Speccing out contracts smArtly! aka, Automatically Building Awesome Teams

Another big post this weekend! I’ll explain how I spec out a contract, divide the work into meaningful divisions, and how I handle asset revisions. I’ll even explain a bit of the psychology behind it that helps me automatically build kickass, super-talented external art teams. :)

My typical approach to pricing something out — especially tricky and difficult-to-quantify work — works pretty much like this:

1) Provide a highly accurate initial spec, but keep cost flexible.

Explain and detail all the work in advance as much as possible. Setting initial expectations early is important for all future negotiation, for more reasons than you might think.

Always leave flexibility on cost on the table. Let the contractor know that you’ll adjust prices up or down depending on how the first batch of work goes. If it’s harder, negotiate the price upward. If it’s simpler, negotiate it downward. Being open, candid and fair in the beginning of the negotiation process pays off down the road, and by the end of this post you’ll see why. :)

Ultimately, it gives both of you an opportunity to show the other that you’re interested in offering fair value for fair value, and that you’re not going to get everything you can out of the other guy for as long as he’ll tolerate it. This emphasizes transparency and helps build trust. Being candid and fair like this strongly encourages reciprocation, and you’ll quickly weed out vendors that aren’t worth working with if you take this tack up front.

2) Divide the work into as few meaningful divisions as possible.

Typically I’ll divide this down by asset type, and then by difficulty. There’s a kind of art to it beyond that, though. I don’t like dividing or categorizing anything too much, because at a certain point it become too granular to organize efficiently. Too big, and it feels to both parties like nothing ever actually gets done. A division should only be as large as it makes sense.

If I’m outsourcing a full character, I try to keep each chunk fairly flexible. I’ll price out the individual cost of the model, the texture, and the rig and make that precise, then I’ll add those three numbers together, round up to the nearest hundred or so, and that’s the cost of one average Character. It leaves wiggle room for small variations.

For example, say it needs 100 more polygons or if it doesn’t need that 64×64 texture. No big deal, no renegotiation needed. It all averages out. I’ve gotten stuck in the trap of suddenly needing to renegotiate for a 512×256 instead of a 512×512 texture in the middle of working on a single character because I had each stage priced out differently, and that sucks. If the difference is substantial, then sure, you’ll renegotiate. But don’t sweat the small stuff, and price out the work accordingly.

Remember: Your goal is to keep the new art rolling in, not spend all your time figuring out how much to pay for each Space Marine’s toenail.

When the workload is less discrete than “one character,” I’ve had great results by dividing each chunk of work into 1 to 2 day segments on a contract that’s invoiceable every two weeks. Contractors all love accomplishing something every day or so, and having a regular bi-weekly payday. Morale stays high and they keep cranking out results consistently and without getting bored. This is my favorite sweet spot.

Which leads me into two more very important considerations: ease of amending the contract, and ease of invoicing. If you broke it down into reasonably modular chunks, it’ll be easy to add on extra work to an existing contract without mid-stream renegotiation. Example: “Okay, turns out we need 3 more Weapons and 2 more Helmets. Let’s slap that onto the contract.”

However, if you priced it out as one large block or added some type of strange and arbitrary division in the middle of a piece of work, billing and invoicing gets complicated. You don’t know how to amend the contract to add or remove more work, so you have to put on the brakes in the middle of production to figure out what the hell to do.

BUT, if you show initial goodwill and flexibility and divide the work meaningfully, this is a nonissue and production keeps moving smoothly. Essentially, you’re frontloading all the serious negotiation so you don’t waste time midway through the contract trying to figure out how to price additional work. This really saves enormous amounts of time later if the workload increases or decreases, or if the contract is split up into separate invoiceable segments.

3) Roll a preset revision number into the per-asset cost, then price out extra revisions as a separate percentage of that.

Defining an acceptable number of revisions in the beginning of a contract is crucial. I like the number three as a safe buffer built into the cost of each individual asset or chunk of work. If more than three revisions are needed, I’ll pay an agreed-upon percentage. If 50% of the asset has to be reworked, I’ll pay 50% of the cost of the original asset. If 25%, then 25%. If the asset has to be COMPLETELY redone, however, that’s a different issue. I *always* include provisions detailing when a “revision” turns into a completely new asset, and who eats the cost of that rework. I’ll explain…

Iterations are ultimately a useful metric for determining whether process improvements need to be made. If I spec things out properly, explain them well, and I pick the right contractors, I shouldn’t need to revise anything more than twice. Period. If I’ve failed to spec something out well and that creates extra revisions beyond what we’ve specified initially, I’ll revise the spec, then pay the contractor the agreed-upon amount of rework, and I eat the cost of my mistake. If I suck, why should my contractor have to pay for it? They did exactly what I asked, nothing more.

Think of it like this: Imagine your boss comes to your desk at your salaried job and tells you “Yeah, you did all that work I asked you for, but I actually don’t know what I want, and I still don’t, but I’m not going to pay you this month.” A *lot* of managers treat external artists this way and see nothing wrong with it. Don’t be that guy.

Contrariwise, if my spec is good and it’s simply the contractor that’s sucking, it’s up to them to give me what I want and eat the cost. They’re not living up to their end of the bargain, which we agreed upon before we even started work. This is exactly why I preach cost flexibility and transparency up-front: it makes people more honest, less defensive and more willing to admit that they made a mistake. If they take any pride in their work and if they value my business, they’ll make it up to me. If we can’t reach a result we both agree upon, then I cut the contract short, pay them for all the completed work up to that point, half the cost of the asset they failed me on, and then I go find a new vendor.

Speccing and negotiation is actually my favorite part of the outsourcing process, because it clears away all ambiguity, it speeds up production and every stage of it is an instant and binary vetting process! If you draw them into your framework of honesty, candor, transparency and specific predetermined expectations, any deviation from that will be immediately obvious to both parties. When that happens, the only possible responses are 1) fix it or 2) break it off. There’s no ambiguity, there’s no guesswork and there’s no drama.

That’s the beautiful thing about it: Only winners and worthwhile people will be able to continue working with you. The people that aren’t essentially disqualify themselves as time goes on. And it all happens automatically, because the conditions of working with you are so transparent, open and clear that you’re never left wondering what to do when a problem arises. The key is to maintain a healthy level of self-reflection and be willing to admit that you’re wrong if you made a mistake.

If you operate by those rules long enough, everyone that isn’t worthy gets replaced and you’ll find yourself only working with extremely talented people of high moral character… automatically. :)

Questions, comments and criticisms welcome as always!

11 thoughts on “Speccing out contracts smArtly! aka, Automatically Building Awesome Teams

  1. [Quote]Contrariwise, if my spec is good and it’s simply the contractor that’s sucking, it’s up to them to give me what I want and eat the cost.[/Quote]

    Eh, you talk about working out and being a lean mean fighting machine, but hardly talk about the conceptual nature of ‘creating’.

    Are you a manager or an artist? I refuse to accept managerial technocrats as artists.
    Work out less and take some art classes. You still haven’t reached your potential for illustration and conceptualizing.

    Ever look at the book: 300: The Art Of The Film [ILLUSTRATED]?

    The concept art and the storyboards looked like arse, yet somehow the movie got done?

    I’m wondering if it was more about an artistic vision or just pushing the movie through?

    I guess it isn’t always about the best, but making calculations and impressing upon people?

    I haven’t reached my potential either, so no point in killing the messenger.

  2. Hi Paul!

    [quote] Eh, you talk about working out and being a lean mean fighting machine, but hardly talk about the conceptual nature of ‘creating’.[/quote]

    Why should I? That’s not the point of the article. In almost all circumstances, I don’t hire people to be “creative.” I hire them to follow my directions and create art assets. The vision, spec and detail all comes from me before we even talk. I NEVER contract an artist unless I’ve determined exactly what I want, illustrated it clearly, and can describe it at length. There is very little room for them to be “creative,” and their job is easier for it, and I’ve mitigated risk on my end by leaving as little as possible up to chance.

    It’s also assumed that I vet the artists first and have hired someone that I have a reasonable expectation that can do the work I want, the way I want it, on time. Fundamentally, I’m paying them for a service, not to be creative.

    [quote] Are you a manager or an artist? I refuse to accept managerial technocrats as artists. [/quote]

    I’m both. I’ve been making game art for twelve years and working in the industry for eight. The last three have been as a manager, and I never forget where I came from. The entire point of this site is to bridge the gap between “managerial technocrats” and artists so they can understand each others’ priorities better and create more productive working relationships.

    Managers need to remember that artists are people and not numbers. Artists need to remember that managers have a big picture view to worry about. And both of them need to remember that everyone’s ultimately working toward the same goal.

    [quote] Work out less and take some art classes. You still haven’t reached your potential for illustration and conceptualizing. [/quote]

    How lovely! Snide condescension from someone that knows nothing about me. :)

    [quote] Ever look at the book: 300: The Art Of The Film [ILLUSTRATED]?

    The concept art and the storyboards looked like arse, yet somehow the movie got done? [/quote]

    The purpose of the storyboards may simply not have been to be pretty, but to illustrate the necessary technical ideas cleanly and simply enough to give someone else a jumping-off point to come in and make it pretty. If the storyboards are due tomorrow and the movie’s due to wrap in a month, the priority is getting them done and accomplishing what they’re supposed to so the next guy in the assembly line can do his job.

    Remember, working professionally as an artist is about working toward a common goal and getting the job done. In this circumstance, looking pretty was probably not as much of a priority as delivering the storyboards to the film director, the directory of photography, the art director, and then onto their respective teams so they can create concept art, build the sets, rent studio space, scout for locations, etc.

    Don’t forget that in the end it all still got done, and the storyboards looking like crap didn’t matter. :)

    Thanks for the comment!

  3. [quote]I NEVER contract an artist unless I’ve determined exactly what I want, illustrated it clearly, and can describe it at length. There is very little room for them to be “creative,” and their job is easier for it, and I’ve mitigated risk on my end by leaving as little as possible up to chance.[/quote]

    Well, thats called thumbnails and conceptualizing, working time for the artist to come up with ideas to meet the clientèle’s demand, not the final product.

    It seems to me you’ve already made the thumbnails and concepts, the ideas, and you’re trying to find somebody to polish it off, making little room for error.

    However, I keep hearing stories about non artist art directors making horrible mistakes and misleading the artist into doom. I know plenty of art directors that are artists themselves….draw, paint and conceptualize that can run rings around people of authority. So, I wouldn’t dismiss taking art classes entirely….since those kind of art directors are your competition.

    Ever hear of Bill Perkins, Nathan Fawkes….there’s more. Don’t get too indignant because they direct at Disney and Dreamworks.

    I also know of an art director from World of Warcraft whose taking art classes along side me…..makes you think.

  4. [quote] Well, thats called thumbnails and conceptualizing, working time for the artist to come up with ideas to meet the clientèle’s demand, not the final product. [/quote]

    I’m really not sure what point you’re arguing here that I didn’t already address in my blog post or in the previous comment.

    [quote] However, I keep hearing stories about non artist art directors making horrible mistakes and misleading the artist into doom. [/quote]

    Yes, the entire point of this blog post was detailing the benefits of NOT treating artists that way. We’re actually in agreement on all of this. :) I feel like you’re arguing with me about something you read somewhere else.

    [quote] So, I wouldn’t dismiss taking art classes entirely….[/quote]

    Um, I didn’t.

    [quote] Don’t get too indignant because they direct at Disney and Dreamworks. [/quote]

    Uh, I’m not.

    Honestly, dude, I’m really not sure what your point of contention is. Yeah, don’t treat artists badly. Art classes are great. Successful people in other industries can teach us a lot.

    You’re reading some sort of weird aggression into what I’m saying, and you’re hearing things I never said and don’t believe. :P

    Who do you really have a bone to pick with?

  5. I’m just trying to figure out how to get this instant rapport?

    Somehow the artist is suppose to get it right in at least 2 tries, so I’m wondering what is being provided to the artist to accomplish this?

  6. Oh. haha

    When I say two revisions, I’m talking about when they’ve gotten used to the technical constraints, working in my art style, working with my tools, etc, and we’re warmed up and in full production.

    There are several conversations before this, and I factor in ramp-up time every time. I give the artist all of the documentation and knowledge and reference we have internally. I let him go over it, ask any questions he thinks are relevant, update the documentation if needed.

    At that point we agree on a price, and then move forward with one small contract to see how it goes, and find out if it’s a fair workload for the price, and see if the documentation can be refined further based on questions he asks as he’s making the art.

    At the end of the first small contract we’ll adjust the spec and the costs to be reasonable for both of us. If the initial bid he gave was too low for the amount of work I asked him to do, we’ll adjust the rates to a reasonable level for both of us and I’ll pay him the difference.

    At that point, if we choose to keep working together, I start assembling a new contract. For the cost, I either reduce the amount of work involved to keep my own costs in line, or I pay him the adjusted rate we agreed on for the last batch of work.

    At that point, he knows what kind of work he has to do, how long it takes him, and how much he’s getting paid for it. There will be a bit of additional ramping-up time on top of that, but generally, artists get faster and better as time moves on. When we’re full steam ahead in full production, as long as he and I are communicating well, there shouldn’t need to be any more than two revisions.

    I’d never expect two revisions maximum right way. I could definitely have clarified that further. Thanks for pointing that out! :)

  7. Hello.
    I’ve been working in the games industry since 1996, and in 2002, I went to help start up a company with an old co-worker. I quickly got the title Art Director, but was still functioning like a Lead Artist until we started to ramp up our Russian studio. At this point, I started managing other people and it was a completely different job than just making good art. Jon’s blog here is an excellent resource, I would have loved to have had back when I started having to learn how to do this crazy new thing.
    While at that company, I was fortunate enough to not have to worry about budgeting revisions and the like since everyone we used was, essentially, an internal resource. Currently, I work only with contractors and am doing my best to manage this new intricate mess of details that were so easy to overlook before. Working with contractors tends to be a very different experience than working with internal resources. It’s not that it’s any better or worse, it’s just that you have to be much more conscious of every step in the process and you have to step up your efforts in planning and preparation.
    Jon’s self professed type-A personality and willingness to blog about his efforts is a great resource for all of us out there doing these sorts of jobs. Even if you’re an old hat, there’s always more to learn and improve.

    To speak to the revision subject more clearly, I’ve found that planning for revision time is a must, but to keep budgets predictable and smaller than the GDP of some of the smaller nations out there, you’ve got to have a maximum number. If you ever get to the uncomfortable point where you’re at the maximum level of revisions for an item, but the item is still not where it needs to be you have to make some tough decisions: get a new artist, contract for more time, cut the item… It’s a worst case scenario, but it’ll probably happen to you at least once.
    The suggestion of small contracts to help establish good estimates and a better feel for how the artist will perform with regards to time, quality and style is an excellent one.

  8. Hey, Israel! Thanks for posting, and offering your perspective on this. You definitely have a huge advantage over me in that you’ve had direct experience managing people inhouse. Whether or not my writings are helpful to you is actually a really useful barometer to me as to whether or not I really know what I’m talking about. ;)

  9. If you claim to be an artist, where is your online portfolio? Let’s see some of your work.

  10. I’ll be polite and ignore the aggressive wording and anonymous cowardice. :)

    My portfolio’s extremely out of date and not online at the moment, but the three projects I had the most involvement in as an artist most recently that you can see are:

    Daxter – http://www.readyatdawn.com/daxter.html (a great deal of the characters’ models and textures, and the bulk of the animated non-creature objects in the game)

    NanoLegends – http://www.nanolegends.com/ (the player model and virtually all of the creature models)

    Dungeon Runners – http://www.dungeonrunners.com/ (the Karl model, the Bling Gnome models, and a good chunk of the creature elemental variations)

    I’m doing a lot of art at my new gig as well, but naturally that’s all under NDA at the moment. One of these days, I will update my portfolio, and post it here.

  11. Hi Jon,
    thank you so much for all of the detailed information here! it’s really helping me put the pieces together in my head about my own plans for an outsourcing company. I have a few follow up questions, if you don’t mind more brain picking :)
    as an outsource manager, how much do you expect to pay for a character walk cycle, and how long do you expect an animator to work on it? if it’s an 8 hour anim, does that include time that is expected to be needed for revisions? (for example should the first pass take 5 hours, second pass 2, third 1)
    And do you provide a low rez mesh version of the models for animators to work with, if the actual model has a dense mesh?

    thank you, your site is a really amazing resource!
    e

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