Thursday, August 26, 2010

contract expansion

When I was working in consulting, we put a lot of emphasis on getting the right contractors (drillers) and getting a contract in place. Some of the contract was our standard legalese, but most of the language was based on a combination of corporate technical requirements and lessons learned ("gee, why is the data for this well always so weird?"). And the technical specification always got looked at by a couple pairs of eyes to make sure it would work.

And then we would go out into the field, and everything would change. Something would get all screwed up (torrential rain flooding the site, a large rodent would chew through something important) and we'd have to re-work things. We'd end up with a little bit of extra space in the budget and take on a whole 'nother bunch of work.

So then what?

Since we had the drillers already out there, we weren't going to bother re-bidding work or writing the spec. Need something totally different? Just call the drilling contact, ask the guy for an estimate, spend 10 minutes discussing what may work, formalize it in an e-mail, and keep the fieldwork going.

It's a pretty good racket for a drilling company. Get your foot in the door with a picky, low-margin contract, and live high off the hog with the change orders.

Of course, this works pretty well for a consultant, too. The client ponied up some money for some unexpected work? Time to add something extra to cover the little shortfall elsewhere in the budget.

The extra work is nice, for both a driller and the long as you don't depend on potential work to cover your ass financially.

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