Fixed Price Contract Is Bad For Your Project- Is That True?

Fixed Price Contract is bad for your project is that true

Generally, When a client need a software built, he requests a proposal. This document includes all the details about how the software should work. Then this would submit to consulting firms or freelancers to bid on a specific project. The firms bid on a project, and the client selects the one to which they would like to go with development.

There are many different reasons why a client prefers a fixed-price, fixed-scope project. The most basic one is the feeling of security that you will get at a particular project at a dedicated cost. Building a website at a specific cost is not like buying foodstuff at a particular fixed cost.

It is iterative and constantly changing. The software you want on the 1st day will not be the same on day 10 and you get on the completion day. So it is not possible to work at a fixed price and fixed scope before starting a project. Let us see the problems with a fixed price.

Top 7 Problems With Fixed price And Fixed Scope Projects-

Problems With Fixed price And Fixed Scope Projects

1. Lack Of flexibility-

Most of the clients insist to set a budget before the project starts since they know precisely how the final product should resemble. But it is a mere delusion. In the project of software development, requirements always change. Means user expectations and market conditions will definitely change. Also, if the component prioritization isn’t acclimated to these changes, the project will probably fizzle. Simultaneously, the clients are generally unwilling to change a fixed-value contract since many new terms require signing another arrangement and lead to extra expenses. Hence most of the developers try to develop a software that was defined at the start instead of the best possible product. 

2. The Long Time To Market-

Once the contract has been finalized, nothing can be changed during the process. Programmers must have a clear vision of a product before they start coding, even the smallest aspect must be discussed and cleared in advance. All the necessary features should be thoroughly described in a written form in SRS(Software Requirement Specification). Such planning activities prolongs the time to market. To compare parties to the Time & Materials contract, another pricing model should agree on the first part of product functionality. Since the necessities might be changed whenever, developers may begin the work immediately.

3. Overpricing to Minimise Risk-

We’re frequently approached to cite, on a fixed-cost, fixed-scope basis, for projects that include research and design phases. Research and design, these two phases means you’ll explore something that you didn’t know before. If the scope is fixed, why trouble to do any research? The discovery is just going to change the scope, which isn’t permitted! Just a fool will not protect themselves from risk, so at the time of quoting it is better to consider that the research will reveal a very demanding, unexpected feature, or that the design will be tricky to execute, so we’ll build in an additional cost margin to cover risk. This is the only way we can guarantee that we won’t lose money.

 That’s no good for the client, and it only gets worse.

4. Continue With Features That Are Non-Essential-

Most of the time, we’ve observed that developers start working and as the initial version of software is sent to the client, their understanding about what is possible changes. At the beginning, feature A was necessary but now you came to know that the another feature does everything that feature A is for, and so it is not worth spending more time and money on it. In such cases with fixed price, you are locked in paying for feature X despite the fact that you needn’t bother with it because of the contract (which is not easy to change).

5. Arguments Over Scope-

One more issue with the defined feature list is that firms or freelancers interpret it one way, and clients will interpret it another way. According to the developers perspective, they know more about the building websites, and assume that you’re looking for something more advanced and complex, whereas the client is looking for a simple and cost-effective solution. Clients know the details of business and what they need in the future that actually firms or freelancers don’t know at a time of quote. Productive arguments in a project are good but tend to get pretty difficult.

6. An Adversarial, Instead of Cooperative, Relationship-

Cooperating and sharing always shows a better result. Fixed scope and fixed price allows everyone to work according to their interests and focus on getting the best value instead of building the best website. The developer will adhere to the agreed scope(even though it is not right), work as fast as possible, and deliver the minimum they can pull off, just to increase profit. The client is persuaded to contend for a lot of features, notifications, and updates as they can pull off to accomplish the best “value for money”.

7. More Cost For Maintenance-

Everyday new technologies came to the market hence websites and mobile apps need constant maintenance. The web solutions built with a fixed-price will need faster updates and it will be more expensive. And the reason is-Such a kind of solutions are developed as per the defined requirements. To be relevant, they must be upgraded just after the initial release. Also if the quality and features are compromised because of the wrong estimation, the further maintenance will be more costly and also complex. 

Conclusion-

Clients like the fixed price contract because they think that it reduces the risk. Developers already know that fixed bids are not good for them. In some cases they yield and make a wild estimate about how much something will cost to satisfy the customer, so as to make the deal. In a consulting relationship, the consultant ought to give a valiant effort for the customer, which isn’t generally what the client needs.

Clients should work with developers they trust. They can develop trust by reviewing previous work, focusing on outputs rather than features, and keeping the scope small. Once the trust has been built the client and developer can work together for the best product.

Are you looking for the best development team to build the best web solution for your business? We are here to help you. We have a dedicated expert’s team to help you through development. You can hire developers of a Solace team for the best development. Connect with Solace and get a free quote for web development that will help to boost your business. We will be happy to help you.

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