Fixed bid VS. T&M : Whats the diff

software_sin_medida (Photo credit: elprosumidor)

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.

Comments

Aligning Projects with CSR (Corporate social responsibility)

CSR ( Corporate social responsibility ) in context to Project management : Projects are unique entity units, they have a start and a logical end. Projects executes in a time frame with certain goals and objectives to achieve by the end of project and obviously Business as whole is connected with project where sustainability matters. Project managers seek responsibility and accountability from each team members in projects to make project a success, there comes the role of CSR wherein project managers can engage project members to achieve the stated objectives in a project in a sustainable way with responsibility. Corporates do CSR but at the corporate level, if we drill down CSR initiatives at the implementation level and align operational objectives with CSR which can drive projects in a holistic way by driving individuals inside-out from organization perspective and projects outside-in. CSR is just not one word but a gamut of activities are associated with it where in on...

Do we really need to calculate earned value for project?

budget (Photo credit: 401K ) What is earned value : It measures cost , schedule, and work done .Its a way to measure projects progress and provide budget variances. Its a indicator of schedule, budget,and milestone.It also gives us percentage of work done, budget spent, and time consumed. So the units to measure it is dollars and and work hours. So whats the next step to calculate EV: Prepares a WBS (work break down structure) to quantify each task as phases and then phases into modules, modules into more detail units as it descends with time-frame for each task have fixed time which gives us a baseline structure. Lets understand some terms: BCWS - Budgeted Cost of Work Scheduled ACWP - Actual Cost of Work Performed BCWP - Budgeted Cost of Work Performed From above terms earned value will be defined as "Cost incurred to accomplish the work that has been done to date." Derived metrics known as Schedule variance and Cost variance, if they fall into ne...

Porter's outside-in and Hammel - Prahald's Inside-out

Over the years inspiration and motivation to out do something which creates spark in the genre of concurrent times is always been challenge for all of us, to make things happen requires a plan, an out of the box solution to rationalize its existence. More often than not inspiration are unknown to us, which may leads to different scenarios of multiple ways of looking at things differently and indifferently also, anyways there are always n-1 degrees of freedom to think differently for n+1 different ways looking at things. Inspired by a spiral which is coincidentally a galaxy in our spatial system gives us views like --if one start from a point from outer end to reach at center, will reach from outside-in and if one starts from the center and circle outwards move than that will be inside-out thinking. So again its up to individuals, which way move. Traveling by we see stars and other objects binding each other with gravitational forces. Galaxy One of the many management stra...

Project Portfolio-Program Management

Search This Blog