Is Your Software Vendor Taking You For a Ride? 

This One Tip Could Save Your Project

Software vendors who charge on a time and material basis put your project at risk and expose your business to uncontrolled, open-ended costs. It’s like getting in a cab and saying “let’s go to the airport” and not having a clue of the fare. Yet the taxi driver has driven to the airport thousands of times for many different clients and is the most knowledgeable about how much it should cost.

It’s unfair for the passenger.

Unfair contracts put your business at a disadvantage

Specifically, time and material contracts put all the risk on the customer. This is despite the fact that the business owner is the least qualified party for assessing the cost of a software project. Software vendor have a conflict of interest with time and material contracts because the longer it takes the more money they make.

More than half of projects cost almost twice as much1 (189%) as was originally quoted, so it is highly likely that your final bill will be over budget.

Just 16.2% of projects are on time and on budget2 . And software vendors are also unlikely to guarantee delivery times.

How much extra will it cost you if your project is part of the 83.8% that are either late, overbudget, or both?

If your vendor doesn’t have the understanding required to offer a fixed price, are they the right choice for your project?

Your software vendor should get you to your destination with a fixed price

What you really want is a fixed price for your journey. Your driver understands your requirements, knows the routes he can take, and has experienced the likely traffic conditions before. With all this information he should be able to give you a fixed price. Software projects are the same. Your vendor should know how long it will take to complete a project and will know the likely problems they will face.

Accurate prices are impossible to get without accurate requirements

An accurate fixed price requires a detailed understanding of the project requirements. If you’ve hired a driver to take you to the airport for an 8 am flight but forgotten to tell them that you need to stop at the office first, then you’d expect to pay more for the change in plans. This extra stop might even cause you to miss your flight.

If the driver had known in advance, he’d have given you a more accurate price and left enough time for the extra stop.

It is your responsibility to mention any requirements that may affect the project, but a good software vendor will also know to ask the right questions.

Choosing your ideal software developer

A good software developer won’t take you for a ride. Instead, they will:

  • Work with you to define your requirements up front
  • Provide a fixed-price quote for your project
  • Guarantee the schedule and deliverables of your project
  • Manage changes to the original agreement fairly

A fixed price reduces your risk and helps you plan your budget. The guaranteed schedule ensures more projects finish on time, and even if a deadline is missed, you don’t pay the price – the developer does.

1. Standish Group – CHAOS Report – https://www.projectsmart.co.uk/white-papers/chaos-report.pdf
2. Standish Group – CHAOS Report – https://www.projectsmart.co.uk/white-papers/chaos-report.pdf