Fixed Price Contract Is Bad For Your Project- Is That True?
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Published: 2020-07-04 05:28:29

Generally, When a client need a software built, he requests a proposal. This document includes all the details about how the software should work. Then this would submit to consulting firms or freelancers to bid on a specific project. The firms bid on a project, and the client selects the one to which they would like to go with development.

There are many different reasons why a client prefers a fixed-price, fixed-scope project. The most basic one is the feeling of security that you will get at a particular project at a dedicated cost. Building a website at a specific cost is not like buying foodstuff at a particular fixed cost.

It is iterative and constantly changing. The software you want on the 1st day will not be the same on day 10 and you get on the completion day. So it is not possible to work at a fixed price and fixed scope before starting a project. Let us see the problems with a fixed price.

**Top 7 Problems With Fixed price And Fixed Scope Projects-**
*1. Lack Of flexibility-*
Most of the clients insist to set a budget before the project starts since they know precisely how the final product should resemble. But it is a mere delusion. In the project of software development, requirements always change. Means user expectations and market conditions will definitely change. Also, if the component prioritization isn’t acclimated to these changes, the project will probably fizzle. Simultaneously, the clients are generally unwilling to change a fixed-value contract since many new terms require signing another arrangement and lead to extra expenses. Hence most of the developers try to develop a software that was defined at the start instead of the best possible product. 

*2. The Long Time To Market-*
Once the contract has been finalized, nothing can be changed during the process. Programmers must have a clear vision of a product before they start coding, even the smallest aspect must be discussed and cleared in advance. All the necessary features should be thoroughly described in a written form in SRS(Software Requirement Specification). Such planning activities prolongs the time to market. To compare parties to the Time & Materials contract, another pricing model should agree on the first part of product functionality. Since the necessities might be changed whenever, developers may begin the work immediately.

*3. Overpricing to Minimise Risk-*
We’re frequently approached to cite, on a fixed-cost, fixed-scope basis, for projects that include research and design phases. Research and design, these two phases means you’ll explore something that you didn’t know before. If the scope is fixed, why trouble to do any research? The discovery is just going to change the scope, which isn’t permitted! Just a fool will not protect themselves from risk, so at the time of quoting it is better to consider that the research will reveal a very demanding, unexpected feature, or that the design will be tricky to execute, so we’ll build in an additional cost margin to cover risk. This is the only way we can guarantee that we won’t lose money.

 That’s no good for the client, and it only gets worse.

*4. Continue With Features That Are Non-Essential-*
Know more at- [https://solaceinfotech.com/blog/fixed-price-contract-is-bad-for-your-project-is-that-true/]