Letters of Agreement
What is an LOA?
The letter of agreement is an actual letter printed on your business letterhead, in which you spell out the specifics of the project. You may also call this document a scope of work, project specification, or proposal. The document name doesn’t matter; what matters is that you list the unique elements of the project at the time you sign on to do the work. The letter of agreement might be all you need for a very small project; most of the time, you will also want a contract.
What items should I include in my LOA?
The LOA includes information that helps you put some limits around the project. It ensures that you and your customer agree on what the project does and does not include. The following sections turn up in most of my LOAs:
- Statement of Purpose: Briefly explains what the project is about and takes the form of an introduction to the LOA. A statement of purpose can be as simple as “Thank you for selecting Plain Language Solutions to edit and revise the six sections of your grant application” or “I’m delighted to design and develop the user guide and self-study training for your new XYZ product.”
- Deliverables: Identifies what the final product will be (user manual, training guide, online help file, edited manuscript) and what form it will take (hard copy master, HTML file, electronic file on diskette in Word or PDF, single copy for production or multiple copies for distribution). This section of your LOA should state the version of the application you will use to create the deliverables, such as Word or FrameMaker.
- Specifications: States the size of the deliverables (anticipated number of chapters, pages per chapter, or Web site pages) and layout notations (8.5 by 11–inch paper, 3–ring binder with tabs, company logo on each page, use of color).
- Your Responsibilities: Provides a sketchy outline of your process — for example, designing a layout and template, developing a draft of each chapter, submitting it for review, making one set of revisions, and creating the master copy. This section should explain how you will handle changes and how you will communicate unforeseen events and issues that might affect the project deadlines. If you will do all the work on the project, say so in this section; if you will subcontract parts of the work, say so here.
- Customer's Responsibilities: List the project manager’s name and the names of subject matter experts. Note whether the manager needs to sign your invoice or timesheet and submit it for timely payment. List reviewers’ names and procedures for expediting reviews. State the resources the customer is providing. In other words, specify any resources the customer has agreed to provide for you to do your job, and when you need them.
- Schedule and Estimate: Answers the following questions: What is the timeline for the project? What is your best estimate at this time for the size of the project? When will you begin work? What is the end date?
- Fees and Payment: Spells out the specifics — What is the hourly rate, how often will you invoice the customer, and how soon will you be paid? Or, if you are working at a project rate, how many payments will you receive, and when? What if there are changes to the project scope? In this section, I state that the final deliverable will be provided upon final payment, or that I will change the copyright notice from me to the customer upon final payment — whatever I think I need to say to ensure that the final payment is made. This section can generate interesting discussions with new customers; for ongoing customers, it becomes routine. I’m pleasantly adamant about protecting myself and my cash flow.
- Unanswered Questions: Lists the things you don’t know yet. Did someone mention online help as well as a printed user guide? Does the customer still need to identify the signoff person to approve your revisions? Do you need special permission to get dialup access? You might want to subdivide this section if it is longer than eight to ten items. Then make sure you don’t let these issues slide until it’s too late and they affect your success. Yes, I sign agreements and begin work before getting all of these answers, but I keep picking away for the answers at every opportunity.
- Approval Signatures: A place for you and your customer to sign and date the agreement. Include a note that your contract (or the customer’s governs standard factors that affect the project. You may also state that any changes to items listed in the letter of agreement will create the need to discuss a whole new agreement or will require a change order.
How does the LOA protect me and my customer?
The letter of agreement protects both you and your customer from “project creep,” that common tendency to add more content, create more graphics, make one more set of revisions, send for one more round of reviews — actions that can strip the profit right out of a fixed-rate project or break the budget on an hourly–rate project.
What if I don’t have many details for the project?
In your Unanswered Questions section, include as many of these items as possible. Your fees, the project schedule, and even the deliverables could be affected.
In an e–mail discussion, Carol Elkins of A Written Word in Pueblo, Colorado, said on this topic, “It never occurred to me to include a list of unanswered questions … but thinking about it, why not? The time to answer those unanswered questions needs to somehow be accounted for, and including them … at the get-go would help defend your actions in the event of arbitration.”
How much detail is enough?
Some independents provide as much detail as possible in their letter of agreement — they create a complete design document in some cases. However, there’s always a chance that an unscrupulous customer could take your detailed agreement document (developed for free as part of your selling process) and give it to some other person or agency that agrees to do the work for less money. When you prepare a letter of agreement that is very detailed, you might want to add a proprietary statement such as this: “All of the information in this letter of agreement is proprietary and intended for the exclusive review by and consideration of Such and Such Company. Redistribution or subsequent disclosure of this material requires the express written consent of Your Name.” (Thanks to Pam Scott, member of the Association of Professional Communication Consultants, for this proprietary statement.)
In her letters of agreement, Linda Gallagher of TechCom Plus in Westminster, Colorado, often provides only the name of the manual, total estimated pages, estimated range of hours, and estimated range of costs. Sometimes she includes options on the work at different total costs. Her LOA also includes a statement that explicitly protects against project creep: “If I foresee that any portion of the project will take longer than the upper range of the estimate, I will notify you immediately, and we can discuss the options. If the deliverables are 5 percent or more longer than the estimated page counts, the additional pages can be created at a rate of $X per hour.”
Kim Shaw of Words & Graphics, Inc., in The Woodlands, Texas, says, “It’s now my rule to provide only enough details to let decision makers know I can do the job. I don't even include project schedules in my proposals, beyond a very high-level timeline with a few major milestones, and sometimes not even that.”
What if my customer already has a corporate contract and LOA?
Only one set of agreement documents should exist for each project, whether the documents are yours or your customer’s. It’s best to use your own, because you can develop the agreement in your favor. But don’t be surprised if a large company that already works with contractors or vendors has its own agreement documents, which you must sign in order to work with the company.
Still, it’s important to discuss the agreement and ask for any changes that do not fit the way you prefer to work. Some project managers are very willing to consider other ways of conducting business. The worst the customer can say is, “No, we can't change that.”
When a company has a contract but no project-specific agreement, you can provide it as a letter of agreement. You might even be able to make it part of the design document and get paid for writing it!