Trying to estimate the cost of a project is difficult if a) you’ve never done something like it before, and b) you have no idea how long it’s going to take. This guest post by Sherri Henkin of Content Clarified shares her story of underestimating the cost of a project and what she did to fix it. Take it away Sherri… 

Backstory of the Project

“Sherri, my niece, Debbie just graduated college. She’s beginning to looking for a job “job”. I thought you would be a great resource in helping her tweak her résumé etc.”

“Great, Jane! Thanks so much!”

“I told Debbie that you’re awesome—that once you worked over my résumé I got numerous calls for interviews!”

“Great! Thanks for the feedback! I look forward to hearing from Debbie.”

I enjoy helping folks with their résumé. That introduction super-charged me to do an over-the-top job for Debbie.

Debbie emailed her current résumé to me. I reviewed it briefly and then we spoke.

During that intake call, I learned more about this bright, energetic person. I prepared my Statement of Work for the full résumé package: editing; content revisions; two draft résumés, and one final version in Word. I estimated the project would take between three and four hours, at $50/hour, and requested a deposit of $175 (3.5 hours)–$200 (4 hours) before work began. I received the deposit through PayPal.

What Happened With the Project

I developed the first draft, sent it to Debbie for review and comment, and requested a response by a certain date. Debbie responded with additional information and corrections. I enjoyed editing this résumé, and kept recording my time. The project moved along nicely.

Well into the edits for Draft #2, I noticed that my time was over the 4-hour estimate by .25 hours.

I had a problem—or as I prefer to think of it—a situation. Actually, two situations: I had underestimated the amount of time the project would take and had gone over the estimate without informing the client. What could I do?

Honest disclosure.

Along with Draft #2, I outlined the situation in a time and payment summary:

As of this draft, we are at 4.25 hours, .25 hours ($25) over the original 4-hour estimate.
I expect I’ll need another .5 to .75 hours to complete/finalize the résumé content and format. The total time will be 4.75 to 5.0 hours. I realize that this time is over the original estimate and we did not discuss this occurrence.

You had paid $175 (3.5 hours).

I included a breakdown of possible time remaining (0.5 hours to 1.0 hour) and the payment options.

The balance due for 4.75 hours will be $62.50.

The balance due for 5.0 hours will be $75.00.

Since this was my error, I figured I’d leave the decision to her:

• Will you authorize me to spend the extra time, up to 5.0 hours, and pay for that time?
• Or, will you only pay for the original estimate of 4 hours?

How I Resolved the Situation

Debbie’s email response was quick in coming and cheerful: “I will be doing the $75 payment option. Thanks so much!” That meant she paid for 5 hours!

When I added up the actual time spent, it came to 5.75 hours. My practice is to send a final invoice before releasing the final document.

A new situation: I was over the 5-hour estimate. I decided to include the extra 0.75 hours but reflect that as a discount. My final invoice read:

Time Spent: 5.75 hours

Less discount of 0.75 hours

Total hours: 5.0

Rate: $50.00/hour

Total Project Cost: $250—Project Paid in Full

What I Learned From the Project

Act with integrity and honesty in all my business and personal affairs. This situation was no different. In terms of business practice, I learned:

• Be willing to earn less if I’ve made the error!
• Continue to keep my time records to use for future estimates.
• Try to estimate a project more accurately by reviewing time sheets of similar projects.
• After estimating, add another 25% to the hours estimate as a contingency.
• To keep the client informed of the time spent, provide time summary at about the half-way point through the project.