[consulting] Why fixed rate "budgets" are a waste of time for everyone (was REVISED RFP FOR DRUPAL DEVELOPER)

[Andrew R. Kelly]

What you are describing is what we used to call "Fixed Price - Best
Estimate" back when I worked at IBM Global Services.  It's the road I always
try to travel.  Displaying that you have sound project control/communication
mechanisms in place during pre-sale also helps to sell this model.

This model puts 100% of risk on the client, but it's a nice model when the
client is needs to go through a procurement process prior to awarding the
contract.  In other words, enterprise-level sales.

Good Selling,
Andrew

-----Original Message-----
From: consulting-bounces at drupal.org [mailto:consulting-bounces at drupal.org]
On Behalf Of Sam Tresler
Sent: Thursday, November 11, 2010 4:25 PM
To: A list for Drupal consultants and Drupal service/hosting providers
Subject: Re: [consulting] Why fixed rate "budgets" are a waste of time for
everyone (was REVISED RFP FOR DRUPAL DEVELOPER)



On Fri, 12 Nov 2010, John Saward wrote:

"they all want to know in advance how much their project will cost them, and
that is a reasonable expectation, I guess)"

Actually, no it isn't.  It would be if we in turn had a fixed labor and/or
resources investment, but that is not the case in custom software
development.

You go to the mechanic, he says you need a new alternator - $450.  He knows
how much the alternator costs him, and having done the exact same job before
he knows how long it will take him. If he gets in there, and it turns out
you need a new wiring harness too, you'll never hear a mechanic say, "Well,
I gave you a fixed rate of $450, so the wiring harness is included."....
ever.

You go to a restaurant and order the steak - $45.  They know what the cost
of the beef is and how much effort goes into cooking it.  If you in turn
order the wine after the initial order of steak, is it included in the $45?

You go to the website developer and request the Website Deluxe, $22,000.
The website developer doesn't know what is involved in your custom theme,
and there's some 'zipcode search functionality' that is a little vague. How
does that translate?

In short, I only agree to fixed rate packages when my hours are also fixed.
i.e. if I were to take a $22000 fixed rate, I would likely say, that I will
accomplish everything I can on their feature list, in the priority that the
client dictates up to 160ish hrs, reserving 40hrs for QA, cleanup, and
polishing of what was accomplished in that time.  We'd just get as far down
on that list of features as we could while delivering a good product.
Incidentally, the client would be much better off just paying my hourly,
because they could get the same deal anyway, except paying the hourly, I
might finish early.

-Sam

>
> Thanks
>
> John
>
>
> On 12/11/2010, at 7:45 AM, Victor Kane wrote:
>
>> Both Joel and Christopher were dialoging and what's more, they were
right. And what's more, they were helpful, on both sides. Went from 12 to 18
in ten minutes. And with the acknowledgement that custom dev would be more,
and with the acknowledgement that it depends also on the real requirements
(word conversion? yes? no?).
>>
>> Now that's a consultants forum!
>>
>> I've been tiredly explaining to people all week why fixed rate "budgets"
are a waste of time for everyone, this really brought it home.
>>
>> Victor Kane
>> http://awebfactory.com.ar
>

Sam Tresler
646-246-8403

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