The phrase ‘fixed rate’ or ‘fixed price’ would scare many an experienced project manager or producer as it is extremely hard to be accurate to the ‘nth’ degree when it comes to estimating project budgets for website or application development.

There is a funnel effect with most projects whereby at the scoping stage budgets can be as much as 25-50% over or under with accuracy generally increasing as the project progresses and requirements are defined further.

Often because we are managing people and not the manufacture of products we are at the mercy of their skills set/experience/moods. What takes one designer 2 hours can take another a day. It is also inevitable that there will be time to be devoted to bug triage/ bug fixing on larger and more complex development projects. Obviously these factors and more should always be taken into account when estimating (some useful methods outlined below for those that are interested).

However when managing smaller and higher volume projects such as banner design and development or a straightforward landing page build many clients do often expect a set price, in that regard online advertising does reflect a standard ‘production line’ with the majority of the effort expended at concept/creative development and then implementation of say two masters (vertical and horizontal) before building X amount of sizes using the same aspect. There are some very smart developers out there who have automated this process to a degree.

The majority of digital projects are probably budgeted for at a fixed rate with various options and provisos included in the proposal. The devil they say is always in the detail and as long as you are being clear with your clients and there are boundaries to what is and isn’t included in the project budget it will aid with any hiccups once the project has started.

Here’s a list of pointers when providing an estimate:

When crafting a proposal:

1. Always ensure the project budget is noted correctly in terms of currency being used and with or without GST (usually without!)

2. Break down the project budget into phases and or deliverables where possible

3. If the projects is a larger project, review whether payment per milestone is also preferable for you (especially if you have engaged contractors who may require payment as this will aid cash flow).

4. Explain exactly what is being provided by you and what is to be provided by the client. Try and avoid using lots of jargon i.e a list of what is included (you may charge for designing a page template but have not included cost for image or specific font purchase).

5. Document all assumptions

5. If additional time is required you might also want to mention the hourly rate chargeable i.e you may allocate 2 hours of a designers time to revisions anything further than this will be charged at X rate.

When estimating

1. Provide estimates dependent on the situation i.e is it a rough estimate? If so calculate a ballpark range rather than a set price i.e form a rough estimate and then add 25-75% on top based on level of detail you have to quote with.

2. If the ballpark is to be developed into a proposal ALWAYS ask the person/team who will be doing the work how long it will take, unless you are psychic or have worked with them for decades. You can however use historical estimating by referring to previous similar projects but it can be extremely risky.

3. Try getting best and worst case estimates and calculating an average (use the PERT method for example) – this is also a great way to get the team focused on the potential job rather than giving you off the top of their head guesses.

4. Do not forget to add in time for reviewing and testing

5. Add in some more time for contingency especially if there are high risks with the project

6. Add in project management time

7. Dependent on internal processes you may also have to add in a management reserve

Studio Transfer offers a free project consultancy service whereby we provide you with project estimates (ball park or detailed) and can also help with any implementation questions you may have or reality checking ideas.

For more information send us an email to studio@transfergroup.com.au.