Milestone Payment Structure

Question: Has anyone out there successfully linked milestones to payment? Any suggested “do’s” and “don’ts”?

Here are some responses to this question:

A well-developed scope of work, and keen attention to monitoring scope, is essential. Identify early any scope changes and immediately remind your client that the quote will need revising. The importance of this was underlined by all respondents.
At the same time, it can be useful to be flexible on some small points so the client has a feeling of added value, while you reserve the right to re-quote for true scope change.
In support of protection against scope changes, be sure to put in place controls for events you know will happen.
In the Statement/Scope of Work, define the client’s responsibilities in the project.
Linking payment to milestones is not uncommon, and can be beneficial to the writer. Choose milestones that you control.
Payment in thirds is frequent, but tying this to other milestones is acceptable. The length of the project can affect effective execution of this. Some payment at the outset of the project is generally expected.
It is useful to reserve the right to define the deliverables (i.e., what’s contained in an appropriate first draft).
Supply only appropriate details in milestone description: not too vague, but not needlessly specific.
Not-to-exceed ceilings are not uncommon. These protect the client and put the burden on the writer to estimate accurately.
In those cases where a project is considered hourly, only hours worked are billed; in other words, if the project comes in under estimate, the client benefits. This is positive for the writer also, as it makes the client happy and makes the writer look good.
Problems with milestone payment include events beyond the writer’s control; for example: dates pushed back, products not ready, unavailability of SMEs for questions or reviews.
Source files are typically not relinquished until the final payment is received.
A detailed schedule can help minimize, or even avoid, milestone payment problems by foreseeing them and creating solutions in advance.
Your comfort level with the client (i.e., trust) can provide a rule of thumb about the length of time that transpires between work and payment.
Trust your instincts and comfort level, and don’t be afraid to walk away.