing us. In one project alone, we had about $77,000 worth of extra renderings, extra meetings, and extra designs that weren’t called for—all to move things along. When it came time to negotiate an additional fee, we got the sad face. We got, “Oh, if only you had told us this was going to be an extra service when we were busily taking it, we probably would have told you not to bother.” So that made me feel really good. We have now implemented the ASN, the Alternative Services Notice. Immediately, when we get a request for something that sets off our spider sense, we write the ASN. We explain why it's not part of the contract, the hours it’s going to take, whether it’s a lump sum or hourly, and it’s all very business-like. We’ve written almost $100,000 worth of ASNs in the last month, and only $2,500 has been challenged. So, I’m liking the ASN as a future way of doing business. The big problem for us is working with these multi-headed clients, and the jobs take place over a really long period. Sometimes, you’re trying to help someone in a different department within the same organization. You think you can wear a lot of hats, but you can’t. The ASN keeps everything above board. Everyone gets the same treatment, and it’s now standard operating procedure for us. That’s it. Speaker 3: Hold up. Speaker 1: So I missed a bit. When does the ASN come in? When your antenna is up that they’re about to ask for or expect free work? Speaker 2: Immediately, when they make the request, we flag it as an additional service. We immediately follow up with a written proposal to do the work, explaining why it’s extra, how much it’s going to cost, how long it’s going to take, and we include a place for them to sign. Speaker 2: The sign here part is the most important part. Speaker 4: Bob, do you use DocuSign or Adobe Sign? Do you use something of that nature? Speaker 2: We don’t use DocuSign but apply an electronic signature to it. Speaker 4: So is it like a change order? Is it what we call a change order? Speaker 2: Yes, but for services. Speaker 4: For services. Yes, it’s a change order for services. So you’re charging. Speaker 2: Right. So we call it an ASN. Speaker 4: Right. Okay. That’s cool. Speaker 2: But it’s immediate. Speaker 1: It has to be, doesn’t it? It has to be immediate. Speaker 5: Has it soured anybody? Maybe they didn’t challenge it, but they didn’t like it. Do you know what I mean? Or were they okay? Speaker 2: We’ve only had one minor item that’s been challenged. I find it makes a huge difference because everyone is happy to take it. They’re actually happy to pay for it, but they’re not necessarily as happy to pay for it after they’ve already gotten the service for free. I was really disappointed that our generosity wasn’t rewarded. The same organization that was happy to take all these services then made it really hard to get approval for the extra. It was easy for them to ask for the additional service, but difficult for them to sign for it upfront. But once we implemented the ASN, they just went, “Okay, you got us here, sign, done.” Speaker 6: And ASN stands for Additional Service Notice? Speaker 2: Yes, Additional Service Notice. We’re just putting them on notice. Speaker 7: I’m going to ask Michelle’s question one more time because I think it’s an important one. I get that you should be paid for your work, 100%. I also get that clients should feel like they are special. It has to be handled with some degree of tact or something. It sounds like you’re making it super professional. My question is about client relations. Are we in any way endangering them? Speaker 2: I relate to my clients on a very personal level, with open discussion. I find that it’s almost a point-counterpoint. I can have this conversation with them and say, “Listen, that’s great, happy to do it for you. It’s an additional service because of our contract, and here it is.” It’s not as off-putting as it might sound. It has actually worked much better for us. It’s much better than groveling after the fact. Speaker 6: Absolutely. Speaker 5: If your contract is really clear about your services, and it’s definitely outside of it, I can see that not being an issue. It’s the hazy gray area where it could be, which is why it’s important to write the contract well, right? Speaker 6: To do that, you really need to have, Richard, is it the blue line method? Where you call out everything that’s included and also what’s not included. Therefore, if they ask for elements that aren’t included, the ASN comes in handy. Speaker 6: It’s prepping early and presenting early on with what you’re providing. So if they ask for extras, that really helps. It does make the proposal writing more onerous because it’s a much longer laundry list. Speaker 4: If you’ve written one or two of them, you have a system in place of that blue line. I think it’s a good thing because there are a lot of clients who do try to push it. It’s a constant thing. It’s called scope creep. In the UK, it’s scope creep, and it’s quite common for services. Speaker 4: It’s about defining your services and ensuring—like a client would say, “I’d love to see a render for this, or I’d love to see more renders.” When you do a photorealistic render, we go, “We’ve included four or five of those. But if you want another ten of them, there is a charge for that.” Speaker 2: Rendering has been a big problem for us because everyone assumes that because we’re using a computer, you just snap your fingers and there’s a new rendering, completely Photoshopped. Speaker 3: Bob, I have a question. What were you doing prior to using the ASN? Were you verbally telling them there would be an additional charge, and they said yes, and then when you invoiced them, they questioned it? Speaker 2: Even worse. We were doing the work and then trying to get paid for it after the fact. Speaker 7: I’d be upset about that too if they didn’t tell me ahead of time there would be a charge for that. Speaker 6: That takes away your leverage. You’ve already provided it to them. Speaker 2: Exactly. Speaker 6: They can say, “No, I’m not going to pay you.” What can you do then? It doesn’t really work for you. Speaker 7: The reason I asked Michelle’s question a second time is that I think we architects tend to think that if we act like businesspeople, our clients will be somehow offended. But it is a business. We have kids and mouths to feed. Speaker 2: But you’re an artist. You’re supposed to starve, right? Speaker 7: I could use a little starving. Anyway, my point is that our clients know it’s a business. So, I wanted you to say twice that they appreciated it. Speaker 7: I agree with Lisa that your previous method was the least effective because people would be upset. So now— Speaker 6: The previous method wasn’t a method. Speaker 2: Exactly. |