14 Nov Essential Contract Terms for Consultants, Independent Contractors, and Freelancers: Part 1–Scope of Services Clauses
This is the first in a series of five posts designed to assist consultants, independent contractors and freelancers to address some of the key contract terms that should be negotiated and included in their contracts with clients.
Legally, a contract cannot exist without an offer of terms, an acceptance of the same terms and consideration for the contract. In other words, there has to be a “meeting of the minds” as to the terms of an agreement and each side gives something to the other.
Each contract consists primarily of the exchange of services for a fee. This post is about the scope of the services an professional will be providing. The scope of services determines the price to be charged and as such it is imperative to have a clearly defined scope of services provision. If for no other reason that to avoid scope creep.
Ask yourself, as a knowledge worker, have you ever had a client who asked for “just this one small extra thing?” Then one thing becomes two things, then five things, then ten things and before you know it, you have expended twice as much time and effort than you thought the project would take and the price you quoted has not changed to match? If you said yes to those questions, then you have been a victim of “scope creep.” For knowledge workers in particular, scope creep maybe the largest undocumented “loss” on your bottom line.
A clearly defined, detailed scope of services contract term will combat the joint contract enemies of ambiguity and scope creep. There are two parts of an effective scope of services provision, which should be presented together in a contract, which will combat scope creep.
First, before you quote a price to any potential client, take care to fully determine what the client expects to be done. For example, a potential client approaches you and says, I need my website redesigned with a new branding approach. As written, that task is pretty ambiguous–the enemy of all business contracts. What does the term “redesign” mean? Do you have to develop the new branding? Will you be producing a new user look and feel? Will you be incorporating a new back-end structure? Will you be producing new plugins? Will you be responsible for producing new content? Will you be responsible for maintaining or hosting the new website? In other words, your expectations about what “redesign” means is far more technical, and time-consuming, than the client believes.
Although specifically, a suggestion for drafting a contract in a legal sense, take the time to fully explore, and document, the discussions you with the potential client about expectations and budget. Not only will you be able to better determine a price for the work, you will be able to accurately describe in a your contract what the client wants and is capable of funding.
Remember also, as part of any scope of services, you will need to include communications about your services as part of the deal. I encourage my clients to embrace the phrase “reasonable communications” and take care to tell the client during discussions what you think reasonable means. A request for weekly status reports is probably okay, but three phone calls and six emails a day is not.
Business Tip: If you think you are going to have a “clingy client” micromanaging your work, I suggest documenting each phone call and email, and the time it takes to address those communications. Include that documentation in your monthly status reports or invoices. Then you have a record to show a client that their communications are unreasonable.
This description and reasonable communications provision then becomes part one of your scope of services provision in your contract.
Second, project based workers and contracts should have an out of scope services clause. Essentially, an out of scope services provision tells the client anything not included in the detailed scope of services provisions is considered out of scope services and you as the contract worker is not obligated to perform out of scope work. You should include two parts in an out of scope services provisions:
- you as the contractor, consultant or freelancer maintains the sole discretion to perform out of scope services.
- you will charge an hourly rate for those out of scope services. Business Tip: I recommend your hourly fee for out of scope services be at least 25% greater than your normal hourly rate for work. The idea is to make the client stop and think about asking for out of scope services.
Business Tip: Think of out of scope work as the contract you do not want to take because it is a great time sink. If the out of scope service is something you want to take on, offer to amend the scope of services clause and the price.
Under the law, for a contract to be formed, there must be a “meeting of the minds,” an agreement between the parties as to what the contract is about. The scope of the work a consultant, independent contractor or freelancer will be providing is likely the single most important term, as the scope of the work to be done drives the price and the availability of the worker to take on other work.
A scope of services clause should contain:
- a detailed description of the services to be performed. The description should be detailed enough to remove as much ambiguity and doubt as to the work to be performed under the contract.
- an out of scope services provision which vests in the consultant, independent contractor or freelancer the sole discretion to do the additional work and to charge an hourly fee for such work.
Together these provisions will provide a solid scope of services provision that avoids ambiguity and eliminates scope creep.
A clear scope of services contract clause prevents ambiguity about one of the most essential contract terms. If the work to be done is too ambiguous, disagreements about what is included in the contract price are all but certain to take place. The key to a good scope of services term is clearly understanding what the client expects. Such clarity happens only when you and the client have a detailed discussion of services and expectations.
For more information on combating scope creep and drafting a contract to encompass a solid scope of services provision, contact us to see what we can do to help.
Have you been a victim of scope creep and want to share your story? What contract language have you used to avoid ambiguity is the services to be provided and avoid scope creep? Comment below, we would love to hear from you.
- Six Ways That Being An Independent Contractor Transforms You (sarahbrownmarketing.com)
- How To Survive On Freelance, Contract Or ‘Odd’ Jobs (forbes.com)
Check out the rest of this “Five Essential Contract Terms For Consultants, Independent Contractors, And Freelancers” blog series: