The Power of the Purse

Beyond milestones, meetings and the bully pulpit, the primary tool for a producer is money. Money can solve a lot of problems. It can grow and retain a team with promos and bonuses. It can acquire game content from outsource companies and buy off-the-shelf tools and solutions. It can also buy a lot of team dinners if you need to crunch. Whatever side of the publisher-developer relationship you're on, here are some tips on how to leverage the power of the purse.

Milestone Payments

Contracts are mostly about handling when things go wrong. The publisher will spend millions on a game and they want some assurances. The developer wants some creative autonomy and certainty that payroll needs are met. The trust can only go so far. For a publishing producer, that means contracts have to set clear expectations on progress. Payments without a corresponding deliverable, while much appreciated by the developer, leave the publishing producer with no leverage. If you have an external dev team or contractor that isn't delivering, withholding payment is a huge motivator for them to get their act together. So make sure the milestones outlined in the contract have teeth, and tie all payments to tangible deliverables.

If you are on the receiving end of that contract as a dev team producer, you need to be laser-focused on those deliverables. Your work begins in the contract phase. Be sure those milestones are reasonable and clear. Scope-check the project with some rough estimates, and pad the dates to accommodate for risk.

It is equally important to be mindful of scope changes not only from your team but also from requested changes from the publisher. There's a currency in the sloppiness of design revisions. You can trade slips in one area for unplanned additions in others and still receive payments or extensions. Make the publisher pay for the scope changes.

Budgets and Approvals

Know your budget. Someone up the line knows the spending limit even if they're being vague about it. Figure it out then break down how you plan to spend it and get that approved. Drafting a budget can be a negotiation, and once approved you shouldn't have to get it approved again every time you go to spend some of it. That can really slow things down. To that end ...

Get a company card. This makes purchasing, expensing and approvals faster. You can always share the line-item on the budget if accounting inquires.

Get spending authority. Big milestone payments might require you to gather approval signatures, but they only come every month or two. But you don't want to have to go through all that for minor payments and purchases. Try to get at least $5K to $20K of spending authority where your signature is enough.

Break up payments. After you got exec approval for overall contract terms, break up the milestones and invoice amounts so they are under your spending authority. If it's a $30K contract, make it 3 payments of $10K if that's all you can approve.

Pay your bills! Follow up with your contractors and accounting to ensure they received payment. Your power of the purse is diminished if it is not functioning or has obnoxiously long payment terms (i.e. NET 60 days). Just make sure payments terms are reasonably quick (i.e. NET 15) and develop a good relationship with your accountant.

Communicate spending plan. Accountants need to know how much cash to set aside for the coming month and quarter. If you have several high ticket invoices stacking up in one month, communicate that ahead of time so you're not stuck prioritizing who gets paid.

Prudent Planning

Don't call it a contingency plan or a slush fund, but you should set aside some of your budget for the unexpected. CFOs and VPs don't like to approve "miscellaneous" items in your budget unless they're really small. Neither does it give them confidence if you literally call something "contingency". That level of smoke generates way too much (unnecessary?) suspicion. Instead, you should have some items in your budget you know you can trim down in an emergency. This could be the gloriously vague outsource art bucket or the software licenses and equipment budget, which you should pad anyway in case prices go up. The point is to have some padding on one or more budget items you can rob from and still stay under your overall budget. Just communicate up the chain when you make the swap so it's all above board.

Flexible Statements of Work

This flexibility in spending also helps when you're smoothing over any miscommunications with contractors. Their contract, often called a statement of work, may have a fixed price for a fixed amount of work instead of hourly billable time. Some wrong information, bad estimates, belated feedback or delays on your part may cause the contractor to start over or incur some costs. These redo's and delays are very expensive if they're not billable. Contractors playing the long game may just eat the costs to keep the customer, but that's not always feasible or fair. You should have a clause in the contract that authorizes additional billable costs with written authorization. You don't want to have to amend the contract for just a few grand.

Next Week

We'll take a hard look at SCRUM estimating and how to handle problematic estimators.