The Focal Point Blog // Operations Best Practices // Team Parallax // June 21, 2022

The Problem with Task-based Proposals

Success requires continuous improvement. This is especially true in the solutions architecture and sales leadership roles I’ve held and led in the custom software development industry.

In these roles, I’ve evolved an approach and point of view on how to tackle a range of challenges. Some ideas I’ve kept, refined, and instilled in others. But a few tactics have dropped off along the way. One of them is the detailed, task-based proposal. Read on to find out why.

What are they?

Love ‘em or hate ‘em: task-based proposals often mimic a statement of work, including aspirational descriptions of each major feature to be built, verbose details of each task the team will perform (often chronologically), carefully-worded limits and constraints to manage budgets and timelines, and, the king-pin of this approach, a long table or list enumerating all of these features and tasks with each associated hourly or cost estimate. The proposed cost of the project is simply and clearly calculated from the sum total of this list.

Task-based proposals are deemed necessary and successful for a few reasons – the descriptive content speaks directly to the perceived needs of the customer; the 1:1 correlation of task to line-item justifies the proposed budget; the volumes of technical and procedural language can deflect objections to technical credibility and expertise. To be fair, for smaller shops where delivery practitioners also do sales discovery and write their own proposals, this style of proposal can be effective! But let’s acknowledge why – there isn’t a hand-off event that triggers re-evaluation of the proposed work.

There are drawbacks, too. Selling on tactical deliverables will seldom set you apart from the competition and will incentivize price shopping. It’s a slippery slope to commoditization from there. Prospective clients will compare apples-to-apples and make a la carte selections. They will get caught up in technical debates on specific, minute details of a proposal. Specific tasks will get cut to win the deal, creating a rift between sales and delivery as the latter realizes their time is being undercut or undervalued. Or, to hedge against risk of the unknown, every estimate is inflated – first by sales and again by delivery, meaning your ability to execute a client’s goal within their budget will be sabotaged by artificially padded budgets.

As sales practices grow, the precision required in detailed proposals is all but impossible to achieve. You either need to slow down the pre-sale process and do more free discovery with tactical practitioners to validate the work, put too many caveats in the proposal, or continue to mitigate risk by padding budgets. Even with padding and caveats, each hand-off event is going to resurface skepticism, triggering (re)evaluation and, you guessed it, more line-item padding and more caveats. 😵

Why should we abandon detailed proposals?

I believe the root issue is that humans are just pretty bad at estimating time, and that delegation at hand-off rarely goes well with this pricing method. Pitching work (let alone executing it) under a task-based proposal does little to fortify your consultancy’s unique value or promote creative, innovative problem-solving. If teams are so boxed in to spend only small amounts of time on predetermined tasks and deliverables, they’re encouraged to prioritize time over quality. Unaccounted time for context switching and draconian project management will invariably kill budgets and margin. Plus, a delegation based on tasks – not of the ultimate outcome – can lead to major changes in scope after hand-off once technical practitioners dig in to solve a problem.

Here’s one (slightly fictionalized) such example; one of several similar anecdotes I’ve witnessed:

Limited discovery and poor hand-offs, at scale, leads to re-evaluation of EVERY task

Charles*, the CEO at Some Fictitious Agency* (*names have been changed to protect the guilty) has grown his firm aggressively and has a sales team dedicated to growing new business. The sales reps are ambitious, and they each rely on their favorite members of the delivery team to help review and estimate work. They’re cranking a dozen or more detailed proposals each month now; more than Charles can keep track of!

Charles gets an email. It’s from a new client, one he hasn’t met yet. This client is livid.

“What kind of bait and switch is this? Your sales team told me everything I wanted to hear, and I even signed a proposal that’s higher than my budget because of how good you say you are. We’re barely 2 weeks into my project, I’ve already paid 50% down, and you’re telling me it’s gonna cost 50% more than planned?? I want my money back.”

What the heck happened? Charles pulls together an 8am meeting with the rest of the team to review.

As expected, the sales rep had consulted with a qualified designer and a strong lead dev in the sales process. They spent a week crafting a 6 page proposal, including a line item list over a page long with everything they expected the project team to do. The client saw this, was impressed, and signed off on the project.

The project kickoff was scheduled, a team was resourced, a PM was assigned, and the sales rep handed off the project to the new team. The original estimation team was there, too. Seems fine, right? Well, kinda. The sales rep spent the kickoff meeting hyping up the project to the new team, and the lead dev who estimated it spent time justifying his estimates and validating his project plan. The new team tried to absorb it all, but at the end of the day, all they had was the page of line items from the proposal and a high-level understanding of the project.

As the PM worked with the team to write tickets and build the backlog, they re-estimated each task. The new team, in order to assuage their uncertainty, added a few hours to each task so they could figure things out as they went. With over 50 line items on the proposal, that small padding on each one added up – fast! 😱 Detailed proposals and task-based project plans like these commonly fail because they encourage micromanagement through a dictated list of small jobs and don’t focus on the final outcome desired for customers. At scale, it’s increasingly difficult to build a detailed plan in the limited time available during a sales conversation. Teams compensate by inflating budgets to offset the risk of the unknown. Each time the project plan is re-evaluated or handed off, this risk mitigation strategy is re-played and budgets swell leading to difficult situations when scopes suddenly change.

Define and protect your unique value with a different approach to pricing

At Parallax, we’re big fans of value-based pricing. This method moves away from selling tactical deliverables (which does little to set you apart from other shops) and focuses more on the unique value[1]  and problem-solving approach. Hand-in-hand with this philosophy is scoping work based on duration, not tasks. This method allocates portions of your team’s time to particular projects and doesn’t force anyone to specifically track each task. The final outcome and value you’re delivering to clients is what’s important. With this philosophy, the sales team knows the delivery team is working hard to solve clients’ problems. Delivery knows that sales is working to position them to deliver the most impactful work. Teams communicate, culture improves, and the business secures more good work. With duration-based proposals, pricing is more accurate, hand-offs are more pleasant, utilization improves, and delivery is focused on the value and the final outcome for customers, not individual tasks.

While Parallax supports multiple pricing and resource management methods, our tool works especially well with this method and enables duration-based resource management. It’s easy to assign a percentage of time to each employee’s time and visualize or forecast allocation across teams, projects, and departments. We can help you standardize your offerings with our “shapes” tool to quickly spin up projects based on common patterns from your most repeatable services.

Ready to learn more?

We’d love to talk to you about putting task-based pricing behind you to help your team do their best work. In the end, the more mature your consultancy becomes, the less task-oriented it should also operate. Duration-based pricing is a more efficient model that empowers employees and keeps everyone focused and on track, with clients seeing the true value of your partnership and team. That’s a win-win in my opinion.