Imagine if 71% of your agency’s SoWs were underestimates. No matter how talented your team is, how hard they work or how efficient you are at running your shop, there is no way you will make money. Perhaps it is rosier for those that tend to overestimate? Not so. The obvious issue is that you might price yourself out of the market, but more problematic is that in overestimating you’ve also committed resources which won’t be used and that can lead to lost opportunities and revenues elsewhere.
So, what’s to be done? Pay more attention when estimating, get your brightest and most experienced to estimate, gather together all your past estimates and compare them against actual, create a template and implement a process so nothing will be missed? Track and record approvals and changes along the way? In short, yes. But there is an easier way.
The inaccuracy of estimating SoWs is the reason why Scope was created. It’s a tool that turns the art of cost estimating into a science. It uses a live pool of job data from 800+ agencies to help agencies benchmark deliverables, resources and hours. It breaks each deliverable down into component tasks so both agency and client can be crystal clear about what is being delivered for the money, and then that holy grail of finding the pricing sweet-spot between cost and value becomes a matter of course.
Consistent, precise scopes that clients can trust or planning fallacy (Kahneman and Tversky)? The choice is yours.