Web feed

  • Fixed price or T&M - the age old question

    It seems like T&M is coming into fashion after years in the wilderness. Ever since I first started working on projects, it seems that customers have preferred the certainty of a fixed price rather than the perceived uncertainty of a rate card. There is an understandable fear that T&M is like signing a blank cheque. But of course it isn't. Recent years have seen customers having their cake and eating it by using capped fees - basically an agreed budget based on a rate card and work breakdown estimate - the supplier can't exceed the budget without prior approval. When approval is sought, they turn round and refuse approval unless there is a change of scope. And of course they don't want lots of assumptions and caveats. And they don't want the budget to include contingency (typically 25% or more on a fixed price project). T&M also gives them much greater transparency and control over the tasks that need to be performed : "we don't want you to do X - we'll do it". Ironically, it's suppliers that favour fixed price these days, on the basis that they avoid micro-management and can get on and do the job. How times change !


Logo 241 x 156

You are viewing the text version of this site.

To view the full version please install the Adobe Flash Player and ensure your web browser has JavaScript enabled.

Need help? check the requirements page.

Get Flash Player