The price of a specialist skill

http://blog.patchspace.co.uk/lesson-learnt-the-price-of-the-specialist-ski

by krmmalik • 15 years ago

25 14 15 years ago

blog.patchspace.co.uk

ghurlman• 15 years ago

This is more a tale of bad estimates than specialist skills; if anything, it goes to the point that a specialist must be careful to not get too confident in his knowledge when developing an estimate.

krmmalik2• 15 years ago

So how should the thatcher have differed in his estimating process?

zck2• 15 years ago

If you hit a pothole, and your tire pops, you bring it to Jim, your mechanic. "I can fix your tire for $150", Jim says, dreaming of the used boat he can afford with your money. He takes your car into the garage, and puts it up on the lift. He looks up at it, then pulls out a calculator, his eyes glinting. Jim can get the new FishHunter model, with double engines and a built-in beer cooler. Built in! "I'm sorry, the pothole broke your axle and damaged your suspension. The total price is $1279."

This is why you quote for one item, not "I'll do whatever needs to be done". The thatcher should have said "It's one price to just re-thatch, but since I have to rebuild the roof, it's more. What do you want me to do?"

rapind2• 15 years ago

Interesting story. I think you're saying it's a bad thing to treat our estimates as commitments though. I don't necessarily agree with that. I think you need to commit and just accept the fact that you won't always be accurate, but that over time you will become more accurate. Most consulting companies pad their estimates to cover this risk, but I think it's better just to bill out as high as you can.

Billing out higher but still committing has a couple of advantages. 1) You eliminate the cheap customers who would've cost you money and are generally a pain to deal with. 2) You're client has peace of mind since you're committed to finishing what you started. 3) Your client will generally respect you more because it seems as though you're time is worth more (even if others padding an estimate with hours works out to the same final amount).

sophacles• 15 years ago

Why not just provide a reasonable estimate, with a "price assuming this goes as expected", what can go wrong and a price for fixing the various common issues encountered along the way, and a worst case scenario price?

rapind2• 15 years ago

Well I never said your estimate shouldn't be reasonable. I think you should always be reasonable and honest with people, but that's just my view.

However, in my experience, if you tell a client "This will cost you anywhere between 50k and 60k depending on what goes wrong" they will immediately assume they're paying you 60K since it's pretty easy to justify that extra 10k given your language. Regardless of whether your intentions are gold. If it happens to work for you though, then go with it ;)

This is why it's hard to get a real budget out of a new client. They assume (and often rightly so) that you're knowledge of their budget dictates your quote.

tomjen3• 15 years ago

Really the issue is that he gave a quote for the entire thing, instead of what it would cost to fix the initial problem.

ashleymoran3• 15 years ago

This was not actually the case, but I realise my writing was not clear, so I've improved the wording in the story.

Unosolo• 15 years ago

Well, maybe it was a really good thatcher but certainly not very skilled in running thatching projects and hence is punished by the market and driven out of the business. There are several ways how he could have avoided the situation or softened its impact:

1) Spend a bit of time and energy to assess the damage first, maybe charging a small fee. Essentially, as I understand, the owner had a choice of re-thatching the roof or opting for tiles instead as a substitute. The decision would depend on the economic expediency and the information provided as part of the initial assessment would have had value to the home owner in its own right.

2) Once the contract is signed it's not a matter of choice for the thatcher whether to continue with repairs on own expense, it a legal matter that can be in-forced by the cottage owner through court.

3) The thatcher could have bought professional indemnity insurance to delegate the risk to a third party.

4) The thatcher could have signed the contract on time and materials basis, explicitly leaving the risk of additional work with the cottage owner. In this case it would only be right for the thatcher to let someone else assess the damage for the customer to avoid the conflict of interests.

5) Finally the thatcher could have done the work on project basis charging more for the risk he takes and then hope that over a series of engagements he will still be able to make profit. As a variation he could have specified a contingency within his initial estimate agreeing with the customer that the contingency can only be exercised based on customer discretion should additional work becomes apparent upon stripping.

The problem here is lack of generic project management skills and experience on the thatcher's side and specifically estimation, contract and risk management.

krmmalik2• 15 years ago

Some valid points there. I see you've commented on his blog post too. The writer of the blog is out for the day. I dont think he was expecting so many hits to his blog!

ashleymoran3• 15 years ago

Thanks again for your comment, as you replied both here and on the blog, I'll repost my reply here:

John, thanks for your detailed reply. Sorry I could not respond sooner. I realise that my writing was imprecise in places, so I've edited the story very slightly to describe the situation better. To clarify: the thatcher in the story did actually do some investigation upfront. I've changed the wording slightly to emphasise this. The problem in general, though, is how do you know when you've done enough risk assessment? The only way to eliminate _all_ risk is to actually do the project, but that is clearly way beyond the point of diminishing returns! But doing _no_ upfront inspection is flagrantly reckless.

Also to clarify: the thatcher did in fact work on a time and materials basis. However, I only vaguely alluded to it, and I've improved the wording again. It's interesting though that you assumed it was done fixed-cost-and-scope - I suspect that is the default situation people assume.

I'm interested by your suggestion of using professional indemnity insurance - how would the thatcher have used this? Can it be done in a win-win, none-confrontational way?

Finally, while I've included enough detail to describe a "full" project, the problem I wanted to emphasise was how (given both parties realise they are partially through a project of questionable value for either side) do they to resolve it in a mutually satisfactory way?

No matter how experienced the thatcher, or how carefully he manages the risk, there will always be a project lurking out there he had no way to prepare for. Improving at your job means being caught out by more difficult problems, as the easy ones you handle almost intuitively.

The price of a specialist skill

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