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These days aren't we all trying to move towards more agile working practices? The problem is that fixed cost is pretty much at odds with this. I've worked on p
by robjan 7y ago
These days aren't we all trying to move towards more agile working practices? The problem is that fixed cost is pretty much at odds with this.
I've worked on projects where we came to a compromise and had a fixed cost per story point, and the in house PO had to agree with estimations, but the vendor quickly started taking liberties and massively overestimating everything. When we called them out, they started compromising on quality instead leading us to code review everything. The overhead ended up being so large that we might as well have in-housed the project.
- lmilcin 7y agoActually, I think fixed cost projects are better. With fixed cost projects you negotiate price for the expected outcome and it is much easier to show if the success criteria were not met. With time and materials projects it is almost impossible to get good results from the vendor. The vendor meets his goals when they deliver the team and they can't be held responsible for results, typically. If you are not happy with the people they delivered you can of course protest but then you just get different people and the people you protested will find place in another project and it does not matter much to the vendor.
- robjan 7y agoFixed cost works on relatively simple, low risk, low innovation projects but not so much when there are lots of unknowns and emerging requirements. An example of low risk would be building a marketing website and high risk would be creating a new system from scratch to replace poorly defined business processes.
- lmilcin 7y agoYou don't really want to outsource innovative projects. You want to keep your best staff with you and have it work on most important projects and outsource the least important but highest volume of work.