Most companies aim at long-term strategic partnership with their clients. While, it’s the best way to leverage offshore economics. But, it can be quite a tedium to ensure flexibility along with a trustworthy relationship when engaging with an offshore partner to make the best out of the requirements. A right engagement model will make sure to have better control over the project aspects. A variety of factors may kick-in depending on specific expected outcomes. An engagement model is a contractual agreement, signed between IT services provider and a client, that specifies working methodologies, delivery terms, pricing, etc. Depending on the scope and duration of the project there are different engagement models, most commonly used are; Fixed Price or Time and Material.
Fixed Price engagement model or the project pricing model is utilized for the projects with descriptive scope, time-line and requirements before commencing of the project. The detailed sketch of the project process, scope, requirements and resources limits ambiguity and allows optimized performance of the project within the project time-line. It is important to understand when and where to use the Fixed price model. As there can be significant risk at time if even there little amount of imbalance in specifications.
Here is when it can be best to choose a Fixed Price model :
- If project result can be described by mutually acceptable and understandable terms and with an immaculate detailing. Agreement of both parties on the acceptance criteria is crucial here.
- If client’s supervision over the project implementation is either inappropriate or not practical.
- If requirements and methodologies are so specific that periodic deliverables can be expected at the agreed schedule.
- If final project features are so clear that during the development process there is a little place for changes or modifications.
Advantages of the Fixed price model :
- Good for small and medium level projects that have well-defined specifications and precise deliverables from the start.
- Cost and timeframe are specified before the beginning of the work on project.
- Little supervision is required from the client, all requirements are defined beforehand.