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Mini MBA July 12: A Sneak Peekā€¦And Some Homework!

Speaker Kerwin Allen, Vice President at Kennedy/Jenks Consultants

If you are attending this Thursday’s Mini MBA program, you may be wondering how a speaker will endeavor to cram two years’ worth of rigorous business coursework into a one-hour lecture. In short, he won’t. What speaker Kerwin Allen, Vice President at Kennedy/Jenks Consultants, will do is equip the marketers and business developers in the audience with a broader understanding of the business concepts that make up the backbone of the firms we fervently advocate for day in and day out.

THINK FOUNDATIONAL

Are you responsible for a departmental budget? Or what about company meeting time when your President/CEO spitfires about the firm’s financial standing, a dialogue riddled with “backlog,” “net sales,” and any variation of accounting terms? Whether you are looking to understand the decisions that go into formulating your marketing budget, or are simply seeking a general understanding of those behind-the-scenes accounting functions at your firm, Kerwin will aim to keep this conversation foundational and broad. He will school us in general accounting terminology, such as:

  • Profit
  • Gross Revenue
  • Net Revenue
  • Direct & Indirect Costs (and how they differ)
  • Overheard/ODC’s
  • Multipliers

 

PRICING PANDEMONIUM

Ah, yes, the age-old question of pricing! While we may not be leading the charge on pricing new work, we can certainly be educated as our technical staff discusses the merits of “lump sum” versus “cost plus.” You never know—if you grab onto these concepts your staff may elicit your two cents on the pricing structure come next proposal.

As for fee structures, Kerwin will review the following fee structures and their respective merits with us:

  • Lump Sum
  • Multiplier
  • Cost Plus
  • Rate Schedule/Table
  • Rate Schedule (Max Rate) + Project Cost (Max) *Slightly more advanced knowledge

 

THE POWER OF THE CONTRACT

According to Kerwin: “Almost every problem I have ever encountered in consulting can be traced back to a poor contract. People often skim them or avoid the difficult discussions up-front, but as soon as there’s trouble everyone runs back to [review] the contract.”

How you do avoid finger-pointing and conflict once the project begins? Train yourself on how to effectively review contracts and look for any red flags before anyone signs on the dotted line. For instance, the most precarious portion of a professional services contract is the Indemnity Clause / Section. In the program, we will learn about this and other “proceed with caution” areas that can be embedded into a Professional Services Contract. 

DON’T FORGET THE SUBS

Another part of a well-thought-out contract? Consideration of subconsultant labor! A mark up on subconsultants must be spelled out in the contract or the prime contract-holder will shoulder the costs. While there may not be a golden rule to determine a “reasonable” amount to markup subconsultants (which varies on a case by case basis), a few reasons why primes SHOULD charge a reasonable markup include:

  • Most liability insurance is based on grossed receipts.
  • There is often considerable cost incurred by receiving, administering, and processing sub invoicing.
  • In many cases, subconsultants cannot garner the insurance requirements required by a client/project, in which case the prime may need to take on additional risk/liability.

 

YOUR HOMEWORK

Think about scenarios and ways that we could apply these financial and business concepts to our everyday activities. These could be questions regarding the formation of your own marketing budget, advocating for staff raises, the case for marketing and business development staff to be considered “bill-able,” or, from a process standpoint, the best way to review a professional services contract in under ten minutes. Come to the program on Thursday, July 12 armed with your pertinent questions to receive the greatest “Return of Investment” on one of the most precious commodities these days…time!

Hannah Mobarekeh is the Senior Marketing & Business Development Coordinator at Mazzetti, where she leads regional business development and marketing efforts throughout Mazzetti's three California offices.

 

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