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Setting the Budget

Estimating the cost of web development projects can be especially challenging due to the myriad variables involved and the alarming propensity for "Scope Creep." It takes practice and experience to predict how long each phase and task will take. Underestimate and you end up not even covering your overhead. Yes, it is possible to invoice $50,000 and still lose money. Know this much to be true: Everything will take longer than you think, especially project management. Build cushions. Cover yourself.

The project's budget will define the actual scope of the project; the words "depending on budget" will dictate how much time and resources you can allocate to any individual task. Of all administrative tasks, this one naturally comes first because it defines the size, boundaries, and feasibility of a project. And keep in mind that a $25,000 budget handled wisely can yield a far more effective redesign than an $80,000 budget mishandled.

Understanding Scope Creep

Scope Creep is the slow, inevitable migration of a website redesign from a straightforward, comprehensible project to an out-of-control nightmare. Seemingly insignificant modifications and unplanned extra time spent handholding and baby sitting your client lead to budgetary increases and time delays. Little things add up.

Scope Creep is subtle; you seldom realize it is happening. At your kick-off meeting, define Scope Creep to both client and team and explain how the various schedules and delivery plans all work together to keep the project on target.

Help avoid Scope Creep by having a very clear list of deliverables. Establish and state unequivocally in the Details and Assumptions list of the proposal or the Project Plan that client-initiated changes mean budget increases. It will help to refer to these written statements if the client suffers from selective memory loss.

Keep meticulous track of hours and all client-initiated changes. As soon as you see that you are going over budget, ask yourself and your team why. Does the client send seemingly casual emails, asking for little changes and minor additions? Does the client send 10 emails a day instead of streamlining into one concise communication? Worse, is the client emailing suggestions, instructions, and/or requests to the production designer or visual designer, bypassing the project manager altogether? Are you receiving content, feedback, and sign-offs when these items are due and needed, or are you having to chase after them? All of this contributes to Scope Creep. A certain amount is expected, but it is the project manager's job to educate the client and clearly define what is within budget and what is out of scope. You can produce an amazingly successful redesign, but if you go way over budget and do not account for it, you're not going to feel great about losing money on the project, no matter how many accolades it garners.

Table .

BUDGET REALITIES

Budget Reality #1: We Charge What We Can

Budget Reality #2: It Comes Down to Hours

Budget Reality #3: Base Estimates on Facts

Most companies charge what they can. While individual projects are dependent on the team's experience, client expectations, and current market conditions, all the following should also be considered: availability and resources, overhead and outside costs, technology and backend programming, timing and expectations, and documentation.

Estimating can be based on task or by team. Whatever your methodology and regardless of budget presentation (whether fixed cost, projected range, or based entirely on time and materials used), when all formula is stripped away, it comes down to one thing: hours. As a result, tracking time is crucial for staying within budget.

When finalizing scope and budget, you already have a general idea of what has been preliminarily agreed upon with the client. To close the deal, however, the temptation is strong to shave off hours and tasks to save costs. Yet despite how much you may want to woo the client, certain tasks take a certain amount of time no matter what, and time always equals money.

Avoid Scope Creep. Make it your mantra.

Estimating: What and How to Charge

Estimating projects is a developed skill. We can offer some suggestions that will help improve your forecasts, but it will mostly depend on your ability to properly estimate scope (how big is the project really?) and client management (how much time will it take to educate and control the client?). Start with the basics; determine your timeframe and resources and then do the math. How many hours will you allocate to each task? Who will make up your team? What deliverables will be due? Forecast realistic hours necessary to complete the goals. Be baldly honest: Can the project even be done before the launch date? Work backwards from launch. You may find that you need to increase resources and negotiate with the client for additional funds.

The chart provided [3.9] illustrates a typical allocation of hours for three different sizes of projects, each running on the five-phased Core Process. (Note that backend is not included.) Take notice of how much of the total resources project management takes. With this conceptual, phase view of your project understood, you can then break it into weeks on a spreadsheet [3.10] that can be used during the project to track against budget projections. To further calculate your costs, two useful methods are estimating by team or by task [3.11].

03fig09.jpg

none 3.9 A typical breakdown of hours for three sizes of projects. This is only an example; each project will differ based on size, scope, expectations, and deliverables. Please note that this chart takes neither integration nor implementation of a backend layer into consideration. Those estimations will vary greatly with scope and level of expertise.budgetsproject planningCore Processdefine projectplanning,estimating projectsplanningbudgetsprojectsdefinitionplanning, . planningprojectsestimating

03fig10.jpg

none 3.10 This budgeting time tracker is a straightforward spreadsheet that takes each role and sets up an hourly charge, estimated hours, and a weekly tally. This example shows a typical eight-week breakdown with a small team in place. (A blank form is available for download at www.web-redesign.com.)

03fig11.jpg

none 3.11 Often, with an experienced and set team in place, it is most effective to estimate by team member (for example, "Kate usually needs about 40 hours for information design on a site of this size and complexity"). This method might apply better to a web development firm.budgetsproject planningCore Processdefine projectplanning,estimating projectsplanningbudgetsprojectsdefinitionplanning, . planningprojectsestimatingtime trackingtrackingtime

Tracking Time

If you take away only one thing from this book, let it be this: TRACK YOUR HOURS. (We hope you get more out of the book than that, though.) In general, organizations that track their hours, and therefore always know where their budget stands and how it is being utilized, are profitable. Those that don't track their hours either aren't profitable or are lucky. It's as simple as that.

Blank estimating forms are available for download at www.web-redesign.com

Establish the method by which you and your team are going to track time… and then actually, truly, diligently track it, even in small increments (not accounting for answering email is notorious for driving Scope Creep). It is the only way to know whether you are making $10/hr or $100/hr. Time tracking is critical for both design firms and in-house departments, though it is more important for many design firms because they bill hourly.

Make sure your team submits accurate hours on a regular basis, at least weekly (this keeps them account able) and keep a running check of total team hours used against your budget and allocation of hours [3.12], [3.13]. Staying on top of project time spent is crucial to maintaining budget and scope requirements. Any time used that was not budgeted for either is eaten by the web development company or, if authorized, scoped, and tracked properly, is billed to the client as an additional charge. The time to tell your client that you are going over budget — especially if it is due to Scope Creep — is as early as possible.

03fig12.jpg

none 3.12 Each week, generate a short report for hours budgeted, hours used, and hours left. Track hours weekly to maintain scope and time estimates. Be accountable. This report means nothing if people are not forthcoming with how over, on, or under budget they really are.

03fig13.jpg

none 3.13 Timeslice (www.timeslice.us) allows for time tracking at a click and makes sorting easy. Available for both PC and Mac, is cross-platform, reasonably priced and does not require a subscription.

Use whatever tracking system works. And be diligent. Your project depends on it.

Client-Initiated Changes

Scope Creep is subtle. Blatant requests for project changes are not. If the client asks for an additional feature or section that is not within the original definition of the project, smile and respond confidently, "No problem, I'll get back to you with a separate schedule and budget by the end of the day." You'll be surprised at how effective this approach is at controlling Scope Creep. Clients will react by retracting the request or agreeing to the scope change.

An Additional Charge (AC) Form is a handy way to document increases in scope [3.14]. Even if you decide to not charge for a change, you can still issue an AC, mark the change as "gratis," and have a record of the change. ACs work as amendments to the approved budget.

03fig14.jpg

none 3.14 Use this sample Additional Charge (AC) Form as a basis for your own.

Requests that are out of scope for the current phase of the project don't have to die on the table. If it can't be added in now (2.0), consider inclusion in subsequent phases (2.1, 2.2, etc.) as a planned item.

The form seen here is available for download at www.web-redesign.com

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