Friday, May 15, 2009

Expenses and proposals

So as we look on at the train wreck of MPs expenses, let's ask ourselves why we are all fed up.

OK - these are publicly elected officials that appear to have been creating their own little secret club with many perks.

There are lots of questions. Why are these things not taxed as perks? Why if you were so busy, did everyone seem to manage to claim too much on their expenses, was there anyone who under claimed? When I'm busy, I'm not claiming anything...they are the last thing I get around to doing. And just because a rule allows something, doesn't mean that rule has to be exploited does it? Where does an individual's sense of right and wrong step in?

OK - what's this to do with a proposals blog?

Expenses to most people are reimbursable costs that they initially pay out of their own pocket before claiming back, not a series of entitlements. This is what you would expect as an employer and as a client organisation you also have a right to know what constitutes reasonable expenses.

When working on a project you have occasional expenses outside the core costs of your business - transportation, accommodation, hospitality etc. But are these the cost of doing business or are they extra for the project? Do you list probable expenses as an additional cost in your proposal or absorb them into your standard business overheads?

I've submitted proposals where outside of the financials I've said something along the lines that expenses will be charged for necessary travel and associated costs that occur due to this project, usually providing an estimate and saying that they won't exceed this. The Project Manager is responsible for keeping track of the evidence and submitting this to the clients for reimbursement.

I've never had a client have a problem with this, but I used to have a client whose policy was to charge a 20% administration charge on all expenses. Clients generally raised an eyebrow at this, because just like MPs it looks as if you are trying to profit from expenses. In this case the business calculated that the costs of processing expense reports was around 20% of the cost of the expenses, so they weren't profiting, just ensuring they didn't lose money.

But some things are the cost of doing business and businesses want to know they are receiving good value. Having the appearance of trying to make money doesn't build trust and good faith. It's important that throughout every aspect of your proposal what you are communicating and the impact (positive, negative, financial) is clearly discernable from the information you have provided.

It's a lesson that some members of parliament are going to learn the hard way - perception is reality. So make the perception of your submissions clear, explicit and fair. If you don't you may win one piece of work, but I bet you'll never work with that client again.