Budgets, contracts, how to estimate our work. PART 2

by David Wright (dwright@artmaze.com) - Artmaze (http://www.artmaze.com)

This is a continuation of my series of articles related to Budgets, contracts, how to estimate our work. If you have not yet read part 1, please do so. I find vignettes useful, especially for those that are starting on this or any other similar type of business. Some are new, some are similar to last article, but due to requests, I have retained the numbering of cases that many of you commented on as having liked on part "I" of these series. I am going to discuss, add and clarify on some mentioned typical business-to-business scenarios and how to avoid them, or at the very least, how to handle the situation. I just want to clarify that my recommendations may sound reasonable and logical, but I am not a legal expert, you should always ask a lawyer for professional advice.

1. You wrote an "acceptable" contract; you also thought that your client's briefing was understood; but then, execution was a disaster

A contract is not a guarantee to a flawless execution of a job; it is just a part of the whole process. Some clients don't truly read the contract, (typically architects due to their artistic background), and simply quickly scan it and think that what you wrote is simple a pure waste of time; something that you never say to others, something you keep to yourself. Some others will actually read it (just a few) and some, the ones that do their homework, forward it to their lawyer. In that case better expect changes, and their lawyer will want to tip the balance to their side since they are the ones putting the money.

To explain this better I shall talk a bit about contractual work. Always keep in mind that the one that writes the contract has more control over the situation; you should always write the contract or have a lawyer write it for you. In the event that your clients writes the contract, declining the use of yours, and claiming that is their normative to write contracts, then you should try to avoid it, claiming in turn that is your normative to write yours, or at the very least, bring your lawyer into the negotiation. You do not need an expensive lawyer unless you are dealing with a huge amount of compensation, and in the event that the job is worth a considerable amount of money, you should always consult a lawyer.

Returning to the subject, have you thought that even that your client may have read the agreement, not necessarily all the other people involved know about the contents, nor perhaps have the time to do so? A solution follows; and this is more a project management task than a legal hat. From the beginning of the execution of the contract, write a clear project schedule. Better still, write one that fits in one page, and give that to everyone that is involved by a document or email that basically does this one thing: informs everyone what is needed from each side and the due dates. Remember: as I wrote in the last article, it is your job to keep a flawless communication.

2. I wrote the contract and my client decided to write theirs and it seems that you have no choice

This clearly tells you that your client wants more control over the execution of the project and that your client is doing his side of his homework; this is common and there are no real arguments to say who has the right to do what; in most cases the one that is risking more tends to prefer to write the contract. In any case I suggest to read carefully their version, compared it to your version, without fear of the legal words and jargon; note all changes, and ask to yourself why is the client requesting such change or amendments? Perhaps everything is just fine and these are normal requests; perhaps not, perhaps they are asking too much, or involve unclear risk. Those with experience may not need legal consultation right away, but for those that are not, you definitely do.

Something to watch out is the following scenario: Your client may request binding your agreement to your client's prime contract with his own client; such as an architect (your client) to his developer. This really means that in the event of failure, you may have to try to collect from this third party, and in practice this is usually impossible, since you do not have any agreements with this party. Their defense would be that they were not aware of, nor had any contractually relationship on such a matter. It also communicates that your client really does not want to be responsible for something that they should be responsible for, which in addition tells you should perhaps be careful.
This scenario is more likely when the amount is above $25K and they have a in-house lawyer.

3. Copyright ownership

You should always have a clause that notes that you are the copyright owner of your artwork, and you do not claim copyright ownership of their design, just your rendering. In addition to your licensing imagery to them for unlimited use, (with certain conditions such as credits, credits on publications, modification rules etc) some clients will not want to let you keep copyright ownership; in which cases you must negotiate.
Negotiation can start as follows; first requesting that you get to keep copyright ownership but agree to a confidentiality agreement limited to some specific number of months; in other words you yourself cannot show it to others until this time has passed from the staring date. If this is not acceptable to them, you can offer to grant copyright rights but you get a license to use for portfolio purposes, and this license must be unlimited. In which case on contract or on delivery you write appropriate assignment and license agreements for the work. In any case stipulate no assignment of copyright occurs until payment has been made in full.
I truly recommend that if the client does not want to agree to your ownership of any copyrights, nor rights to use, then you should increase your fees; since your work could otherwise to be used to get more work.

4. You accepted a job that will be paid in 60 days in full, your client's presentation is in 30 days, and your client has a contract that you can't freeze or take action on, nor stop delivery of dues for their presentation, what can you do?

Well, you are taking a risk on contracts with no early payment nor a step-by-step payment schedule. So a remedy could be to not accept such terms, or else you are simply going to have to take the risk.
This is something that you need to watch out for, and evaluate the risk. Who is your client? Is it a company that has been around for some time, and one that has some reputation? Is your contract made with the company you know or another company with a similar name? For the case where your client is a developer, is the contract made with the main developer company or a new company made just for the development? As said earlier, is your contract bound to a second contract? I would never recommend accepting a contract with a company that was just created for that particular development; after all, why are they not using their solid company name? You must understand that corporations, at least here in the US, are like barrier walls, you can easily incorporate a company, and that company may or may not have any serious capital value behind it, especially assets. So again you may have a perfect contract but if the other party has no real net worth, then how could collect for work done and time expended if things do not work out?

5. My client is reading the contract in my face, but suddenly seems to get bored and skips pages and agrees and signs, this is good, right?

No, this is not good. It is natural to think that you are actually in a better position, and you may feel better since this phase is kind of uncomfortable, a phase that seems to have passed and you hope not to come back again to, a car sales representative's dream. Remember: is your job to make communication flow, so is better to say to your client that you would feel more comfortable if he reads it completely, and in addition you may say that perhaps he should take the time to read it and sign it later. It is better to confront uncomfortable issues now, rather than running away from them; the better your communication is, the less problems you will have on your project.

6. Wording, phrases, what words to pick?

This is directly connected to your culture or country, in the US, direct words are commonly avoided and considered un-polite, such as "restroom" instead of "toilet". But the cultures of some countries, or states, may prefer plain wording. The phrase "note of termination of contract" may appear to mean that if something went wrong (at least here in the US) one may simply communicate that the contract has terminated. I suggest you pick words that do not bring negative associations; the word "termination" may be replaced by "conclusion"; it certainly sounds better. I personally don't have a problem with this, but is something to watch out, more so in the US.

7. Sign-offs involving too many people

The worse case is as follows, a project requires that sign-offs are done by multiple parties in your client's company, and in addition a third client (your client's client). This is guaranteed to be a stressful scenario, since you will spend unnecessarily time with all parties. As said in part I, you should work out with your client, to designate in the contact, one single person who will write any changes and provide them to you.
In the event that someone else contacts you, you should listen, and explain on very politely, and in a friendly manner, that for this project person "x" was assigned to be the gatekeeper and you are not to complete the matter should it not be that person who is contacting you. Establishing these limits may be a bit of work for new clients, but better off training them with your workflow than not to do so. In addition you should write a brief memo of the event, keeping it polite, so that other parties are not shown as ones to blame (even that this could be the real case). Also, a memo to the gatekeeper is recommended.

8. Sign-offs, changes were not delivered as quickly as I thought

You delivered drafts on time but you don't receive changes as expected; you get email 2 days later about the subject. This has to do with planning, you should include in the contract and in memos, when sign-offs are due. This commonly happens when sign-offs are via email. What usually happens is that your images are sent to your designated person, and he forwards it to, say, 3 more workers; but he may not receive response from all at the same time, and some may forget about it since they are really pressured at the design level.

In addition some comments may be due to the fact that you are working/modeling based on revision number 22, and designers are already on R24 and have no clue that you are still working on R22 of the drawings. A remedy is to note in all drafts the date or revision number as per plans supplied by your client, and you communicate to your designated person that if changes are not received by "n" time, delays may occur, and if such thing really happens, you write a memo to him (not to anyone else) that delay may happen due to delay on the sign-off process. You should never copy this to someone else and never to his supervisor unless things are critical.

Also, always make a clear and loud statement that rendering are going to be done as per R22, and in the event that you are contracted to absorbed changes, then the same should be clear and perhaps a portion of your contract will be based on an hourly rate.

9. Colors, Pantone, colors are not the same as provided by client

Sometimes discussion arise from your rendering colors do not match their colors. Most of you will understand why; it is simply that the color gets modified by its environment, by light, by other colors. Some clients may not understand this right away. A second scenario is that their printer is not calibrated as your monitor. You should only worry about it if you client shows real interest on color precision such as providing you with pantone swatches or codes, or by simple straight interest on color. You should explain this possibility from the beginning, and you should perhaps make a note about it on contract. Your client may prefer a NPR (non photo-realistic rendering) rendering than a photo-real rendering and he may not know it at the first meeting; it is your job to clarify both.

10. Taking responsibility about your mistakes

Learning how to take responsibility about your errors is not necessarily a business skill, is a personal skill. There are employees that always blame an error on something else, accepting it or not such as "Yes it was my fault but..". The other types are the ones that do get blamed, and don't say anything. You may ask what has to do with this article? Very much so, these attitudes bleed into your negotiation skills; you must know when you fail and accept it with no excuses. Clients do prefer this to an excuse, even if your excuse could be a good one. In addition, if you want to become managers, you should always learn how to take responsibility, and accept when you fail.
If you are managing a group of ten and one of them fails, this means that you fail not necessarily your group member.
When you face delays, you should communicate it to your client; your client will be angry, but better off than feeling treated badly with a cheap excuse or manipulating phrases. Never translate guilt to their side, not only that it will come back to you, it will come back with more momentum. To compensate you can do many things, reducing fees, giving credit to future jobs, or give something extra such as an extra rendering. In addition, keep in mind that we are all humans and paying for lunch will not hurt.

Regarding Animations:

Many have asked about how to rate animations versus stills. Some think that an animation is a huge amount of stills. My answer is that the amount of hours involved on the production of your animation are the hours you should charge. Your profit margin built should be included in your rates, as architectural offices here in the US charge approximately $50 to$60 per hour for drafting, but they really pay $15 to $20.

In addition, you may have a rendering farm, or simply want to charge CPU usage for those tedious rendering times, this is something that you should charge, and a quick way on how o determine this is by calculation how much you're rendering farm costs per hour, including depreciation, and add the same profit margin you have to that rate. Keep in mind that such calculation is different from calculating employee fees; your hardware is costing you money on the full 24hr day, and not only 8hr per day.

I agree that Animations tend to be more profitable than single renderings; not only that you can get stills from your animations, but also as an overall product, it is more impressive and has more brings more value to your client. But just charging more because is an animation is not appropriate; always charge to your client the amount of work involved, from your hours, others, to your hardware hours. Competition comes from better workflow, a better product, and better quality.

Last thoughts:

I do not expect any reader to agree nor to learn all this just by reading my articles; I do wish my help makes someone remember a few facts wile nervous in a meeting with a tentative client, and I hope my work guides those that are starting or simply are great artists with minimal business skills. Never run from your obligations, never run from the uncomfortable scenarios, from my experience, running just makes things worse; simply learn from your experiences.

David Wright is a long-time LightWave 3D user and CG artist and has succeeded in the A/E/C (Architectural / Engineering / CAD) market with Artmaze becoming a leading provider of integrated 3D animated visuals and multimedia services. Coments or suggestions about this article are welcome; David can be reached via email at dwright@artmaze.com.