

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

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Unosolo
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.

~~~
ashleymoran
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.

------
tomjen3
Really the issue is that he gave a quote for the entire thing, instead of what
it would cost to fix the initial problem.

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

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rapind
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
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?

~~~
rapind
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.

~~~
ashleymoran
Thanks for the replies both. Yes, this is one of the issues I have found:
honesty over the risk in a project can make you look more expensive if you
don't explain it carefully. This is especially true in a young relationship,
when the client has not yet build up trust in the supplier.

Fortunately, I have found once clients are used to regular progress, they're
more accepting of variation, and willing to accept estimates based on real
statistics.

------
ghurlman
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.

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

~~~
zck
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?"

~~~
JonnieCache
You have a very engaging, "narrative" style of writing that paints a vivid
picture in the mind. It is wasted on comments. You should write some articles.

~~~
zck
Thanks, but if I'm being honest, this comment is directly aping Joel Spolsky's
style. I'm glad it worked.

