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 Fixed price contract  Fixed price contract   Capped Time and Materials CTAM   Capped Time and Materials CTAM

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The time and materials contract is delivered on the basis of resources charged at specified fixed hourly rates with all equipment and supplies being invoiced at cost or with acceptable profit. The emphasis of risk is on the organisation here and the extra time and effort spent in deriving accurate estimates for the proposed project is important.

Using the Toolkit, we deploy regular shipments and monitor these shipments to agreed and defined levels of quality and cost. Under the time and materials contract, the risk to deliver these shipments within defined time periods is on the organisation not the delivery partner. The organisation will pay the delivery partner for the total number of hours worked on the project. Therefore, a delivery partner has motivation to extend the project and to maximise the number of hours its personnel spend on the service. There is no incentive to operate its team at maximum efficiency, quite the opposite. The less efficient the delivery partner is, the more revenue it generates. The focus turns away from the delivery of products towards the maximisation of product quality and the maximisation of hours spent.

Therefore, the focus of the organisation should turn to acceptance criteria. The Commitment to accept products that are fit for purpose is important here. The delivery partner will sign up to this Commitment and will not seek to deliver products with an unacceptably high level of extra polish and additions. This is unsuitable under the Toolkit and in such instances the delivery partner has failed the fit for purpose Commitment.

The focus of the organisation needs to be on the velocity and burn rate of the project and to make sure the delivery partner is running its team to the maximum operational efficiency without unnecessarily extending tasks and products to pad out the timeboxes. The delivery partner will sustain an acceptable velocity according to the planned frequency of delivery.

Furthermore, the organisation will withhold the timeboxes defined in the Delivery Plan and whilst it is accepting products that are fit for purpose and monitoring an efficiently running delivery partner team, the organisation is minimising the overall risk to the project. When a project is maintained in this way a time and materials contract can be a very efficient way to deliver your project.

A time and materials contract is very often estimated and priced by a delivery partner under the assumption that extra work will be revealed and overall revenue will rise as the project progresses. That is the situation normally with traditional projects. However we have fixed timeboxes when we use the Toolkit. So the delivery partner cannot pad out a timebox and extend it. Also we have prudent acceptance criteria and the Commitment to accept products that are fit for purpose. Accepted deliverables within accepted timescales can only mean the deliver is on time and to quality, when it is estimated accurately and managed efficiently.

Once again the topics of acceptance criteria, fit for purpose deliverables, clear and accurate estimating as well as intimate management throughout a project are the cornerstones to successful development using the Toolkit and ensure a project runs and delivers efficiently.

The real tip, in securing the best contract, is securing the best contractor. This is not an easy task and the topic of other publications. However, under the Toolkit, in contract negotiation there are guidelines you can adopt to flex a contract in your direction and to your favour. You will benefit by considering limiting (or capping) certain elements of the contract. Let us see how we do this.

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 Fixed price contract     Fixed price contract   Capped Time and Materials CTAM    Capped Time and Materials CTAM



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