Fixed bid VS. T&M : Whats the diff

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What ever it takes to execute a project whether it is a fixed bid or Time and material based what matters is how you are managing your finances in terms of billing. Lets take a closer look to difference between fixed bid and time and material based project.

A fixed bid project is the one which is having a fixed budget from client and defined set of scope. So, in a fixed bid project the ball is in your court. You define how efficiently you can manage on resources to utilize them fully to balance on your margins. There is other side of the coin also by having a scope creep if you really blow up your work. Obviously a fixed bid project later can managed by the delivery team and driven by project team.

While a time and material project is like a billing of resources involved on hourly basis for actual worked performed with agreed on terms and conditions. Also here one can get reimbursement for overheads.

Here there is one possibility of getting paid for scope creep of your project, so changes in scope will result in more billing , which in will result in more revenue.

So before giving estimates you actually think about whether its a Fixed bid or a T&M based project because fixed bid is fixed one has to live by the fixed amount budget whatever it takes to do it. In that case there is always a possibility of scope creep by having a change in requirements. So keep updating your estimates on regular intervals as requirements changes, to acknowledge of customer.

Because at the end of the day its important to get paid for your work and resources blocked for the same.

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