How to prepare a cost estimate for an investigation
By focusing on four simple steps you will be able to provide more accurate cost estimates and manage your client’s expectations of costs.
If you are working hard to run a business as a private investigator, preparing a cost estimate for your client is a critical factor in making your business a financial success.
However, sometimes the cost of an investigation can be hard to quote. And sometimes they can run over budget. But nobody wants to be the one to tell the client. Running over budget is not exclusive to investigations. Did you know that the Sydney Opera House ran 1357% over budget in 1973 ? Costing a staggering $819,451,680 when the original budget was only $56,236,680. Not only did it run over budget, it ran over time, not by a little, but by 10 years!
The variable nature of investigations can make cost estimates hard to prepare and difficult to stick to. However, failing to manage the costs of investigations can lead to a break down in the client relationship. Understanding what a client needs from an estimate, and how to manage changing costs can make all the difference.
Download our FREE Investigation planning and cost estimate tool.
What do clients need from a cost estimate?
Some organisations are required to obtain two or more quotes from providers to ensure that they have engaged a suitable investigator and to demonstrate that they have obtained value for money.
A client wants to be able to:
- compare quotes to assess ‘value for money’
- make sure the investigation plan matches their expectations
- set up a purchase order and manage their budget
How does a cost estimate help the investigator?
Some investigators dislike providing quotes because investigation activities can be difficult to assess and if costs go significantly over budget, the client may be unwilling to pay the bill.
Providing an accurate estimate and setting expectations from the start is much more likely to result in a positive outcome for both the client and the investigator. When an investigation expands and runs over the initial budget, it is far easier to negotiate changes to a written document than via a verbal agreement alone.
Do not think that because there is no agreed budget that the client does not have a figure in their head – there is always a budget. The cost estimate ensures that the clients budget is realistic and that the investigator understands the clients expectations.
4 steps to creating accurate cost estimates for investigations
Step one: Get a solid briefing
Before you can make an accurate estimate of the time required to undertake an investigation you need an honest and detailed briefing from a person who knows the case.
Step two: Complete a comprehensive Investigation plan
Our article on ‘How to write an investigation plan’ provides more details on what goes into the planning process. Once a plan has been prepared, it is possible to identify which tasks are required and start to make assessments of the time required to undertake all the essential activities.
Step Three: Estimate your time for each activity
An estimate is calculated by breaking down each activity and providing a realistic estimate of how much time will be required to complete the task. Estimates of time can be made based on past experience and discussions with the client.
Many investigations are conducted in stages. The first stage consists of the core or compulsory tasks. These core tasks are the minimum amount of investigation required. The second and third stages are investigative activities which are dependent on the outcome from the first stage of the investigation.The costs for secondary and tertiary stages can be negotiated once the investigation has commenced.
In addition to providing summaries of cost estimates for all investigative actions such as interviewing, and document examination time, investigators need to allow time for:
- Client liaison
- Travel costs
- Administration functions
- Report writing
How do you cost out the time to write a report?
Go back to the client briefing, make sure you know what type of report the client needs and provide a cost for that report. If the type of report required changes you can clearly and openly adjust the cost. Generally speaking, the more divergent the evidence, the longer it will take to write an investigation report.
Many investigators find it hard to write reports, your cost estimate should be reasonable and may not be a direct reflection of the time you actually take to right the report. For a workplace investigation, generally 1 hour of investigation equates to 1 hour of report writing. However, this is a huge generalisation because some desktop reviews could be classified as 100% report writing and other investigations require only field reports.
For more information on how to write an investigation report read our article on report writing from our How to series.
Step four: What to do if the investigation goes over budget?
As soon as you suspect that a matter may overrun the initial budget, work out the updated costs based on essential investigative tasks. Where additional tasks are required, explain why and give the client options. Let the client make the decisions over which additional tasks are going to be taken.
Conclusion
Clients need cost estimates because they are accountable for the expenditure. The investigator’s responsibility is to help the client meet those obligations.
Download our FREE Investigation plan and cost estimate template.