edition 22 feb 24 2004
setting the scope of work
In the last three months we have had many enquiries from advertisers faced with providing their agency with a scope of work for the coming contract period, only to have the agency come back with a level of human resources that seemed high for the work proposed. In this edition we introduce the P3 Scope Monitor and will look at some of the issues in setting and monitoring the scope of work and ways using industry benchmarks can clarify the situation. P3 ¿ helping people achieve commercial purpose through creative process Add a colleague to the ïp3 newsÍ mailing list, by emailing their details to people@p3.com.au
how many head hours does the agency need for 2004?
Many remuneration agreements, be they project fees or retainers are based on the head hour resources required to undertake the task multiplied by an overhead and profit factor. In some cases these payments include a performance-based component as well. But one of the key issues is setting a realistic scope of work and then predicting the human resources required.

Setting the baseline The most effective model is setting the previous year as the baseline. The number of projects for that year and the number and type of head hours and associated costs are a known quantity. Accepting that the head hours are correct this becomes the baseline from which the following years’ scope of work is compared. Setting the scope of work Predicting the advertising activity for some advertisers is easy and part of their normal budget planning. But for other advertisers it is much more difficult, with the need to react to the market place or difficult trading conditions making predictions for the coming year largely inaccurate. If you cannot accurately set the scope of work then you may be locked into a retainer that is too high or too low. Either way it becomes expensive with you paying too much or not paying enough to maintain the relationship with the agency. Adjusting the head hours Some advertisers have opted for a system of an adjustable retainer based on the number of projects being undertaken. This method requires the scope of work undertaken to be reviewed either monthly, quarterly or half yearly based on the level of activity to ensure the number of hours does not exceed the amount agreed under the original contract and to adjust the payment accordingly. The problem with this method is that it relies on the agency keeping accurate and detailed time sheets in the style of law and accounting firms who account for every 15 minutes. This can lead to unwanted disputes over the efficiency and effectiveness of the agency. Using the industry benchmark Using the industry benchmarks we have collected over the past 4 years, P3 has developed a model that can predict the human resources required year on year across account management, creative, electronic and print production. Based on creative outcomes, such as television, print and radio commercials it allows advertisers and agencies to not only predict, but to measure the impact of changes in the scope of work on the agency resources required.

To find out how the P3 Scope Monitor can help you manage your agency resources and remuneration, contact P3Biz by email biz@p3.com.au put the p3tv production  application to the test
 

Want to try out the P3TV benchmark application for yourself? Now you can with our free on-line demonstration.

Just go to www.p3tv.com.au/app

Advertisers enter username client Agencies enter username agencyproducer or agencystaff Film companies enter username producer1 or producer 2

 

And all have the password demo.

Try it out for yourself. If you need help simply click the HELP button on any page.

If you enter an estimate remember this is an open demo section of the applications so we cannot provide any security. Therefore just use the time to check out how it works and what it can do.

64 pages on improving the performance of your advertising

To get the complete 64 page manual on how P3 can help you maximise your advertising budget, email us at people@p3.com.au or order on-line at our website www.p3.com.au by clicking the SUBSCRIBE link or download a pdf version by clicking the E-BROCHURE link.

more top 10s for 2004
The popular P3 Top 10 Checklists are back for 2004. The first one is to be mailed out in April. Already available are: Television production Print production Agency remuneration Financial compliance Misleading statements TPA compliance If you are missing any of these you can order them from our website www.p3.com.au  

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