Budget Flashcards
Client Statement:
1. “Yes”
- “We were expecting to spend in the $4M - $5M range.”
- “Respond positively to anything up to $6M.”
Consultant Possible Responses:
- “Can you share it with me?”
- Option: “Accept any response between $5M and $6M.”
Option: “If I were to bump that amount slightly to $5M-$6M, could we keep talking?”
- Stop if you reach an agreement of at least $5M. Note that it’s better to get acceptance of up to $6M.
Client Statement:
1. “We have thrown around some preliminary figures.”
- “Actually, I’d rather not. Nothing personal. It’s just that whenever I give out a budget, that’s what the consultant comes back with in the proposal.”
- If they give you a range, respond, “I think that’s probably something we could work with.”
Consultant Possible Responses:
- “And what were they?” (Can you share them with me?)
- “Not a problem. I don’t want you to do anything you’re not comfortable with. I’ll tell you what, let me throw out a number and get your reaction.”
Test a range between $5M-$6M. Stop if you receive a positive response.
Client Statement:
1. “Yes. We’ve set aside about $2M.”
- “That’s what we came up with in last year’s budget session.”
- “Our analysis wasn’t really based on finances; that was just a number that seemed reasonable at the time.”
- “We should definitely keep talking.”
Consultant Possible Responses:
- “And how did you come up with that number?”
- “And in last year’s budget session, were you talking about the same $150M a year economic impact we covered today?”
- “If this is truly at $150M problem and it costs $5M to fix it, should we keep talking?” (If yes, stop. If no, “I’m confused.” Test likely beliefs.)
Client Statement:
1. “No, we haven’t. Can you tell me what this will cost?”
- “Well, if you really can help us, that would be a
reasonable investment. You’d have to come closer to the $5M than the $6M.”
(If you would keep talking even if a proposal might head towards the $6M.)
Consultant Possible Responses:
Give the three-part response.
If the client is within range, stop.
If the client gives you the bottom of the range, you can still test the top.
Example: “Just for my information, let’s say we both believe that the results are possible and to get those results takes more like the $6M than the $5M. Should I still bring you to the proposal?”
Client Statement:
1. “We don’t usually give out that kind of information.”
- “Right now, I’d say you’re high.”
- “You’re about 25% too high.)
- “Based on our budget for this fiscal year.”
- “I’m not saying Yes, but if you can help us spread out the investment, we should at least keep talking.”
Consultant Possible Response:
- “Not a problem. I don’t want you to do anything you’re not comfortable with. And I don’t need a specific number; I just want to make sure we’re heading in the same direction so we make best use of each other’s time. I’ll tell you what. Let me throw out a number and get your reaction.”
Test a range
- Option: “Compared to…?”
Option: “How high…roughly?”
Option: “By 5%, 10%, 20%…?” - “I appreciate the feedback. Out of curiosity, how did you arrive at that particular number?”
- “Let’s say it’s really possible to get the results we talked about, and we could span budget years to get the necessary investment. Should we keep talking?”
Client Statement:
1. “Money won’t be a problem. You just show good economic justification in your proposal and getting the money won’t be difficult.”
- “Wow! We’d never spend that kind of money.”
- “I was thinking $2M max.”
- “That should be what a project like this cost.”
- “Well, if you’re thinking two and a half to three times what I’m thinking, I don’t think we can proceed.”
- “We had another consultant in here who said that was what he thought it would take.”
- “I don’t know if it would be right to show you someone else’s proposal.”
- “Agree to do it if they assure you they will not look at anything proprietary – only the scope for the investment amount quoted.”
Consultant Possible Responses:
- “Great. Glad to hear it. Just so there are no surprises”….Test a range.
- “What were you thinking was appropriate?”
- “And how did you come up with that number?”
- “I think we may have a problem. I believe that it really is possible to get the results we’ve talked about. I don’t believe it can be done for $2M. What do you think we should do?”
- Test likely beliefs:
- They don’t believe it’s a $150M problem
- They don’t believe what we will do will create the results
- They believe they can get it somewhere else for less.
- Option: Agree to spend 30-minutes reviewing the competitive proposal to see if the client is comparing “apples to apples.” (You only need to see scope and investment – nothing proprietary.)
Option: Explore “worst case scenario” of what happens- both direct and opportunity costs – if the project fails. If the downside is big, how comfortable is the client that the other consultant can deliver at one-third the price, still get the same results and avoid the downside?
Option: If this is a project where cost equals time x rate; if the competitor is paying or charging roughly the same rate as you, that means they believe they can do it in one-third the time. Is that realistic?
Client Statement:
1. “We haven’t established a budget. We’re waiting to get some bids.”
2. “I don’t know if that would fly or not.”
3. “The Executive Committee would have to okay the budget.”
4. “You personally feel the amount is workable if it can be proven that the results are sustainable.”
“Fair enough.”
Consultant Possible Responses:
- “Well maybe I can help.” …Test a range.
- Option: “That’s fair. We’re still early in the game. Who would make that call?”
Option: “That’s fair. How would we find out, one way or the other?”
Option: “That’s fair. I imagined we’d have to involve others. Just out of curiosity, if this were your decision completely – and I realize it’s not – would the investment range seem reasonable in relation to the expected results?”
Client Statement:
“We have an overall budget from which we fund this and other initiatives.”
“I think that sounds realistic – unless of course, someone else can get us the same results for less.”
Consultant Possible Responses:
“That sounds familiar. Rather than guess, let’s get a rough sense of whether a likely investment for this project fits into your overall priorities.”….Test a range
“Fair enough.”
“That’s not the way we work. I’d like you to come up with your best number. We’ll judge it against our alternatives and make a decision.”
“If everyone else is higher, than that range is okay. If everyone else is lower, then it’s a problem.”
“If that ($5-6M) represents the best value, yes. We would spend that amount.”
“We’ll definitely come up with our best number, and I wouldn’t expect your business if we weren’t the best overall value. I’m not there yet. All I’m trying to do is make sure we are thinking in the same order of magnitude so we don’t misuse each other’s time. In fact, right now…” Test a range
“I understand completely. Is it fair to say that if the overall value requires investing $5M and $6M, that amount would be reasonable?”
Client Statement
“Why do you need to know our budget?”
“Actually, that’s a lot higher than what we were thinking.”
“We were thinking more like $2.5 to $3M.”
“That’s what we thought a project like this should cost.”
“Well, why don’t you give us a proposal and we’ll consider it.”
“If we became convinced that your solution was the best value, we’d be prepared to spend that kind of money. We would have to believe that someone else couldn’t produce the same results for less.”
Consultant Possible Responses:
“Actually, I don’t need to know anything specific. My goal is to get you a solution that meets your needs, and I know we can’t take fiscal responsibilities out of the equation. For instance, right now.” Test a range.
“What range did you have in mind?”
“Fair enough. And how did you come up with that range?”
“Well, we may have a problem. I believe that it really is possible to get the results we’ve talked about. I don’t believe it can be done for $3M or less. What do you think we should do?”
“I appreciate your consideration. I am a little confused. It seems like even if I come up with a proposal that exactly meets your needs, even if together we can produce the results we talked about, it will be rejected. I’ll be somewhere between $5M and $6M, and you’re only prepared to invest half of that. At this point it would seem like preparing a solution would be a waste of both of our companies’ time and resources. What’s you sense?”
“That’s fair enough. Let’s talk about what you would have to see, hear or experience from us that would allow you to be convinced – one way or the other.”
Client Statement: “Well, we were expecting to pay about $8M - $9M.”
Consultant Possible Responses:
“Fair enough. That’s a number we can work with. I will want to make sure we have tight mutual agreement on the scope and that we both expect the same outcomes.”
