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 Outsourced Project Delivery Acceptance  Outsourced Project Delivery Acceptance   Time and materials contract   Time and materials contract

Manage   »   Delivery   »   Fixed price contract


In a fixed price contract the price forecast for the project is predetermined, preset and stable regardless of the actual true costs of the project and seemingly remains unchanged throughout the project until the end. In this type of project the emphasis of risk is on the delivery partner. The objective of the delivery partner is to create and maintain enough pace to deliver as much of the project as possible without exceeding the budgeted price forecast. Of course, there will always be delivery companies seeking to appropriate as much of your money as possible by delivering as little as possible within the planned budget.

In the Toolkit, we show you how to plan regular shipments and how to monitor these shipments in order to avoid this eventuality. The risk is on the delivery partner to bring home the project within defined levels of quality and cost. The risk that you bear for the organisation is that the acceptance criteria for your deliverables are clear enough to enable accurate estimating before you start, re-estimating throughout the project and confirmation of the deliverable once it is complete. Importantly, you also seek to get the maximum benefit from project funds by ensuring the project runs efficiently and at the optimum rate.

Furthermore, you are trying to avoid being hammered with change control because your specifications are too loose, subject to interpretation and ambiguity. Change control in this instance refers to the process to cost and manage development outside the scope or original brief of the contract. Where you elect to develop new functionality outside the original brief, this work will need to be estimated and presented to you for further funding or agreement.

In theory, this should only occur when you truly intend to extend the scope of the original development and deliver something additional or new. In practice, discussions and debates are often generated when either the delivery partner or the organisation seek to understand the full scope of the original planned development and to understand whether this latest change was originally inside or is in fact outside the original scope.

During this sort of debate you are likely to find out what sort of ethos and approach your delivery partner intends to take for your project. If your discussions are conducted with the attendance of the delivery partners lawyers you can expect a confrontational approach for the remainder of the project. This should not always be seen as a bad thing. It ensures that your work and their work is going to be accurate and succinct, helps manage expectations a little tighter and keeps you all on your toes.

Some delivery partners, however, take a very different approach. They are likely to have a more accommodating attitude, to allow Small Changes to be made and they adopt a style which gives the possibly valid impression of co-operation and obliging service. This approach seeks to impress the organisation (the client) and to convey the perception that the delivery partner is an agreeable and helpful company that intends to support the organisation for the long term. These anticipated late-breaking changes will be covered in their costing and you can expect the delivery partner will add these up in the background to ensure the cost of the changes do not exceed their planned contingency.

This is a commercial operation for a delivery partner and they will seek to generate positive financial benefit. If such a benefit is not apparent, the delivery partner will lose focus on your project and very swiftly take the skilled resources you so acutely crave away to another site to deliver commercial opportunities elsewhere.

It should be the objective, in all fixed price projects, to deliver a solution where the client organisation agrees and signs off accepted quality deliverables on time, to agreed budget. It should also be the objective that the delivery partner derives acceptable financial benefit for securing and managing skilled resources, delivering your project and covering the associated financial risk.

The Toolkit favours and extends the 3rd edict of the Agile Manifesto. We extend the concept of customer collaboration to include supplier and client collaboration. Whilst there is value in ensuring that contract agreements are accurate and suitable, we value and prefer customer collaboration over contract negotiation. For more information about the Agile Manifesto refer to the Agile Alliance website (http://www.agilealliance.org/).

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 Outsourced Project Delivery Acceptance     Outsourced Project Delivery Acceptance   Time and materials contract    Time and materials contract



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