I don’t think I have to explain about what a Time & Material project is and what a Fixed Price project is. Those of us in IT companies have surely come across this. But for the benefit of the netizen who is unaware of what this is here is a quick one-line definition:
T&M project is one where the client and the vendor agree to execute a project and the financials are based purely on hours of work completed. E.g.: If you have 2 people working 8 hours a day for 5 days, then the vendor bills the client for 80 person hours of work.
In an FP project, the client tells the vendor that he needs some work done by a specific date and would pay him x dollars. The client doesn’t bother about the number of people deployed by the vendor.
If you still can’t comprehend this, here is an example that could enlighten you.
Many many years ago, in Chennai, auto-rickshaws used to have meters. Meters that worked and was not ‘soodu vechu’-fied. So whenever we Chennaites used this three-wheeled contraption to move us around, the meter used to display what we had to pay. The meter also used to include time when the auto-rickshaw was not mobile – like in signals, or when you stop to buy flowers from your ‘vaadikkai pookaaramma’ etc.
This is a Time & Material project.
Over the years, however, the price of petrol kept rising with a consistency that even Don Bradman could not have matched. While the Government was over-zealous in hiking the prices, they never bothered to rectify the rates for these meters. So, the poor auto-rickshaw driver had to ‘soodu vechu’-fy the meter to make ends meet. So much so, that at one point in time, we ended up paying way too much money than necessary. And those of us not aware of shortcuts were always fleeced by the ‘autokaaran’, who made it a point to include a drive along Marina Beach even if you had to go to Tambaram from Adyar!
When people started questioning this, the ‘autokaaran’ came up with an alternative. “Just pay me some x rupees for the travel from Besant Nagar to Spencers”. This was always slightly more expensive than what you would have to pay if the meter was correct. But, if at all the guy did have a meter, you would have ended up paying much more than the offer of ‘x’ that was just given to you. And you would have had to see the Marina Beach as well.
So, we simply haggled with the ‘autokaaran’ and settled a deal for y rupees. It was then the ‘autokaaran’s decision to use the shortes route, keep the engine running at signals etc.
This in short is a Fixed Price Project.
1 comment:
The chief difference, I feel, between the three-wheeler hiring system and the IT industry is that, in the former, the vendor gets to call the client, "Pannadai, Kaidhae, Paradesi, Punnaakku and Podaango" during the course of the meeting with the client, but in the latter, it is usually after the meeting has come to an end and the client's representatives have left.
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