Terms and Conditions
Mike Pedersen, CTS-D, CTS-I
The Higher Ed AV theme for April is “Emerging Tech,” so I would really like to discuss Terms and Conditions with you. What is the connection there? None, I won’t even try.
The topic of Terms and Conditions (T&C, referred to as “Terms” in this article) may be boring compared to emerging technology, but even a minimal set of Terms can prevent a headache later. The Terms I am referring to in this article are the Terms for your department operating as an in-house integrator for other departments on your campus. On my campus we call this work fee-for-service or cost-recovery work; we essentially bill another campus department for the goods and services we provide them. When you are acting in this capacity, even though you both work for the same institution, it is important to have a clear understanding between your department and your client. A clear, plainly-written set of Terms and Conditions are one key tool to develop that understanding.
While you certainly can involve campus attorneys if required or desired, I don’t think the Terms for in-house work need to be overly complicated or written in legalese. A few simple points of understanding that are included with the written estimate should meet the need. I would recommend that once you develop your Terms, that you require a signed copy of the estimate with the attached Terms before you buy any hardware or start any work on that project.
One of the differences I’ve discovered between an external integrator and an in-house integrator is around warranties and insurance. One of the advantages of using an external integrator is that they need to
provide insurance and they typically provide some type of warranty. They also typically provide firm-fixed-price quotes, meaning if the project runs into snags or takes a lot more hours, they won’t charge for any of the added parts and labor. To a certain extent, firm-fixed pricing also requires them to cover the cost of errors and omissions. In our case here, when we do fee-for-service work, we are not currently allowed by the campus accounting rules to charge any profit or margin. There is a spreadsheet we are required to use to develop our labor rate each year that just recovers the costs. This does not allow us to create any type of buffer that we could use to help when something goes wrong. For example, if our team forgets a part on the estimate, who pays for that?
The client may not feel they are responsible, but our team has no excess budget to cover that either. Similar complexities may occur around the rare situations when our team may accidentally break something or if the project takes significantly more labor hours than estimated. While the IT Services department has provided us with a small account I call the “Keep Campus Happy Fund” we can use to cover small issues, for larger amounts our clients have a very hard time understanding that we simply don’t have any money to cover any such charges, even if it was our fault. People, in general, are used to working with companies with firm-fixed-price quotes that have insurance or profit that can help cover those types of issues, and larger expenses have often led to some unpleasant conversations that often get escalated to the administration. I tell people that the advantage of using our team is that we can typically save them between 25-40% on their project relative to an outside contractor; one disadvantage is that all risk must fall on the client. Also, if something breaks one day after we finish, the expectation is that we would come to fix it for free, and they are often frustrated when I have to tell them that as a fully time and materials cost-recovery service with no ability to gain any profit or margin, we will need to bill them for the troubleshooting time even on that first day after sign-off. These types of subtleties can be best presented to the client upfront inside the Terms.
In full disclosure, we are still drafting our own Terms document and have not yet been formally using it with clients, but we hope to be able to begin using it very soon. As you begin to draft your own Terms document, here are some of the areas we have drafted text around that may spur some ideas for your own:
- Fee-for-Service. You may want to clarify, in no uncertain terms, what it means to operate as a cost-recovery unit.
- Time & Materials. Reiterate that while you will provide the best possible estimate, all work is done fully time and materials. It is not a firm-fixed-price quote. The client will be charged for the exact materials used and hours worked on the project, whether that be more or less than the estimate. (This is also why we work hard to use the term estimate and not the term quote.)
- Clearly state what warranty, if any, you are able to offer. If you are not able to provide any labor warranty, clearly state that the client is responsible for any repair labor throughout the installation and immediately after the project is completed.
- Damages and Errors. State if you are able to provide any type of internal insurance and exactly what happens if your team damages something or commits an error. If you are not able to cover those costs through insurance or an alternate funding source, your Terms will need to clarify that the client will still need to pay for all costs in those circumstances.
- Disposal of decommissioned materials. We have certain policies in our process to send materials to our surplus/asset recovery department that says the owning department (i.e. the client) needs to send the materials; we are not supposed to do it for them. We need to state this.
- Knowing some departments may be risk-averse, these Terms may not be acceptable to them. Acknowledge that in the document and indicate that in that case, your department would be happy to connect the client with an outside integrator who can provide the expected firm-fixed-price quote with coverage for smaller errors and omissions, insurance, and a warranty.
It is very important to make sure the clients sign a document stating they accept the Terms you develop for your department. This signed document is what you can point back to when the rare unfortunate situation arises. While they still may not be happy, it may help them more easily accept the hard conversation since you were up-front about it.
Many of you likely already have a well-developed set of Terms you use as a part of your in-house integrator activities. For others, like my department, this is still an area that needs to be considered and implemented. Either way, developing and then maintaining a good set of Terms and Conditions can be an important element in communicating with your client a clear understanding of the project. It may not be as exciting as emerging technology, but it may be even more important to your department. And who knows, it may help get you out of a bind when that emerging technology you installed for a campus client goes haywire!
Get to know: Mike Pedersen
Mike Pedersen joined Iowa State University in the summer of 2018 as the Audiovisual Experience Manager. Mike has been working in the engineering industry for over 26 years. For the last 21 years, he has been focused on the professional audiovisual (AV) industry where he has become recognized as an expert. He holds both the Certified Technology Specialist (CTS) certifications in Design (CTS-D) and Installation (CTS-I); he is one of the approximately 520 people in the world to hold both certifications. In 2018, the Audiovisual and Integrated Experience Association (AVIXA), the primary industry association for professional AV, recognized Mike as CTS Holder of the Year. He currently serves as Chair of the Technology Manager’s Council and a member of the Certification Steering Committee for AVIXA. Mike is a founding member of the Higher Education Technology Managers Alliance (HETMA) and co-founder of the Big 12 Technology Manager’s Alliance.
At Iowa State, Mike leads a team responsible for maintaining the AV systems in over 200 general university classrooms. The Audiovisual Experience Team (AVXT) also assists with AV consulting, installation, and repairs in college and departmental spaces across the university. Mike spends extensive time meeting with individuals to find out how audiovisual systems can make them better in whatever role they serve.
Prior to joining Iowa State, Mike worked for the AV Engineering and Integration firm Mechdyne Corporation for almost 19 years. While at Mechdyne he served several roles including systems engineer, IT manager, manager of project engineering, research and development, and pre-sales engineering. He taught classes on AV extensively both inside and outside of Mechdyne. He has also previously worked for John Deere and Engineering Animation Incorporated (EAI).
Mike is an active volunteer in the community. He advocates extensively for Science, Technology, Engineering, and Mathematics (STEM) education. He is currently a governor appointee to the governor’s North Central Iowa Regional STEM Advisory Board. He has served as chair of the Project Lead the Way (PLTW) partnership team for the Marshalltown Community School District and on the advisory board for the Broadcasting/Digital Media program at Marshalltown Community College. He has also been very active in the churches he has attended, serving in many leadership roles including Elder and Technology Leader.
Mike is a member of the American Society of Mechanical Engineers (ASME) where he served as chair of the Central Iowa Section. Mike is a past invited participant to the National Security Forum (NSF.) In addition to the CTS certificates, Mike holds certificates in ITIL Foundation, Extron Audiovisual Associate (EAVA), and OSHA-10.
Mike is a 1994 graduate of Iowa State University with a Bachelor of Science degree with distinction in Mechanical Engineering and a minor in History.