The Value of Project Outcomes over Hours
For Architects, billing by the hour makes as much sense as billing by the pixel, or by the drawing line or by the number of screws in the finished building. Hourly billing is rooted in the scientific management of industrial age practices, and cost accounting practices in legal and other professions. This unit-accounting has carried over into the construction industry but is not always applied to its best value.
All due respect to bricklayers, but architects don’t lay bricks and bricklayers don’t coordinate buildings. So why should we bill them the same way.
Architects offer our head, not our hands. We promote ideas and outcomes, not units of widgets, so it doesn’t make sense to bill them in a unitised way. Hours are arbitrary units of measurement that have nothing to do with the design or project outcome.
An alternative proposal, which will likely go a long way towards mitigating a client’s project risk, is to provide a value-based fee. This is not a new idea…
A Value-based Approach
As discussed in our previous article Building Solutions that Work for you – Part 1 – The Full Architectural Scope, if a consultant team is treated as a cost, the client is missing a valuable opportunity.
Rather than starting with an argument about the number of drawings required, meetings attended, or magical trained monkeys to deliver a project the way we did decades ago, a new approach is needed.
Best project outcomes are usually achieved through early client briefings which focus on desired project and investment outcomes.
Ideally, clients and consultants enter into positive briefings & negotiations, around what their business aims to achieve with this investment or project, and what they really require to achieve those goals. If these discussions drill down into a stripped-out service and bare-bones scope, with no capacity to investigate options or changes, the client often misses the opportunity to maximise their investment.
Briefings that focus on goals and outcomes also mean that your consultants have the opportunity to gain a deeper understanding of your business.
Briefing for the Big Picture
Clients who can brief consultants based on their business goals & project outcomes show a deeper level of trust in their consultant team.
When consultants understand the bigger picture around clients’ business and project goals, beyond a set of drawings, they can better focus on the real project priorities, not just the drawings.
Tasks and drawings are a product of design ideas and strategies to deliver project outcomes, not as a result of two project team members, spending four hours per day, for three weeks.
This is how real, positive long-term client relationships are forged and it is these relationships that go on to deliver brilliant project outcomes for both parties.
There are, of course, clients and contexts which don’t warrant this approach; for them, in those contexts, a productised offer would suit them just fine.
The POWE Team start by asking more questions to better understand what the client requires.
We work to become educators, not salespeople.
The POWE Team asks our clients what a successful project outcome would mean to them personally, or indeed professionally. We have an interest in what keeps our clients awake at night.
Our approach to delivering outcomes for our clients is to provide clarity in solving a problem for them. The best conversation we can have is the one before we send our service submission. We often deliver services proposals to our clients with three proposed options, to allow them to choose the level of risk that suits their desired outcomes.
- Option 1 – Lowest Price and Smallest Scope: The minimum service offering or features needed to reach a successful outcome.
- Option 2 – Value-Plus: All the services or features from Option 1, plus additional services that add more value to the project, provide more certainty and reduce risk.
- Option 3 – Premium service package: Imagine that your client had no budget and wanted a premium result as fast as possible. Include everything from your Low Price / Small Scope option, Value-Plus option, and added value if they are willing to significantly invest in their project.
Instead of “pitching” to your client, you are collaborating with them to work through different options to help them achieve their goals. Relate to their problems and goals, be a problem solver and sell solutions.
A Value-based Proposal
Submitting a service proposal is a lot more than slapping on a price tag and crossing your fingers. The groundwork and strategic thinking behind how to get inside your client’s head might seem overwhelming. However, it’s not only crucial but also extremely beneficial to understand your customer’s journey and helps you highlight the very best aspects of your product, and why it is relevant to them.
No matter how expensive your product is or what pricing strategy you use, if you can successfully use value-based selling to solve your customer’s problems and prove to them your service offer will help them achieve their goal, you’re on the right track.
If we continue to value our services based on unit prices, such as hourly rates, rather than project or client outcomes, we are doing a disservice to our clients and our profession. Instead, if we focus on understanding our client’s business goals and providing them with value-based solutions to achieve those goals, we will deliver better projects, develop higher quality built outcomes and provide better business solutions for everyone involved.
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