Comments on: Fix Price vs. Time and Material Contracts

By: A

Wed, 14 Sep 2016 10:52:50 +0000

This sums up the current FP project I am working on perfectly

By: Athiq

Athiq — Sat, 15 Mar 2014 03:21:26 +0000

I would like to know on how do we calculate the Actual Cost, Planned Value, earned value for Time Material projects

By: axe

axe — Thu, 30 Aug 2012 03:32:50 +0000

This is the way I have seen it throughout my career, very nice post and reply

By: Morons

Morons — Wed, 15 Aug 2012 16:29:49 +0000

Joel,

As soon as you go fixed price, you make the nature of the client-consultant relationship adversarial. Fixed price is a zero sum game

I adamantly disagree with this here’s why: Myth # 3 - With T&M you don’t need a change control process. – The fact of the matter is that discussion of cost will take place regardless of the pricing model. If those conversations become adversarial it has nothing to with the Pricing Model.

The client’s motivation is to stuff as much extra scope into the project as possible and the consultant’s motivation is to be as intransigent as possible about dealing with the inevitable scope creep.

This is simply not true, Even with T&M Projects, Clients push to get free stuff, and YES even with T&M Projects Vendors give in and give away freebees. I will make preventing this the Topic of a future Blog Post.

Without more information I can’t explain why you are experiencing T&M projects to be less adversarial, but I suspect one or more of the exceptions I mentioned, namely

You are working Onsite (Exception #2)
Your client insists on T&M (Exception #4)

By: Joel Brown

Joel Brown — Wed, 15 Aug 2012 12:46:50 +0000

I don't like fixed price contracts, regardless of the opportunity to be rewarded for assuming more risk. As soon as you go fixed price, you make the nature of the client-consultant relationship adversarial. Fixed price is a zero sum game. The client's motivation is to stuff as much extra scope into the project as possible and the consultant's motivation is to be as intransigent as possible about dealing with the inevitable scope creep. No SOW is ever perfect so there will always be arguments over interpretation. If you work T&M instead of fixed price, then both parties are motivated to work together instead of against each other. The client won't over-pay because they will only pay for what they see as being worthwhile and the consultant is motivated to do great work so that the client sees enough benefit to keep working.