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Before the Planning (and initial) phase of a project, there is obviously going to be some time devoted to an analysis of the client's requirements. I know this might be hard to answer, but is this time typically billable?

Example: I'm dealing with a complex software project - a client has an Excel spreadsheet with a million rows and around 25 columns. The data populated in the cells is based on complex calculations between each of the columns (or fields).

The developer and PM (me) go into a conference call and spend an hour estimating the scope of work. I decide that the developer and myself (as I have a technical background) will require another 10-15 hours of work to figure out the mechanics of the Excel file, which will include providing documentation that contains the suggest approach for building the app (framework to be used, hosting environment, etc.)

The client feels that this "digging into the analysis" (the 10-15 hours) should not be billable as no real development work is being done (i.e. converting the Excel file into a web based app).

From your experience, how much time do you give away for "free" for estimating the actual work of a project?

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3 Answers 3

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In general I agree with @Tiago Cardoso and @Mark Phillips; your client is effectively saying that they want to pay only for development, not for project management of the development effort. If that is what the client wants, I'd be happy to supply the name of three or four competitor firms, and tell them to keep my name on file to rescue the project when the inevitable occurs.

The answer does depend on your environment. Currently I support government customers and planning and estimating are part of the service we provide and are directly billable. When I was in the private sector, these costs were part of corporate overhead. Planning and estimating were performed on speculation and were part of the cost of acquiring the contract. (and to give proper credit where it is due, my current job relies on someone performing the planning and estimating function on speculation).

It all depends on the environment in which you work and the client's expectation. But on the other hand, the answer is the same as the answer to 90% of PM questions - assess the consequences of the alternatives, and communicate the options to the relevant stakeholders.

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  • There was a variable I was missing and you answered it: the environment. Thanks for pointing it out. You're right about the fact that larger companies tend to bite the bullet and place it under their overhead costs. The issue is that the company I'm with now is a much smaller firm and can't afford to take hits like this. But then again, this isn't a "hit" and it really is a billable item. Thanks, Mark!
    – JTech
    Commented Nov 14, 2012 at 18:52
  • Highlighting the environment is indeed a good catch (+1!). But I believe the last sentence is missing something, isn't it?
    – Tiago Cardoso
    Commented Nov 14, 2012 at 19:08
  • Odd, I could've sworn the whole sentence was there before or I probably stopped reading after I got my answer :D
    – JTech
    Commented Nov 14, 2012 at 19:19
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In short, I'd say nothing. There's no reason working for free and it could cause several issues further down the road (who's going to pay for this 'free' work?).

The analysis your team is doing is part of the estimating process. The underlying point in your question is: how accurate your client want estimates?

If they only want wild guesses, then go for it.

As much time spent on the analysis, as better the estimate will be. With this argument, you throw back to the user his own question in a polite way and without working 'for free'.

And yes, working on the estimates is not part of the development, as the test, QA and deployment phases. Nevertheless, they're required and mandatory for a successful project.

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  • Thanks for the answer and link, Tiago. Along the lines of what I was looking for.
    – JTech
    Commented Nov 14, 2012 at 15:48
  • You may take advantage of having the author of the link here in our community, our buddy Pawel (pm.stackexchange.com/users/89/pawel-brodzinski)!
    – Tiago Cardoso
    Commented Nov 14, 2012 at 15:51
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Expanding on what Tiago said, it is more than part of the estimating process, it is part of requirements gathering and is part of the project's billable time.

On the other side of the equation, the client is looking for some sense of a total estimated budget before signing-off on the project. This is a reasonable request as part of giving you the go-ahead on the project. The total project budget can be a WAG ROM with +/- 50% but will at least give the client some sense of how much they are getting into.

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  • WAG - Wild ass guess? :)
    – JTech
    Commented Nov 14, 2012 at 16:42
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    Looking at the link in Tiago's answer, I found it funny how one of the readers specifies a methodology for estimates: PDOOMA - Pulled Directly Out Of My Ass. Though, jokes aside, here's what I did: I explained to the client that he can't expect multiple resources to gather data without being billed for it. So I reduced the scope of the project to a very small component with two deliverables: a PDF doc outlining a developer's logic in implementing the app AND a test demo of the app (no design) exhibiting just the barebones functionality and logic. He loved the idea and agreed to proceed.
    – JTech
    Commented Nov 14, 2012 at 16:45
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    Just to expand on the above comment: This gives the client a chance to know what it's like to work with our team and if he's not happy after this phase, he has all the deliverables that he can simply hand off to another development group (and save costs on the requirements phase) and we get our payment for the work done anyway.
    – JTech
    Commented Nov 14, 2012 at 16:49

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