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I might add two amendments here: The first is that "time and materials" is infinitely preferable to "fixed scope." In the former case, both client and consult

I might add two amendments here: The first is that "time and materials" is infinitely preferable to "fixed scope." In the former case, both client and consultant have an incentive to set priorities and make difficult, pragmatic choices. In the latter case, the potential for inadvertently over-promising is ever-present. Then comes either "fail and take the blame" or work through sunrise to deliver. The second is that over-communication with the client throughout the engagement is often the difference between joyous interactions and the various horror stories that become commonplace. Consulting can be spectacular IF the contracts are time and materials AND consultants over-communicate with clients.

benjaminwootton 5y ago
Many good consultancies prefer fixed price for fixed scope because the margins are higher. You are of course owning the risk, but if you know how to write a contract and manage a customer, fixed price work is much more profitable and even easier to deliver.
- evancoop 5y ago
  Certainly, the upside is larger - cannot argue. The challenge, in my mind, with respect to software is the unforeseen, not-entirely-in-your-control challenge of integration, bug-fixing, etc. I'd much rather have delivered 95% of the scoped work, tell the client essentially, "we can do X, but it could require some non-trivial expenditure on your part or, since we've done a great job setting priorities to date, maybe that feature is not mission critical." Time and materials gives both parties some agency. Of course, if your powers of predictions are infallible, then perhaps you're better off with fixed scope! (My powers of prediction are infallible too...until they aren't!)
ejb999 5y ago
While I don't think you are wrong, and that is a very common viewpoint - in my own experience I always preferred fixed price jobs - but you do need to be careful about the projects you choose. I love the freedom of just building what the client asked for, without tracking my hours and billing for them. Some projects I might spend more time on them - beyond what I had estimated - just because it was a fun project, was learning something knew - or knew it was something I would be able to leverage up with for the next project. On the other hand, sometimes projects would turn out easier than I thought, and be done in less time - and would end up making more money that I thought. It does help if you are good at estimating - I always thought it was one of my strongest skills; rarely was I off much - but my general rule of thumb was estimate how long it would take to do, and then add 25-50% as profit margin (or buffer if I was off). Can't remember it ever turning out bad for me in a financial sense, though not all clients are nice to work with. Always worked out OK for me, for small to medium size clients and projects - I wouldn't take on a 7 figure project on fixed price, but once you get into this sized projects - getting the project 'done' usually has many, many layers of different stakeholders who might choose to jerk you around and who are very removed from the actual delivery of the project - i.e. legal, marketing, some guy in purchasing that enjoys squeezing vendors for no reason etc; but smaller companies often you deal with 1-2 stakeholders that are easier to communicate and can make final decisions and who are happy to have the predictability of a set price.
- tonyedgecombe 5y ago
  I've done a couple of fixed price jobs but they were very small (a couple of weeks work) and with a client I trusted. In general I won't and I've found the more the client demands it the more I should be worried.

benjaminwootton 5y ago

Many good consultancies prefer fixed price for fixed scope because the margins are higher. You are of course owning the risk, but if you know how to write a contract and manage a customer, fixed price work is much more profitable and even easier to deliver.

evancoop 5y ago
Certainly, the upside is larger - cannot argue. The challenge, in my mind, with respect to software is the unforeseen, not-entirely-in-your-control challenge of integration, bug-fixing, etc. I'd much rather have delivered 95% of the scoped work, tell the client essentially, "we can do X, but it could require some non-trivial expenditure on your part or, since we've done a great job setting priorities to date, maybe that feature is not mission critical." Time and materials gives both parties some agency. Of course, if your powers of predictions are infallible, then perhaps you're better off with fixed scope! (My powers of prediction are infallible too...until they aren't!)

ejb999 5y ago

While I don't think you are wrong, and that is a very common viewpoint - in my own experience I always preferred fixed price jobs - but you do need to be careful about the projects you choose. I love the freedom of just building what the client asked for, without tracking my hours and billing for them. Some projects I might spend more time on them - beyond what I had estimated - just because it was a fun project, was learning something knew - or knew it was something I would be able to leverage up with for the next project. On the other hand, sometimes projects would turn out easier than I thought, and be done in less time - and would end up making more money that I thought. It does help if you are good at estimating - I always thought it was one of my strongest skills; rarely was I off much - but my general rule of thumb was estimate how long it would take to do, and then add 25-50% as profit margin (or buffer if I was off). Can't remember it ever turning out bad for me in a financial sense, though not all clients are nice to work with. Always worked out OK for me, for small to medium size clients and projects - I wouldn't take on a 7 figure project on fixed price, but once you get into this sized projects - getting the project 'done' usually has many, many layers of different stakeholders who might choose to jerk you around and who are very removed from the actual delivery of the project - i.e. legal, marketing, some guy in purchasing that enjoys squeezing vendors for no reason etc; but smaller companies often you deal with 1-2 stakeholders that are easier to communicate and can make final decisions and who are happy to have the predictability of a set price.

tonyedgecombe 5y ago
I've done a couple of fixed price jobs but they were very small (a couple of weeks work) and with a client I trusted. In general I won't and I've found the more the client demands it the more I should be worried.