So a customer mis-specifies, or completely missed something from a specification, You asked all the important questions to allow you to get started, but now you realise there's something missing. One route costs time or money, maybe another allows you to dodge the problem, maybe another makes no difference to cost but causes the need for uncomfortable communication.

This happens in every walk of business, and it’s unsurprising, customers are not the expert at what you do. They come across as knowledgeable (because they don't want to be taken for a ride), but what they really know is their core competence; the piece they didn't outsource to you.

Let the contract be your shepherd

The contract is your guiding light, but at times it can feel like both you and the customer are completely in the dark. It sometimes gets to the point where your team starts to see the contract as more of a guide, as the detail piles up, the contract starts to look weak, with your team feeling like they are going over and above, with no recognition from the customer

This is where customer and supplier start to mis-align; the customer simply sees you completing your contractual obligation, whilst your team feels like the company has been over generous with their skills and time. Where did it all go wrong? Some would dive straight into root cause and say - "we need to do better contracts" (and to be fair, for some, this would be a drastic improvement), others may simply "put it down to experience" or just accept that this exact problem will probably never happen again, or "there's nothing they can do about it".

Here's the enlightened perspective; "a failure of the specification is a failure of your ability to satisfy the customer's need".

This could sound crazy - the customer needs are defined in the contract, surely?

You Need to Look at it from the Customer's Perspective

To make sense of it, let's dive into the situation from a customer's perspective; the supplier is the expert at providing their product or service. As a customer you are looking for a solution to a problem. Even if you think you're buying a product or service, your requirements will be specific to you, especially in manufacturing and engineering.

So from a customer's perspective, the contract and specification are actually part of the solution they are paying for, even if they wrote it themselves. They expect you to make sure you have all the information you need to complete the contract, even if they don't say it aloud or in writing.

"...from a customer's perspective, the contract and specification are actually part of the solution they are paying for..."

Before I lose you to thinking this is a "the customer is always right" article - it's not! But understanding the above behaviour and preconceptions of the customer may help you turn yourself into the heroes rather than the bad guys.

The planning horizon limits the effectiveness of a contract

Part of the issue with contracts is that they too have a planning horizon - or a distance into the future within which the activities to be undertaken can be planned or predicted to an acceptable level of certainty. In other words, you can't specify some of the detail until you've progressed along the contract laying down some of the foundations. This could sound like a dodge, calling it "progressive elaboration" and having done with it. The other challenge comes obviously in the form of cost, who picks up the tab for the expensive details? This is where your knowledge and expertise can convince your customers.

However, the aim of the contract should be to identify the key objectives for the customer and the key cost drivers for you as a supplier. The grey areas will inevitably be lower cost areas of work anyway if you achieve the above aim of the contract.

I'm not suggesting "don't quote until you know for certain" - but I am saying that you should estimate with levels of uncertainty based on your planning horizon. If your customer is willing, providing them with a cost and a contingency may work for larger contracts. But be prepared to show where the uncertain costs are from the beginning, and justify the use of the contingency later on.

Successful control of a contract depends on your team's ability to communicate

The major part of the problem stems from the behaviour of your team and how you communicate with your customer with regard to your contract.

Take responsibility for delivering a great specification up front. The specification and corresponding contract needs to outline key objectives from the customer perspective, and identify specific cost drivers (details that are at risk of large variations in costs dependent on which specific solution is chosen).
These are things you should know about your own product or services - I can guarantee your team knows!

Any time your team comes across one of these contractual grey areas the current action could be to solve the problem at minimal cost - sounds pretty sensible. But the missing action here is to log it with the customer, update the specification and get their acceptance. Apply a time cost, but demonstrate a zero charge; show them you are working in their interest and adapting to the contract.

Handling variation and clarity in the contract needs structure

Common behaviour is to work on a customer order, completing work that is seemingly outside of specification, until your budget or patience runs out. At this point, and only at this point do you communicate with your customer asking for "extras".

The problem with this approach is twofold; your customer realises that you've worked out of specification, and is now confused why this has become a problem, causing friction. Now your customer wants to know why you worked out of spec on things that are not important to them, and now things that are important to them, are going to cost. They weren't given the choice - that's the problem.

So in summary, remember that;

• • Customers want to be educated
• • Customers have unspoken needs (See our article on customer needs)
• • Customers assume that a specification is fully satisfactory - unless you say otherwise, explicitly
• • Customers will appreciate your efforts if you communicate when you hit a grey area
• • Customers will make the same mistakes in specifications again and again until you correct them

What are your experiences, and how have you overcome them? Comment below and share your experiences...

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