How do you manage changes when your price is fixed?

[Karin Skaug]

I work as an in house visualizer at an architectural firm, but my illustrations are mainly not included in the main architects fee, but extracted as a fixed price job. But every time the project changes, and often the agreed deadlines are missed and we lose money doing changes without getting paid for the work.

I struggle with finding a way to manage the changes. Not starting the work until the project planning is "finished" isn't an option, as our clients want to start marketing early.

A solution is to have a fixed price but to charge the client extra for changes initiated by the clients, and to put the cost of the architects changes into the architects fee, but experience shows its a mess of who orders which changes at different times in the production.

 

How do you manage changes when you have to have a fixed price agreement?

Any sharing of experience with setting up contracts/agreements to cover this would be helpful. Thanks.

[John Dollus]

It should be covered under the additional services agreement for rendering collateral. Clearly defining the scope is vital including reviews/changes covered under the base agreement with a line item for changes occurring beyond the scope of the additional services. My favorite is the catch-all, "any hours required by the client beyond the agreed upon deadline and schedule covered under the additional services agreement will be billed at an hourly rate of $x per hour."

Or something similar.

This usually circumvents the false deadline tactic that can throw production schedules into a freefall.

[Scott Schroeder]

DBOX did an excellent interview with CGArchitect about this very subject.

http://www.cgarchitect.com/2017/07/business-in-arch-viz-vol-4---contracts

 

One of the more important paragraphs was this one:

To work through this and be fair with the client, we have started to bill all this design process hourly. It is an open-ended process and working through stages, with a constant drip of information and requests is too difficult to manage as a staged process with a production team. Once everything, and we mean everything, is in place (think of a finished real apartment that has been staged and the flowers have been moved into their final resting place), we then go to a flat fee for creating the marketing rendering. This has a series of stages that are to do with nuances, materiality, reflectivity etc. As soon as those flowers get moved, again, we go back to an hourly model until everything is once again in place. This approach encourages efficiency from the development team and can actually save the client money, while making our production schedules more manageable. We always have more rendering work (see reasons above relating to credit) than we can do, so the more efficient we can be the better for all involved. We’d prefer to ultimately charge less and get the job done in efficient hours than charge more in inefficient stages. This approach can also be extended to exterior marketing renderings that have specific and complex landscape.

[Justin Hunt]

DBOX did an excellent interview with CGArchitect about this very subject.

http://www.cgarchitect.com/2017/07/business-in-arch-viz-vol-4---contracts

 

One of the more important paragraphs was this one:

 

this has become a very important strategy for us as we were in the same boat, loosing money big time due to constant changes causing "marketing" images to drift into "design development" images. Now we set a price with a clause that after X number of reviews any further changes will be quoted for based on an estimated time/cost frame to make such changes and only done with client approval before hand.

 

After a bit of resistance (both by us and clients) it has proven to be very effective. It all starts with a clear conversation with the clients BEFORE any work starts.