The Break-Up Friday, February 20, 2009 An imploding economy is getting worse. Clients are backing out of more projects at all stages of the design process, and being caught off-guard is not an option. We sat down with a panel of designers from across the event design spectrum to talk about the right way to proceed when a client pulls the plug after your team has started on a project. Mind Opera president David Johnson, Entech Creative Industries president/coo Anne Herzog, Lynch Exhibits vp-design Eric Miller, and Delphi Productions design director Mark Pearlman weigh in on a sensitive issue and how best to handle it. EVENT DESIGN: It’s our first issue of 2009. What’s going on? David Johnson, president, Mind Opera: We have noticed a definite decrease in budgets and elimination of projects for 2009. Three reasons we have heard are the current economy, public perception of spending, and making sure the dollars they do spend have significant and measurable impact on their sales and communication goals. What they are spending money on is more video production that can be leveraged across multiple viewing channels. With events, they are spending less on hard sets and more on digital sets, such as widescreen multi-screen backdrops, which gives them more flexibility for changes and lowers the cost of building and storing large sets. Anne Herzog, president/coo, Entech Creative Industries: Yes, we are seeing this occur more frequently on the larger-scale projects. In some cases, clients are either putting projects on hold indefinitely or are scaling them back to much smaller projects, which are going forward but delayed while they go into a redesign mode. Funding is almost always the reason that we are hearing for the cancellations or delays. ED: What is the right way to proceed when something like this happens? Is it a matter of gauging the work that has been done and moving forward from there, or is it more complicated? Eric Miller, vp design, Lynch Exhibits: We have had some situations where clients have offered to cover costs that were incurred during the design process but some clients simply apologize for any inconveniences. Unfortunately in today’s climate, budgets are being cut over concerns with our economy. You can only move forward. AH: Not much can be done from our standpoint when a project gets put on hold. If we are partway into it, we typically complete that current phase of the work and invoice accordingly. It is important to have the appropriate clauses in your contract that protect you, as a vendor, as much as possible, in order to get paid for any work completed to date. It’s also important not to take it personally; the client is typically not happy either that the work has stopped. Mark Pearlman, design director, Delphi Productions: Usually this doesn’t happen with an existing client; for us it seems to be with new builds and new clients. Existing clients have show schedules and they know they are going to go. So that money seems to be allocated and they may spend less. When it comes to clients who are ditching their old exhibits and doing something new, that’s where we are seeing people dropping out. DJ: We ask lots of questions and listen intently to try and find the deeper meaning to what is motivating the changes. We believe there are hidden opportunities that exist whenever a program is stopped, and digging deeper may unveil a new need that our company can address. Ultimately, clients care about how efficient you can be at solving their business problems. Marketing money still gets spent in tough economic times and you just have to keep reaching out with solutions that fit the times, which means you need your team to be very engaged with what’s going on in the world as well as in their own backyards.   ED: How is it different when an existing client backs out of a project versus a newer client? AH: I think if an existing client backs out, you need to stay in touch in case any new potential work might arise down the road. A newer client will require a more proactive method of staying on their radar. They don’t have the longtime experience or confidence in working with you, so you need to make sure that they don’t forget that you are out there and available. MP: Existing clients are pretty solid, but they are changing the strategy of how they are going to appear at the event, and that dramatically changes the scope of how we’re involved. In the past they might have done an exhibit, a full-blown event, and a big off-site conference room area, and now this year it’s no event, no trade show presence, just conference room suites. EM: It makes you think twice about speculative design. We are taking a hard look at who we are doing business with these days. These types of situations have pushed us to develop a decision matrix, which is comprised of qualifying criteria based on a point system. ED: What ways are there to protect your company up front, just in case something like this happens once a project is underway? AH: A way to protect yourself is to have the proper language written in your agreement to at least get paid up to where the project has stopped, including both labor and materials. Another way is to make certain that if new staff has come on for the project specifically, that they are made aware that if there is no other work to redirect them to, and that they may be let go. This is fair to them and will save a tremendous amount on payroll, if the situation is handled as quickly as possible. DJ: To protect our company up front and thrive, we always do three things. We continue our marketing program even if there is less money to spend. We constantly hone our business processes, making us very efficient, lean, and able to handle bumps along the way. Lastly, I encourage my staff to engage in the world around them as much as possible, because the more influences you receive the more ideas you have to give back.
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