For the execution of a digital project, such as the development of a web or mobile application, there are two types of contracts: time and materials time and materials or fixed-price fixed-price. Galadrim is a web and mobile application development agency that has completed over a hundred projects, some on a fixed-price basis and the vast majority on a time and materials basis. Based on our experience, we believe that a time and materials contract is beneficial for both the client and the service provider and can make a difference in a project's success. The aim of this article is to explain why and to provide advice for good collaboration on a time and materials basis.
Difference between fixed-price and time and materials
In a fixed-price contract, the service provider commits to results, i.e., the delivery of a good or service defined in the contract, whose conformity to the order is theoretically easy to measure and verify.
In a time and materials contract, the service provider commits to means, i.e., human resources made available for a given period.
In light of these definitions, the fixed-price model seems like an assurance for the client. In practice, we will show that intuition is often misleading and that the time and materials model has many advantages if executed well.
Why fixed-price is ill-suited for digital projects
Evolving needs
When an application is tested by a project owner, they usually have a lot of feedback to give to improve theuser experience (UX) of the application.
In practice, it is simpler to test the application feature by feature, and to address feedback as development progresses, rather than at the end. To understand this, we can draw an analogy with building a car: for example, it is simpler to modify the engine before it is integrated into the passenger compartment.
In a fixed-price project, since the deliverable is defined before development begins, feedback is not included. This therefore necessarily entails a new quote, new commercial negotiation, and new costs.
This way of working goes against the
Agile Manifesto one of whose four principles is to prioritise
customer collaboration over contract negotiation.
The difficulty of defining a measurable and verifiable deliverable
To understand this difficulty, let's take a feature as an example: “As an administrator, I see the list of users registered on my site”.
This feature, simple in appearance, raises questions:
What will be the graphic appearance of the screen?
How will the screen be adapted for mobile, tablet, and computer screens? For example, will less information be displayed on mobile?
Should an action be triggered if I click on a user? (For example, accessing a detailed user profile)
If the list of users is long, is there a pagination system? Or automatic loading when scrolling down?
Is it possible to perform a search on the list?
Is it possible to filter or sort the list according to different criteria?
Is the list exportable to an Excel file?
If the display includes certain special effects, should it be optimised for browsers used by a small percentage of internet users, such as old versions of Internet Explorer?
Depending on the answers to these questions, the implementation time for the feature can vary greatly, for example from single to triple. Furthermore, the list of questions is not exhaustive. Finally, the feature mentioned is relatively simple. In a more substantial digital project, uncertainties increase.
These uncertainties, when not addressed upfront during development, can generate frustrations between the developer and the project owner.
Frequent situation in digital projects
However, addressing all uncertainties upfront is in practice time-consuming, costly, and difficult without conducting initial user tests.
Maximising the benefits of time and materials through prioritisation and testing
As we saw previously, the fixed-price model generally leads to additional costs if one wishes to obtain an application that truly meets user needs.
The solution to this problem is the time and materials contract: as the service provider does not commit to a precise deliverable, taking into account the project owner's feedback does not go against their interests, which is beneficial for the project.
However, the time and materials model can be a source of concern for the client: if there is no commitment to results from the service provider, what prevents them from doing poor work? We will now look at some advice for establishing a time and materials collaboration that is advantageous for the client.
Define a budget and a deadline for a first version of the product
Even if you have budgetary and temporal flexibility, it is good to define a budget and a deadline for a first version of the product. This will help the service provider advise you on which features to prioritise in order to quickly deploy a product testable by real users.
Regularly test features and review priorities accordingly
As seen previously, regular testing and considering feedback improve the quality of the application. However, this can consume time initially allocated for developing other features. We advise the project owner to categorise feedback and features by importance, accepting that less prioritised ones will not be present in the first version of the product, in order to respect budget and deadline constraints.
Define important deadlines
It is beneficial for the service provider to be aware of the client's deadlines, such as the launch date of an internal beta test or a public launch. This helps frame developments to meet these deadlines.
Conclusion
To summarise, the time and materials contract is beneficial for a digital project, as it facilitates the regular incorporation of user feedback, which is more difficult with a fixed-price contract. To maximise its benefits, we advise defining clear budget and time constraints, continuously testing project features, regularly reviewing priorities, and agreeing upfront on important deadlines.
Our company Galadrim has been applying this method for 3 years now and has completed over a hundred digital projects. If you have a web or mobile application project and a time and materials collaboration interests you, please do not hesitate to contact us!
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