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February 2015

Time & Materials – T & M Costing

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Time and Materials is a phrase often used when businesses are proposing work to be completed, not setting a fixed cost, but the purchase agrees to pay for the time and also materials used in completing a task. Often used by tradesman in construction but now more so in software development and professional IT services.

In providing professional services, our clients work with us based on our past experience, where we have provided consultancy or development or through word of mouth and also referrals. Our product is our professionalism and quality of work, but this is not a physical product like a PC or a table, which clearly has a fixed price that varies from business to business.

Pricing based on time and materials protects both clients and the service provider, which means both parties obtain a fair price for the services completed. With all projects you look to define and clarify what the deliverable may be, however in many instances this can be improved – but in a world of technical unknowns it may be difficult to forecast change in circumstances.

Another way to look at this is reviewing what a fixed price really is – it can be restrictive for both parties in that improvements and developments may be required, but without the allowance or the cost of change, both parties will not fairly move forward and agree.

T & M or Fixed Price

More often than not a client requesting a fixed price will receive a quotation which is higher than the forecasted time. A business scheduling the work will always build in some “fat” or “margin” to protect themselves against unforeseen circumstances. How would you feel about over paying for someone’s time when a project is completed, or more so, if the project was completed in half that time, would you feel cheated?

We work with many large businesses who even at the point of placing an order for development, realistically they do not fully understand what their requirements are. They may not be aware of the different technologies that are available or how implementation can be improved – but they also do not know the limitations with their current software infrastructure. We have a duty of care to provide the best service to our clients, to ensure project delivery is completed on time and on budget – but also utilising the best methods available to us.

If you are 100% certain of your requirements and how a project needs to be delivered, we will happily provide a fixed price solution. Many of our clients have worked and partnered with us for many years, and almost all of them now work to a T&M method. They appreciate our work ethics and dedication to ensuring best of breeds solutions – but if you are new to Wirebox and would like to test the water – we are happy to provide you with a fixed cost. The greater the brief, the more accurate the costing!

By admin February 2015

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