Managing Your Project Costs

“It’s the wild, wild West.” --Nonprofit leader speaking about the range of costs associated with building a new website. Customers submitting an RFP for a web redesign are often shocked at the range of pricing they receive back. How can one organization charge $30,000 and another $120,000 when they are looking at the same RFP? It needn’t be mysterious, and understanding what drives the prices can help you write a stronger RFP.  So let’s look at the items in RFPs that drive costs and analyze what you’re really getting for your money. Design: Good design cannot be undervalued. And it involves far more than simply creating good pictures. Designing a site that is consistent with your organization, that meets the needs of your users, and drives traffic in a way you desire requires research, testing, considerable internal discussion about what you are trying to convey, many rounds of design and redesign explorations, and examining competitors your design will be measured against. If your RFP is open-ended about how much of this you wish to pursue, the organization writing the proposal is forced to decide how important the design is for you. There are many ways to cut corners in the design process—omit research, forego scientific methodologies for anecdotal approaches, limited rounds of revisions, limited the breadth of design explorations, or omitting competitor research—and if a proposal is coming in significantly lower than another, chances are they are making concessions in this area. Higher-priced proposals are probably long on this type of research and analysis. When reviewing proposals, it is worth asking yourself, and those offering the proposal, how the design process is carried out. RFP Tip 1: Don’t leave it to the respondents to determine how important design is to you. Be clear about what level of work you want. Budget: If you have led pre-bid conferences, you’ve gotten the question. “What’s the budget?” And if you have bid, you’ve heard the answer. “We have a budget, but will reveal that to the final group we interview.” Certainly, organizations are right to worry about telegraphing too much information here. If you say your budget is $100,000, you can bet you’ll get proposals that come in at $100,000. So you could be missing out on less expensive options. But by not putting a budget on the table, you also run the risk of missing out on a great organization because they made assumptions about what you want (see “Design” above) and come in too high. How to make this work better? The obvious solution is to post your budget and ask that the vendor provide fixed-source pricing in the proposal, allowing you to see piece by piece what you are paying for. This has several advantages. First, it allows you to compare apples to apples. If one vendor is charging $15,000 for data migration and another $30,000, you not only understand what’s causing the price fluctuation but you have the ability to bargain with your selected vendor over the price. Second, seeing a disparity in solution costs will trigger questions about why. Perhaps the $30,000 is justified because it covers issues that you haven’t considered. The less-expensive option may be cheaper, but it may also not be as all-inclusive as you might imagine. If you don’t want to publish your budget, consider using some open-ended language that provides savvy bidders insight into what you’re willing to spend without giving away the answer. Terms like custom, enterprise, and branding signal a major job and an appropriate price tag. Terms like refresh and improve signal a less-expensive job. RFP Tip #2: Consider posting your budget—it will empower you to compare apples to apples, and allow you to work with your vendor to better understand what they can do for you. If you don’t want to do this, mind your language. Don’t just borrow a template for an RFP from an organization that isn’t consistent in size and budget with your own and copy it. The language will signal costs that you may not be prepared to absorb, and you will deprive yourself of many good organizations who can do the work at a price-point that's right for you.  Data Migration: If your job calls for moving your database information from an existing, “legacy,” system to a new open source platform (or any other new system for that matter), be prepared. Too many believe the migration of data should be simple. It rarely ever is. The more information there is to migrate, and the more complex the data sets to be migrated, the higher the cost is sure to be. The Data Administrator Newsletter gives an excellent overview of the complexities involved and what you can do to mitigate costs. Again, if a bidder is significantly underbidding everyone else on data migration, ask yourself why that is, and consider the risks you are exposing yourself to. Your data is your lifeblood, and not something you want to short-cut. RFP Tip #3: Data migration is never simple. Understand the costs and the risks associated with this process.