Contracting: REFUND FOR REWORK?

  • Recently due to miscommunications with the client's client there was some rework required to the project. My Client has asked that I adjust my future charges to basically refund time for the estimated amount of hours spent on rework. Yes, I am ultimately responsible for my work, but should I honor this request when the rework was not entirely due to my own actions?

  • Depends, was the work that needs to be reworked done to the requirements at the time? Where did the miscommunication occur? Did the client not understand what work you were going to accomplish, or the other way around?

  • Scott Grant (1/22/2010)


    Recently due to miscommunications with the client's client there was some rework required to the project. My Client has asked that I adjust my future charges to basically refund time for the estimated amount of hours spent on rework. Yes, I am ultimately responsible for my work, but should I honor this request when the rework was not entirely due to my own actions?

    It is usually not a miscommunication it is the client deciding to change their mind because they don't want to pay. They make up their mind what your time is worth and ask for many things not included. That is the reason to get a killer contract before you do any work. Check the link below for a guideline of your next contract. This bad economy most have decided not to pay for technology.

    http://24ways.org/2008/contract-killer

    Kind regards,
    Gift Peddie

  • I'm at the customer side (at least at the moment).

    The statement

    miscommunications with the client's client

    indicates to me that you've been hired as a subcontractor.

    If there would have been some "miscommunication" (miscom) between a subcontractor and myself to me it would be the same as "miscommunication" between the vendor and myself, since I don't have any contractual relationship with you (I'd treat you as if you'd be an employee of the vendor).

    Look at the situation as if you'd be an employee: Who'd be held responsible in the given situation: vendor or customer? If the former, then I'd agree with the refund. If the latter, then me as the final customer would have to pay for the change. If both, I usually try to "negotiate a fair split". How much of the remaining amount I hold the vendor liable to would be passed on to the subcontractor is an issue between the vendor and the sub.

    Side note: If I have to deal with a project situation like this I usually request to see the contract between vendor and sub covering exactly this situation. It helped me a lot in the past...



    Lutz
    A pessimist is an optimist with experience.

    How to get fast answers to your question[/url]
    How to post performance related questions[/url]
    Links for Tally Table [/url] , Cross Tabs [/url] and Dynamic Cross Tabs [/url], Delimited Split Function[/url]

  • For me there are a couple of points of interest. What is a fair and equitable split? Do you want the Client as a repeat client? If so, some bartering may need to occur.

    Documentation of requirements and work produced are critical. Documenting this information helps to put out these little fires.

    Jason...AKA CirqueDeSQLeil
    _______________________________________________
    I have given a name to my pain...MCM SQL Server, MVP
    SQL RNNR
    Posting Performance Based Questions - Gail Shaw[/url]
    Learn Extended Events

  • CirquedeSQLeil (1/22/2010)


    For me there are a couple of points of interest. What is a fair and equitable split? Do you want the Client as a repeat client? If so, some bartering may need to occur.

    Documentation of requirements and work produced are critical. Documenting this information helps to put out these little fires.

    A "fair split" should take various issues into consideration:

    e.g.

    How did the project go so far? (does misunderstanding occurs frequently?)

    Is the project within budget (from both perspectives!)?

    How "flexible" has the original requirement been followed so far?

    Would some sort of bartering be an option both sides can live with?

    What's the amount of money we're talking about in relation to the overall project?

    Documentation from vendors side is one thing. Approval from the customers side is required, too. If I, as a customer, cannot sign my requirements / change requests I shouldn't be allowed to ask for refund either...

    If I, as a vendor/consultant, am not sure what the customer wants and start coding right away I should be prepared for some refund time.

    Overall, it's a two-way street.



    Lutz
    A pessimist is an optimist with experience.

    How to get fast answers to your question[/url]
    How to post performance related questions[/url]
    Links for Tally Table [/url] , Cross Tabs [/url] and Dynamic Cross Tabs [/url], Delimited Split Function[/url]

  • In my past ... I have always informed the customer that prior to beginning work and after discussion with them (at no charge) I will draw up a formal software specification and will ask them to read it and approve it ... with a copy to each of us. When asked why the formal document my answer has been "to document what I think I heard and what you think you said" and the document includes my time estimate as not to exceed xx hours .. it has cleared up many a potential communication problem ... in fact went over so well with a Japanese firm at a United States plant that what was estimated as a one month gig, was so successful, that the firm kept coming back for more and the gig lasted some 14 months -- and in addition they had calculated my hourly rate for the first few months and on their own increased my payment ... they called it a bonus, and paid for the time to create the software specification .... oh those were the happy days.

    Not much help for the situation you are now in ... but think of it being useful in your next gig.

    If everything seems to be going well, you have obviously overlooked something.

    Ron

    Please help us, help you -before posting a question please read[/url]
    Before posting a performance problem please read[/url]

  • lmu92 (1/22/2010)


    CirquedeSQLeil (1/22/2010)


    For me there are a couple of points of interest. What is a fair and equitable split? Do you want the Client as a repeat client? If so, some bartering may need to occur.

    Documentation of requirements and work produced are critical. Documenting this information helps to put out these little fires.

    A "fair split" should take various issues into consideration:

    e.g.

    How did the project go so far? (does misunderstanding occurs frequently?)

    Is the project within budget (from both perspectives!)?

    How "flexible" has the original requirement been followed so far?

    Would some sort of bartering be an option both sides can live with?

    What's the amount of money we're talking about in relation to the overall project?

    Documentation from vendors side is one thing. Approval from the customers side is required, too. If I, as a customer, cannot sign my requirements / change requests I shouldn't be allowed to ask for refund either...

    If I, as a vendor/consultant, am not sure what the customer wants and start coding right away I should be prepared for some refund time.

    Overall, it's a two-way street.

    Agreed. Thanks for pointing out the need for Client sign-off.

    Jason...AKA CirqueDeSQLeil
    _______________________________________________
    I have given a name to my pain...MCM SQL Server, MVP
    SQL RNNR
    Posting Performance Based Questions - Gail Shaw[/url]
    Learn Extended Events

  • I tend to side on Lutz with this. There are lots of clients that just want you to eat the charges. I'd use my moral compass to try and decide what makes sense here. Where does the fault lie, and what seems to be fair.

    I also think about the work in terms of what I'd pay a mechanic or electrician. If they made a mistake, I'd expect them to eat some time to fix things. If I wasn't clear or changed something, then I pay.

  • For what it is worth, I think it all depends on the contract with the client, the way the requirements were stated, the extent to which the work previously done conformed to the requirements, and the nature of the "miscommunication" that the Client is claiming to have occurred.

    I have had clients who, upon viewing the finished product, agreed that I had delivered what they had asked for but then stated that they now realized what they asked for was not what they wanted. In a few cases, they also didn't want to pay for the end product as delivered and wanted me to redo the owrk for free.

    I had a very good contract (a simple but thorough 2-pager with the project requirements, etc., defined in a one or two page addendum) which I would then bring to their attention. I would explain, as politely as possible, that the contract stated that I would produce the work strictly in accordance with the addendum/addenda and, since I had fulfilled my part of that clause, they were obligated to fulfill their part of that clause which consisted of paying me for the work done.

    I would also point out that there was a clause that stated that they had an opportunity to amend the the contract by providing an additional or a superseding addendum describing the modifications to the requirements. If they had not done so previously, I was always willing for them to do so at that time . . . provided that they paid for the original work. (That clause also stated that they would pay for any and all work up to the time the modifications, via the new addendum, were agreed upon. 😉

    So, the crux of the matter is, what is the contract and what are the claimed "miscommunications"?

    Something to always remember is a statement from a wise mentor of mine from early in my career:

    "A verbal contract is not worth the paper it is not written on."

    Ralph D. Wilson II
    Development DBA

    "Give me 6 hours to chop down a tree and I will spend the first 4 sharpening the ax."
    A. Lincoln

  • I would also point out that there was a clause that stated that they had an opportunity to amend the the contract by providing an additional or a superseding addendum describing the modifications to the requirements. If they had not done so previously, I was always willing for them to do so at that time . . . provided that they paid for the original work. (That clause also stated that they would pay for any and all work up to the time the modifications, via the new addendum, were agreed upon. [Wink]

    So, the crux of the matter is, what is the contract and what are the claimed "miscommunications"?

    My experience clients change scope and says it is miscommunication.

    😉

    Kind regards,
    Gift Peddie

  • If the rework was partly your responsibility and partly your client's then you can both share the costs of the rework and you can adjust your next bill to account for your responsibility.

    However, some clients will pay even for rework because in this industry, there are so many things that can't be quanitified that doing rework is part of getting to an optimal solution and your client ought to understanf that.

    You should adjust your contract going forward to spell out clearly who will be responsible for future rework.

    There is a bigger problem here: it is possible that your client either does not want to pay or is not satisfied with your work. If that is the case, then you need to find better solutions than just discussing the rework.

    Regardless of who is responsible for the rework, do a root cause analysis and figure out how to mitigate or eliminate this problem in future.

  • When I do independent/subcontract work, I have a very simple, 2-page contract that covers both my and my client's . . . uh . . . ASSets. This contract covers who pays for what and various other "boiler-plate" topics. It also specifies that the specifics of the work to be done will be covered in addenda to the contract. I then carefully lay out the work to be done, in detail, and I get the client to sign that a) they understand that this is the work I will be doing, b) when this work is completed as described then this part of the contract is completed, and c) if there aer changes to the requirements, then those changes will be addressed in additional addenda.

    I have had very few clients who made radical changes to the project once it was under weigh; however, when they have decided to make radical changes, I have the documentation to back up my case. At that point, they have 3 options: 1) terminate the current phase of the project and start on a completely new phase (and addendum), 2) add the new requirements as an addendum that will be worked on after the current one is completed, 3) abandon the project all together. I have had 2 formercleints who wanted to invoke a 4th choice, i.e. I would get to eat the costs involved in making any existing code conform to their latest desires. I have had a few of my clients ask why I couldn't do the 4th option and then, after pointing out that they had not only agreed to the requirements in the first place but had, in fact, provided the requirements, they have opted for one of the 3 options I presented (about 49% going with option 1, 49% going with option 2, and 2% going with option 3 ;-).

    Ralph D. Wilson II
    Development DBA

    "Give me 6 hours to chop down a tree and I will spend the first 4 sharpening the ax."
    A. Lincoln

  • Thanks for all the insights and tips.

    RESULT: Since it was a mutual miscommunication. We sat down and determined an acceptable number of hours and schedule to "refund", basically no-billed hours on future work so it wasn't too painful to either side going forward. This helped build goodwill between us and solidified our working relationship.

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