Contract Models of Multi-shore projects (II) – Time and Materials

Time and Materials projects are based on hourly, weekly or monthly charges per person. It offers more flexibility and is more suitable for projects that:

• The initial scope is not defined precisely enough to make a reasonable estimation.
• The client would like to make changes frequently as they go. The project scope and requirements evolve significantly over time.
• Need to use new technologies (e.g. beta technology) with high risks.
• Need for innovative designs which involve much effort in experimenting and researching.

Advantages of using the Time and Materials model

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The time and materials model works best with agile methodology (e.g. Scrum, XP). Clients always have opportunities to optimize the products by adding new valuable features and removing unnecessary ones (when the project is going) so that they can achieve the most value out of their investment.

The time and materials model also provides flexibility to scale up or down the project and simply adjust the team size based on needs. The client has the flexibility to decide when to stop the project (when they feel either the product is good enough for release or the project is not worth further investing).

Trust is the key to the success in a Time and Materials project

With the advantages described above, a client may still be reluctant to sign up to a time and materials contract. This is usually because of lack of trust between a client and the development team. Clients are reasonably 0afraid that they may pay too much for too little (if not nothing). In other words, clients have the fear that they have less control over the project, compared to a fixed price model.

Transparency is critical to reduce fear and build trust with clients. And customer involvement is the key to building transparency. In a typical multi-shore project, a client does not reside at the same location as the development team. So  below are the things we do at our Global Delivery Center to ensure transparency:

• Involve the client in the iteration planning.
• Report daily status to the client.
• Burn-down chart is visible to the client.
• Demo working software to the client at the end of iteration.