8 ms·

The moment you agreed to a fixed bid, the incentives between client and customer are directly in conflict. Any additional thing that the client wants has to be

by GavinB 10y ago

The moment you agreed to a fixed bid, the incentives between client and customer are directly in conflict. Any additional thing that the client wants has to be renegotiated. If your development is in any way exploratory or creative, my experience is that hourly billing frees everyone up to focus on making the best product. It also lets the developers and designers be creative and figure out the best way to build something, rather than having to build exactly what was drawn up by some idiot (usually me!) who isn't actually the one doing the work. Yes, you have to trust that the hourly worker isn't wasting your time. Yes, they may have to raise their rates as they get more experienced and more busy.

matthewowen 10y ago
I've worked at an agency both on a fixed price and on a time and materials basis. They're equally bad in their own ways, IMO. On a fixed price build, as you say, every small detail becomes a negotiating point. I do think time and materials can be better, but I think the trust you mention can take a long time to earn. Some things seem simple but take longer than expected. Some things seem hard and come together quickly. It can sometimes feel for clients like they're being taken for a ride on a particular piece of work, even though in other cases the work will have been done for less than initially expected and it notionally balances out. These are tricky problems to get back on a case by case basis. And, truthfully, in my experience the clients who were fussy about costs were usually fussy about quality too, and I would say generally came out ahead because of it. So the incentives are still tricky. It's also challenging, because in an agency context the client inconsistencies do exist. Some people do work faster or slower. Some people do better or worse work. Sometimes the person who is already up to speed on the project isn't available and someone else has to do the work instead. A lot of these problems are internal to the agency, and it's frustrating to the client when they affect their expenditure. I don't really have a good solution to it. Honestly, my takeaway from the experience was that the client/agency dynamic just kinda sucks, and it isn't a dynamic I enjoy working in.
- dasmoth 10y ago
  >>> Honestly, my takeaway from the experience was that the client/agency dynamic just kinda sucks, and it isn't a dynamic I enjoy working in. What do you prefer? Single employer + Salary?
  - matthewowen 10y ago
    Worth pointing out that I was working at an agency, so I was still an employee with salary: I just had to deal with all this other crap too. But yeah, I prefer working in-house to working for an agency. Besides the fact that I think the work tends to be more interesting and generally done to a higher standard, I don't think the same dynamics exist. Maybe this is just my experience, but I don't find the boss <-> employee relationship to be nearly as adversarial as the client <-> supplier relationship. Additionally, I think most managers are just less penny-conscious about their employees are than most clients are about their agencies, probably because the budgeting processes are different. I mention this, because I'm conscious that you can frame salaried employment in equivalent terms to client <-> agency dynamics. I just don't think that framing tends to be true, because I think there are other social and economic dynamics at work.
pmoriarty 10y ago
A fixed price for the whole project is not the only alternative to hourly billing. You can also bill by day, week, month, or some other interval.
- GVIrish 10y ago
  Or break the project out into phases/sprints. That way if the customer wants to increase scope it changes the price of the next phase, rather than having to renegotiate the entire deal. It also gives both parties some concrete decision points so they can decide if they want to continue.
- kxyvr 10y ago
  As opaque and oppressive as it sometimes can be, I highly recommend that people at least understand the kinds of contracts listed in the FAR (Federal Acquisition Regulation): https://www.acquisition.gov/?q=browse/far/16 https://www.acquisition.gov/?q=browse/far/16 These contract structures apply to more than just federal contracts and have helped me dramatically understanding different contract structures. Anyway, long story short, each contract type has a different amount of risk and reward and it's extremely important that both parties understand and choose the contract type most appropriate for the work. Even fixed priced contracts have a lot of variation: http://www.acq.osd.mil/dpap/ccap/cc/jcchb/Files/Topical/Contract_Type_Comparison_Table/resources/contract_type_table.docx http://www.acq.osd.mil/dpap/ccap/cc/jcchb/Files/Topical/Cont... Anyway, it does take time to learn this language, but the there are many local chapters of the National Contract Management Association (http://www.ncmargc.org/ http://www.ncmargc.org/) that run seminars and study groups that can help understand this kind of language.
convolvatron 10y ago
yeah, this can be really awful. Normally as a contractor, part of my value is that I can adapt to fill in the gaps left in the project. Thats almost always the best thing for both parties. Instead of pointing at a flaw and screaming that it needs to be fixed before I can work, I just fix it. On a fixed bid, depending on the difference between the reality and expectations, that can put me underwater pretty quickly. So I end up calling them and saying:"I assumed you had tests, and the board was working, and that I wouldn't have to drive back and forth to your office 6 times. Now my hourly is $7.50 assuming I could finish right now. So are we going to fix this or am I going to walk away from this giant sunk cost." This conversation never goes well.

by GavinB 10y ago

matthewowen 10y ago

I've worked at an agency both on a fixed price and on a time and materials basis. They're equally bad in their own ways, IMO. On a fixed price build, as you say, every small detail becomes a negotiating point. I do think time and materials can be better, but I think the trust you mention can take a long time to earn. Some things seem simple but take longer than expected. Some things seem hard and come together quickly. It can sometimes feel for clients like they're being taken for a ride on a particular piece of work, even though in other cases the work will have been done for less than initially expected and it notionally balances out. These are tricky problems to get back on a case by case basis. And, truthfully, in my experience the clients who were fussy about costs were usually fussy about quality too, and I would say generally came out ahead because of it. So the incentives are still tricky. It's also challenging, because in an agency context the client inconsistencies do exist. Some people do work faster or slower. Some people do better or worse work. Sometimes the person who is already up to speed on the project isn't available and someone else has to do the work instead. A lot of these problems are internal to the agency, and it's frustrating to the client when they affect their expenditure. I don't really have a good solution to it. Honestly, my takeaway from the experience was that the client/agency dynamic just kinda sucks, and it isn't a dynamic I enjoy working in.

dasmoth 10y ago
>>> Honestly, my takeaway from the experience was that the client/agency dynamic just kinda sucks, and it isn't a dynamic I enjoy working in. What do you prefer? Single employer + Salary?
- matthewowen 10y ago
  Worth pointing out that I was working at an agency, so I was still an employee with salary: I just had to deal with all this other crap too. But yeah, I prefer working in-house to working for an agency. Besides the fact that I think the work tends to be more interesting and generally done to a higher standard, I don't think the same dynamics exist. Maybe this is just my experience, but I don't find the boss <-> employee relationship to be nearly as adversarial as the client <-> supplier relationship. Additionally, I think most managers are just less penny-conscious about their employees are than most clients are about their agencies, probably because the budgeting processes are different. I mention this, because I'm conscious that you can frame salaried employment in equivalent terms to client <-> agency dynamics. I just don't think that framing tends to be true, because I think there are other social and economic dynamics at work.

pmoriarty 10y ago

A fixed price for the whole project is not the only alternative to hourly billing. You can also bill by day, week, month, or some other interval.

GVIrish 10y ago
Or break the project out into phases/sprints. That way if the customer wants to increase scope it changes the price of the next phase, rather than having to renegotiate the entire deal. It also gives both parties some concrete decision points so they can decide if they want to continue.
kxyvr 10y ago
As opaque and oppressive as it sometimes can be, I highly recommend that people at least understand the kinds of contracts listed in the FAR (Federal Acquisition Regulation): https://www.acquisition.gov/?q=browse/far/16 https://www.acquisition.gov/?q=browse/far/16 These contract structures apply to more than just federal contracts and have helped me dramatically understanding different contract structures. Anyway, long story short, each contract type has a different amount of risk and reward and it's extremely important that both parties understand and choose the contract type most appropriate for the work. Even fixed priced contracts have a lot of variation: http://www.acq.osd.mil/dpap/ccap/cc/jcchb/Files/Topical/Contract_Type_Comparison_Table/resources/contract_type_table.docx http://www.acq.osd.mil/dpap/ccap/cc/jcchb/Files/Topical/Cont... Anyway, it does take time to learn this language, but the there are many local chapters of the National Contract Management Association (http://www.ncmargc.org/ http://www.ncmargc.org/) that run seminars and study groups that can help understand this kind of language.

convolvatron 10y ago

yeah, this can be really awful. Normally as a contractor, part of my value is that I can adapt to fill in the gaps left in the project. Thats almost always the best thing for both parties. Instead of pointing at a flaw and screaming that it needs to be fixed before I can work, I just fix it. On a fixed bid, depending on the difference between the reality and expectations, that can put me underwater pretty quickly. So I end up calling them and saying:"I assumed you had tests, and the board was working, and that I wouldn't have to drive back and forth to your office 6 times. Now my hourly is $7.50 assuming I could finish right now. So are we going to fix this or am I going to walk away from this giant sunk cost." This conversation never goes well.