Subcontractor Causing a Budget Overrun
Recently, two of my programmers have spent WAY more time than was estimated for tasks within projects and did not let me know until after the work was performed. Now the clients are furious because of the budget overrun and we may have to credit a significant amount of money back to two clients. One of the programmers is an employee so he’s already been paid but I still have to pay the subcontractor. What are your thoughts on paying people who repeatedly go over budget without notice? Our contract even states that subcontractors will not be paid for work done without prior approval.
Sticker Shock in Chicago
Dear Sticker Shock,
I feel your pain. One of my biggest challenges in managing a team is just that—managing. Once I’ve made an estimate I expect my developers to avoid a budget overrun or give me a red hot alert if they even think they may need more time. Most great problem solvers are so focused on the outcome that they lose track of their time. Their focus is great but it requires you to keep an eye on the clock for them.
If you’ve set the expectations up front and been very specific that your subcontractor will only be paid for up to X number of hours, I think you’re within bounds to bring it up and say, “Listen, we agreed to this amount and I can’t afford to pay you for all these hours. If you had let me know ahead of time I could have gone to the client but this is coming straight out of my pocket and I’m not willing to pay for unapproved time.” I’ve had subcontractors admit that they spent too much time on a project, that they should have let me know, and agree to discount their time.
That said, if you want to have a dedicated subcontractor who is focused on providing great customer service, you don’t want to be the kind of client who nit-picks their invoices. On more than one occasion I’ve been too busy to respond to a client emergency and a subcontractor has jumped in to solve it without passing the buck and saying, “Oh I can’t help you until I get budget approval…” Perhaps a compromise would shed enough light on the situation to prevent it from happening again, but maintain a positive relationship with your subcontractor.
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