6 ways to justify A/E salaries to clients in a tight market, from PSMJ Resources

August 11, 2010

In a tight market, your clients may be looking to tamp down what you charge them for your management expertise on their projects, says industry consultant PSMJ Resources Inc. They offer six ways to address salary concerns:

1. Identify significant contributions that your people have made to actual projects. You can tell the client that “Just this year, this management team completed the ABC and XYZ projects on schedule with minimal changes and received written commendations from the project sponsors.”

2. Assess your negotiating position accurately. Does the client like the existing team a lot? Do they feel that these specific people are essential to the project? Would it be difficult for you and the client to find someone at a lower salary to provide comparable value to the project? The more yeses, the stronger your position in getting the client to agree to invest in the value and cost of the management team assigned to their project.

3. Make sure that you can successfully demonstrate all the high-level activities your managers are doing on your client’s project. Clients will associate key individuals holding high-level responsibilities with corresponding higher salaries.

4. Quantify how much your project management team’s expertise adds to the client’s bottom line.  You can do this by proving that this team will complete the project faster, with fewer changes, and deliver an end result that will save the client money long after the design work is completed.

5. Make the client believe that they are competing for the team they want. Nothing enhances your negotiating position like another client’s potential project offering an expression of interest in this project team. Even if you intend to use this team on this project no matter what, if a second client expresses interest you can legitimately tell your first client, “There has been interest from another client for this team; however, I want to give you every opportunity to secure the team that you feel best about.”

6. Don’t over-negotiate looking to gain the last penny. If a project is important to your firm and you can reach your target multiplier take the price the client is offering – it is rarely worth the ill feelings and risk of losing the relationship just to secure the win. Even if you prevail, you may have set up unrealistic expectations for your client –screw up once and you know you’ll be in the doghouse.

For more, check out the PSMJ A/E Management Salary Benchmark Tool.

         
 

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