Scoping Budget?

How serious is your prospect about your project? The one that you’ve busily sacrificed anything from your once-hectic social calendar to the long-forgotten blissful balance of your treasured personal relationship to help make happen?

How about testing their true intentions by surreptitiously pressing them around project scoping funds?

Late last year, someone in the primary trades mentioned that for big-ticket greenfield projects, it was commonplace for the potential investor to invest up-front from one or two million on a project where the total costs were anywhere between twenty and thirty million. This would typically involve the first formally completed draft business plan.

That worked out as roughly a twentieth of total cash being spent in feasibility first, including outline planning. This 5% figure cropped up in another meeting I had just gone by. An expert in funding brownfield ventures (where expansion or replication of existing capability was sought) also revealed to me that they budget for 5% of total budget costs to be needed for “scoping”.

This reminded me of my early days in selling IT. What a great qualification conversation I could have had with prospects. If their ITT stipulated budget was a hundred grand, what were they planning to use the five grand scoping pot for? In that sphere, as nearly all of my prospects were CFOs, it could have set me (even further!) apart quite considerably.

When a prospect baulks at a pre-sale activity (if one isn’t on the immediate horizon then get creative!) that involves them putting their hand in their pocket, this line of questioning could well smoke out true objections or the real lie of the land.

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