Wednesday, January 6, 2010

Why are people so much attracted by fixed-cost project outsourcing model?

Sometimes customer insists on fixed-price project model. It is stated, that all the requirements are already perfectly defined.
Is it really so easy to predict all the job scope? Would it not be better to be flexible if required? It sometimes seems to me, that fixed-price projects simply transfer the risks to the outsourcing vendor. This reflects in overestimated prices and non-optimal planning and resourcing distribution. So I wonder, how many fixed-price could have been more successful if there would be more flexibility and client-vendor interaction added?
What are your experiences with different pricing models? Which model has proved to be most effective for both parties?
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