This model will always need detailed requirements specification before work on the project starts. You need to know exactly what you want and must be able to define these specific requirements clearly in written format. The specification must remain frozen throughout the project.
In this model payments are made as milestones in the project are reached.
Predictability is the core factor that any entrepreneur seeks for in business. Company strategy usually requires clear deadlines and figures to be transferred to the budget. Planning expenses for 1–3 months ahead is preferred, as it can provide you with exact figures. (However, if product development will last for 4 months and more, other price models are advisable).
Transparency. With specified requirements, fixed budget and pre-arranged deadlines, there won’t be any surprises. Regular project management interaction with the contractor ensures scope compliance and protects margins.
Ease of management. Payments to the service provider are mainly based on a percentage of work performed. Such workflow requires little involvement since expectations are transparent and predictable.
Lack of flexibility is the major weak point of fixed-fee agreement. As a customer, you are responsible for any emergent changes that you’ve initialized or those ones that are beyond the vendor’s competence.
Less accountability can be referred to as both pros and cons, depending upon each particular case. Such an approach doesn’t comprise regular reports and interactions between the customer and team. All the management is mainly carried out by the team member, so you don’t have to allocate time slots for deep project involvement. (Nevertheless, it doesn’t mean that you’ll be in the dark about the workflow.)
Organization: goes well with Project Outsourcing
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