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That's the fallacy with hourly billing. The alternative model is value-based pricing, where you price the solution/intervention upfront. Of course, this become
by fnordsensei 9y ago
That's the fallacy with hourly billing. The alternative model is value-based pricing, where you price the solution/intervention upfront.
Of course, this becomes more expensive upfront as well, because the consultant takes on the risk. Hourly billing seems cheaper to the client, since they have to take on the risk instead.
- kakwa_ 9y agoPublic contracts (like the one mentioned in the blog post) are "valued-based" ("contrat au forfait" in french). But you can circumvent these by over-billing contract additions/change in requirements ("avenants" in french). In theory those are limited to 20% of the original amount, but with contract renewals and if the government agency already sunk large sum of money into the project it's possible to bypass this limit.
- sokoloff 9y agoWhich leads to situations like this: http://www.quartetservice.com/wp-content/gallery/boat/cs-pic2.jpg http://www.quartetservice.com/wp-content/gallery/boat/cs-pic...
- allannienhuis 9y agohah! I saw the original boat in person and laughed at the time, but didn't see the name on the dingy. Awesome :)
- hestefisk 9y agoVery few large projects like this are based on hourly billing / time and materials. Proper procurement would do fixed price contracts (outcomes based) with a set number of contract variations in place. Where large consulting companies / system integrators secure their margins (and tangentially try and screw over their customer) is by making the fixed price offer really attractive and then to hard on scope as requirements change to pump through as many contract variations as possible at a premium price.