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A clause in agreement to get paid back from Development company ?
Is it possible to add a clause anyway, to avoid losses?
Future

5+ Year Member



 
Msg#: 4021842 posted 7:42 pm on Nov 9, 2009 (gmt 0)

Hello,
We are disucssing only our inhouse development requirements, we are not affiliated or work for any clients.
All work done is our inhouse requirements for our own owned web properties.

We are dealing with a company, who took more then 1 year to finish one of our website development/redesign project, they claimed to finish the same in 4 months time (although according to other quotes maximum bid was for 5 months only).
Due to huge number of sites entering market today, the one who launches there ideas earlier, makes a fortune.

We have another inhouse project (SEO TOOL) in development with this company, the wireframe made in axure, is still not finished and took more then 7 months !

How can we include a clause in project terms and conditiions, that if project is not finished within due spam of time (as instructed by developers) they have to pay back us ?

Is this possible ?
How much should the charges levied be ? If we spend 1000 US$ on this project as total amount ?

Thank You.

 

httpwebwitch

WebmasterWorld Administrator httpwebwitch us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 4021842 posted 8:22 pm on Nov 9, 2009 (gmt 0)

<disclaimer>IANAL (I am not a lawyer)...</disclaimer>

As far as I know, if you have words in a contract and both parties agree to them, and the words don't describe something impossible or unethical or illegal, then it's binding. So if you draw up a contract that says THIS PROJECT MUST BE COMPLETE BY FEBURARY 15, OR ELSE _____ -- then that's that.

What goes in that blank? That's up to you. Put something there, and make sure you call attention to it when the contract is being negotiated.

A softer way to approach this is to tell your dev outsource that if they finish the job by a certain deadline, they earn a bonus $X above the offered price (a bonus which obviously is part of the budget). If it's two weeks late, it's less. If it's four weeks late, then it's even less still. Whittle down the price over time until they are essentially building the thing for cost with no profit, and see how urgently they make your project their top priority.

It's rare, but I've worked on a couple of projects where completion on time was a "drop-dead" necessity, where I'd only get paid if it was finished, tested, and live on a certain date. By agreeing to do it, I had to be very confident, the scope was very clearly defined, and still I was really putting my buttonhole on the line. In those conditions it's remarkable how hard you'll work to get something done on time.

These kinds of stipulations are more common when the completion date is paramount, for example a website advertising or selling registrations for an event which is going to happen on a specific date. Can you imagine if pubcon.com wasn't ready to accept registrations until after Pubcon? it would be ruin.

The clause you describe can't be done in hindsight - you need to have it in the initial contract. Otherwise you get into flaming battles of complaints and excuses which neither party can win.

Future

5+ Year Member



 
Msg#: 4021842 posted 8:34 pm on Nov 9, 2009 (gmt 0)

Can you imagine if pubcon.com wasn't ready to accept registrations until after Pubcon? it would be ruin. q
Thank you very much for a very meaningful reply, I appreciate the same.

If entire project costs $1000 and we made an advancement of $250 for wireframe development using Axure, will the development company agree to entire into new clause ?
We have one reason, if they do not, we discontinue the project, and continue forward with another company, ignoring existing developer.
We faced a problem with this dev. company were we spend more then $2000 for another project as mentioned in my first post.

Thank You again for your very meaningful and helpful reply httpwebwitch.

aspdaddy

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 4021842 posted 9:45 pm on Nov 23, 2009 (gmt 0)

Been in this situation a lot. The process is actually quite simple, but you must follow it!

Each time a milestone is missed you have to either

A) Choose to accept late delivery by extending the deadline, making it clear further missed delivery will not be accepted
OR
b) Reject the work and obtain a refund for any outstanding deliverables via Escrow. You will incur fees of around 5% but these should be covered by a supplier guarantee - see below.

Each time you choose A) keep written evidence in case of dispute / arbitration.

In practice itís difficult because you need the work completing and it takes more time to contract again, but you need to learn which suppliers either deliver well consistently or dont deliver. You more you contract work out the samrter you get.

You have to do all the work upfront on contract writing / detailed specification and supplier selection to avoid the bad ones.

Also never make any advance payments direct to a coder, it de-motivates and encourages late delivery. Always use Escrow or a trusted 3rd party to hold the funds during development.

For sub $1000 projects make the supplier pay 25% non refundable guarantee before they start work.

Future

5+ Year Member



 
Msg#: 4021842 posted 10:28 pm on Nov 23, 2009 (gmt 0)

For sub $1000 projects make the supplier pay 25% non refundable guarantee before they start work.
can you please explain this in layman terms ?

I appreciate your time checking/replying to this question

Future

5+ Year Member



 
Msg#: 4021842 posted 9:31 pm on Dec 4, 2009 (gmt 0)

Dear friends,
We have included a penalty clause issue in contract, but dev. company is informing us to add a rever-penalty clause in the contract.

Our wireframe is 100% ready and does not requires any additional inputs from our side..

Dev. Company is also not ready to disclose the amount of penalty, they will face, in case they are not ready to deliver this project on time.

Since, we already made an advance payment of 20%+, they are trying to flex there muscles..

FSD: Does not amounts to 5% of total project costs.

vincevincevince

WebmasterWorld Senior Member vincevincevince us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 4021842 posted 3:17 am on Dec 5, 2009 (gmt 0)

You can't add such clauses now, forget about it. Your contract is established. Add them only for the next project you undertake. If you want to renegotiate the contract, then you must be prepared to renegotiate all items of the contract including the delivery date and the price. (You cannot hold your developer to a price quote given under one contract if you are no longer offering that same contract).

I do not know what your business is, yet it does seem you are trying to get an expensive build (4-5 months of work) produced for a low sum ($1000). It doesn't matter what kind of contract you use... that kind of strategy rarely pays off. If you want things fast, then you need to be prepared to pay market rates for your development company.

My advice is to complete the current project under the current terms. Then, for your next build, start by specifying the timescales, and don't pick the cheapest developer; instead pick the one with a good track record of delivering work on time and to a good quality.

Budget $200-500 per working day for a developed world company, $50-100 per working day for a developing world company because honestly anything less is insufficient for the developer to not be doing a cowboy job.

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