Project over-budget - can I invoice more?

[nr74]

I have a question about time-based invoicing, particularly, invoicing extra time. This is more about etiquette and best practice rather than legalities.

I have recently started to work as a freelance designer and I usually work on an hourly rate. I provide quotes for projects beforehand, and invoice on completion/client approval. I must admit I am not very tight on the ‘business’ side of things. My terms and conditions are pretty basic to say the least, and don't go into such areas as projects going ‘over-budget.’ I haven't encountered such problems to date.

I am just about to invoice for a recent project, which took longer than it should have, but I'm not sure where I stand with adding costs to the invoice. I quoted a price for a certain amount of hours. My price was based on the client meeting certain requirements at the beginning, supplying all the project content beforehand, and sticking to the original parameters throughout. I also gave an alternative higher quote, as an example of what it might cost if these requirements were not met. I was told that the budget would only cover my lower price, but assured that they would deliver everything I required (and stick to the brief!)

My requirements were not met, and almost twice as much work was required as I originally allocated. The end-client changed the goalposts, amended things along the way, and added things that were not in the original spec. I made the mistake of carrying on with the project, without raising concerns at the time. I realise I should have objected at least, or even downed-tools until further costs were agreed upon. Anyway, the job is finished now and the client is happy. They have got a lot more than they originally asked for.

Basically, I want to know if I can invoice more than was agreed at the beginning. It is only a small project - the difference is just a few hundred pounds - but this is not the point. The client knows that they took advantage, but won't admit this and certainly won't want to pay more. I doubt I'll ever work with them again, so I'm not too concerned about spoiling the relationship.

I have documented all the reasons why the job took longer, the things I ended up doing that were outside the scope of my original quote, and alterations made by the client that required more time, etc. I have their original brief that describes a smaller simpler project, and my original quotes that described the possible cost increases if the client went off track. I think I have good reason to charge more, but I also need to consider the client's POV.

Have I left myself high-and-dry for not raising this earlier? Will I be at fault for submitting a higher invoice, out-of-the-blue? I don't really know if I have a leg to stand on here, and I don't know what to expect if they object (such as legal disputes, etc).

Any advice would very much appreciated!
NR

 

[Nick Kay]

Have you had the conversation with them explaining the scope creep that occured and the extra work (therefore charges) that this incurred? You may find they are quite happy to pay the extra, especially if they are more than happy with the outcome of your work.

Ron Baker has written some fantastic books on value pricing in the service industry, and why charging/pricing using hourly rates causes issues like the one you mention above.

He also goes into the use of extra work orders and scope creep, which if you implement will prevent similar scenarios to the one above happening.

 

[nr74]

Thank you Nick, those sound like very useful resources, certainly something to look into.

Is the client happy? Er…..yes and no!
I didn't think that this mattered too much so I left it out of my OP, but it is less straightforward than I described. In this case there is a middleman involved, who is my direct client. They then invoice the end-client. I am effectively an outsource.

The end-client is very happy with my work, but the middleman is not happy with me personally (but no issues with my work, apparently).

In spite of the extended hours, the project went very smoothly. I had contact with the end-client through most of the job. Unfortunately, the middleman is a very volatile character, and on the closing day of the project he got really angry with me over something that was out of my control. Basically, he left it until the last minute before telling me the job was approved, and after I delivered the project he needed to ask me some technical questions about how I had done certain things. I was in a meeting and couldn't speak straight away, but I guess the approaching deadline was causing him a lot of stress. When I returned his call an hour later he screamed at me over the phone, accused me of letting him down, and hung up. I attempted to contact him several times afterwards, but he is giving me the silent treatment.

I contacted the end-client directly to make sure all was fine. They are delighted with the outcome of the job, and my involvement.

So technically, the end-client is very happy with my work (I have emails confirming this), but my direct client, the middleman, still refuses to answer my calls. He did sent me a single email last week, which said literally this : "Please send me your invoice."

If I invoice more, it will go directly to the middleman. It is up to him then to pass on my costs to the end-client for more hours, but he won't do this. He won't want to upset the client, and he hasn't lost anything in the process; it was all my time, not his.

Discussing this like grown-ups is not going to happen I'm afraid. I suspect the middleman is not still angry over what happened (it really was nothing to be upset over) but probably wants to avoid the issue of the job going over budget. I need to invoice one way or another, I just want to know where I stand for adding extra time, and what he might do to dispute it.

Thanks,
NR

 

[positivesparks]

Hi NR

Wow, this project sounds like it has been a real adventure!
All in all, I would recommend you send a really polite email with your invoice to your middleman. Reach what you consider a fair middle ground between what you "could" have invoiced for all of the extra time and what you would have invoiced at a minimum level. Explain in your email why you have reached your middle ground, ie outline your rationale in each element of our charges and how you believe you are giving and taking on each item. Be reasonable and polite throughout, offer to speak to the end client if it will help overall. Your middle man is already upset at you, so you don't really have much to lose by doing this!
For the future, you have already said how you know you should have brought up this issues earlier, it's a business lesson we all go through, take it and learn from it no matter what the outcome.

 

[nr74]

Thank you positivesparks,

This sounds similar to what I had in mind; find a mid-point between the high and low quotes, and explain how I got there.

I still doubt if the middleman will see sense about this, he seems to be a fairly black-and-white kind of person, and I think he's made his mind up about this now.

I very much doubt that he'll try to get out of paying altogether, but he may kick up a fuss about the increase, and possibly dispute it. I don't really know what to expect from a dispute, I'm guessing he'll probably just refuse to pay until I take action. This is new ground for me, is there anything I should know about this whole procedure?

Thanks,
NR

 

[positivesparks]

Hi NR
What I've learnt about payment problems is that the best thing is to keep everything on email so it's recorded. Any conversations you do have, summarise in an email and send to your client for confirmation. Try all you can to reach some agreement, the only way forward if you cannot is to make it all legal. Whilst the email notes of all discussions will help there, taking it legal rarely helps anyone and the costs of doing so often far outweigh the possible return should the invoice amount be repaid.
Good luck with it all!

 

[ethical PR]

In your place, I would take it on the chin and use it as a learning experience. You carried out the additional work without agreeing terms/payment. Review your terms and conditions and going forward don't put yourself in this situation again.

Make sure you have comprehensive terms and conditions covering payment, a project plan, timelines, what the client will need to provide and by when and includes mention about how any alteration to the original specification will be handled.

You need to have an element of flexibility ie a few hours creep is ok but substantial changes or time - alert the client in advance, provide them with an estimate - which they need to confirm in writing they are happy with before you do any additional work.

In this way you will not be left in this type of situation.

 

[tabish]

This is a normal issue considering we are into outsourcing software development however we make sure all contracts have a cost scalability and any extra work that's beyond the scope of work which is to include any changes formerly approved and later requested to be changed, is intimated and charged.

HOWEVER, working more than required just to achieve what the client requires leading to ultimate client satisfaction is BUSINESS. There's no harm in discussing the invoice with your client. Using the right words most clients are happy to pay. Either way it's worth trying. The riskiest thing to do is not to take risks you see.

 

[philmc1]

unfortunately this will happen,and unless it is documented as you go along (or better still at the start) differences will arise between what you think is a time and materials hourly estimate and what the 'buyer' or middle man will think is a fixed or maximum price. Try and email send information before you invoice. If they reject the invoice then the hole becomes deeper, and it hurts the relationship. Also you may want to invoice differently (2 invoices) for those things in the original estimate and then 'changes', so that your whole work is not in dispute.

 

[Energise Accounting]

for the sake of future relations take this one on the chin,there will be a good chance they will do business with you again

 

[nr74]

Thanks to all for your advice. This is a final update on this topic to wrap it up.

By the time the advice to ‘let the extra hours go’ and ‘take it on the chin’ started to appear, I had already invoiced for 6 extra hours on top of the original budget of 12. A bit of a risk perhaps, but I knew the client was never going to use me again (and I don't want him to), so I felt there was nothing to lose. I politely provided an exhaustive breakdown of all the extra tasks I had performed, which doubled my total hours to 24. I explained that it would be fair and justified to bill for this full amount, but I was only billing 18 hours as a gesture of goodwill.

I heard nothing for a few weeks and was beginning to think it was heading towards a dispute, but after I sent my first late payment notice the client responded, and I received full payment shortly after.

On this occasion, invoicing a few more hours worked okay. It could have very easily gone wrong though, and the whole thing could have gone into an ugly dispute. If I ever end up in this position again, then I will at least bill any overtime in a separate invoice, as philmc1 said. Then at least if there is a dispute over extra costs, it won’t jeopardise the basic budgeted amount as well.
However, I will try to avoid this scenario at all costs in future, and take much greater care in raising over-budget concerns as they arise. Valuable lessons learned.

Thanks again for all the advice, and I hope this topic is useful to others.
NR

 

[john1989]

With fee sensitive clients, If the client strays outside the scope of the agreement, point it out to them immidiately and let them know it will incur additional charges. Give them the opportunity to proceed with the additional work or not. Trying to charge extra later is more often than not going to be met with resistance.