Estimating costs to a client

The estimate is a contract which sets out the cost to client for completion of a project in a clear and understandable way, including any assumptions, caveates and conditions.

Considerations

When creating an estimate, you should consider the following points and ensure:

The estimate is an accurate reflection of the deliverables and purchases required to complete project.
Any decision to over-service a project must be approved by the appropriate team member.
Incomplete briefs require additional time scoping a project (eg project management time).
The number of amends/revisions included as part of the estimate should be clearly stated.
Where an estimate contains third party purchases, project management time should be included.
Large cost jobs should be part-billed upfront – especially those which incur significant 3rd party cost.

Workflow

Draft – The estimate is being created or edited. The costs include on a Draft Estimate are likely to change and are excluded from any primary/WIP reports.

Pending – The estimate has been finalised and is/will be sent to the client to approve. Whilst in the Pending state – the Estimate can be download and shared with peers and/or clients. The costs included on the estimate are now reported on as Forecast Revenue.

Approved – The client has approved the cost estimate and provided the appropriate Purchase Order / Cost reference number in order for these costs to be invoiced against. The costs included on the estimate are now reported on as Projected Revenue.

Declined – The client has declined the costs OR there has been a change in scope that has invalidated the original estimate. From the Declined estimate, the estimate must be put back into Draft mode, updated accordingly and progressed through the workflow once again.

Cancelled – The estimate will progress no further. If the client decides they do not want to progress with the estimate, or if the estimate is superseded by another estimate, it must be cancelled. Cancelled estimates are excluded from any WIP reports.

Business rules

When creating an estimate, the line items included on the estimate must correspond to a ‘Deliverable’ or ‘Purchase’.

Any changes to a ‘Deliverable’ or ‘Purchase’ are NOT automatically updated on the estimate.

If an approved estimate requires revisions, then it must be ‘Declined’ to return it to ‘Draft’ state where it can be updated.
If an existing line item (eg Deliverable or Purchase) requires adjustment, it should be removed and re-added to the estimate, pulling in the latest costs.
When an estimate has been approved, ‘all appropriate reference material’ must be attached, this will include any email correspondence from the client approving the cost and a copy of the ‘Client Purchase Order’.
Ensure that a ‘Deliverable/Purchase’ only exists on one approved estimate.
You cannot create a ‘Sales order’ for any work that does not exist on an ‘Approved’ estimate. This ensures teams correctly documented all estimate approvals, capturing all the mandatory information required to invoice.
You can create multiple estimates that include the same ‘Deliverables’ or ‘Purchases’ in order to present options to your client. Once the client has ‘Approved’ one of the options, you must ‘Cancel’ the other Estimates, ensuring they are excluded from any reports

Creating an Estimate

Prerequisites:

Any deliverables will have been created.
Any line items and quantities will have been created and added to the deliverable(s).
The rates used have been approved by the appropriate business director.
Any purchases will have been added to the project with the appropriate Sell costs.

To create an estimate, first open the project/campaign/activity and navigate to the ‘Estimates’ section.

Estimate listing screen

Click ‘New estimate‘.
Enter a ‘Title’ and a ‘Description’ (if applicable), and click ‘Next’:
- The ‘Description’ will appear on the Estimate PDF that is generated.
- You can also define the ‘Default’ tax that is to be included on the Estimate print out, if required.
In the ‘Line items’ section, you will have the option to ‘Add’ Deliverables or Purchases.

Estimate line items section

Selecting ‘Deliverables’ will present you with a modal to select the appropriate deliverable(s) from the project.
Tick the checkbox next to the ‘Deliverable(s)‘ you wish to include on your cost estimate, then click ‘Add’.

Adding deliverables to an Estimate

Selecting ‘Purchases’ you will be presented with the list of purchases currently existing on the project.
The cost shown is the ‘Sell (Net)’ value from the purchase which will be automatically converted to the currency of the project if the purchase was made in a different currency.
- The exchange rate used will be the approved IIG rates
Check the tick box next to the ‘Purchases’ you wish to include on your cost estimate, then click ‘Add’.

Adding purchases to an Estimate

Once the appropriate items have been added to the Estimate, you have the option to select ‘Detailed’ against each of them:
- This will provide additional information on the given estimate, for instance showing the breakdown of a deliverable down to Stage or Line item level.
- Leaving this option unselected will show a single summary line
You can apply this all selected line items using the ‘Edit > Layout’ menu item.
Review the values displayed on the estimate and the total values in the ‘General information’ section and once you’re happy with the estimate, you can click ‘Send on approval’.

Sending an Estimate for approval

Once the ‘Estimate’ has been finalised, you can click ‘Send for approval’. Depending on the configuration of your OMG site, the estimate status will either update to ‘Pending’ (Workflow A) or present you with a modal to send directly to your client(s) (Workflow B) .

Workflow A

As soon as you click ‘Send for Approval’ the estimate will become read-only, meaning no changes can be made. From this point, you will be expected to download a copy of the Estimate and seek approval from you client via the mechanism you currently use (eg email).
Please note:
• If you are uploading the estimate to the Assets section of the project – please understand that anyone with access to the project now, or in the future, will be able to view these costs.
• We will provide functionality to send the estimate on approval directly from the system as part of a future update to OMG.

Workflow B

References

OLIVER Quote Process for Existing Engagements