Why Fixed Budgets Are Perfect for Time and Material Contracts

Topics: Thoughts, Costs

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For some reason, many people feel uncomfortable with clearly defined budgets or even can't tell the exact sum of money they need. Some customers worry that their budget is too small and with such a budget, no one will take up the development of their idea. Some developers are afraid that the budget will not be enough or they will not fit into a tiny budget.

However, having a clearly defined budget is excellent.

We have a significant number of customers. And by "a significant number" we should understand dozens at this particular moment and hundreds over the years that we have been cooperating. Because some projects are in development continuously, and others are developing in stages.

Everyone represents different industries, countries, and different types of projects, but what they all have in common is a clearly defined budget. Yes, everyone's budgets are different. The capacity varies - some deal in their business with tens of thousands, while others handle millions of money. However, they are not endless.

Well, if the budget is limited (meaning not endless), one might think of adopting a fixed-price model and be satisfied. But no, customers choose to work with us on a time and materials basis. They understand something that they don't need to be convinced of. So what's the matter?

It's About Constant Project Management

In the realm of project management, it's not just about overseeing a project, it's about orchestrating the entire endeavor. At a time. Just think about the sheer magnitude of responsibilities and goosebumps have already begun to march from realizing the scale.

The person responsible for the project must have a firm grasp on what is happening now, the course ahead, what the plan is, the financial resources available now, how much time is required for each task, how many people are involved, and at what stages.

It's not limited to development. It's about the whole business, including customers, suppliers, contractors, employees, reports, goods, and advertising. It's a colossal system.

Let's say, just a flight of fancy, this month, the "Best eCommerce" project faces a tightly constrained budget due to the acquisition of costly warehouse equipment. The project involves three specialists: two backenders and one frontender. Meanwhile, the client is gearing up for the Black Friday sales.

The tasks for the next two weeks have been meticulously planned, with responsible individuals assigned to each. However, an unforeseen hurdle emerges: the new warehouse equipment is unable to interface with the existing one due to outdated software, for argument's sake. This issue demands immediate attention. All tasks for this week are both urgent and critical.

Consequently, together with the project owner, we promptly reassess their urgency and pivot the action plan to address this pressing matter.

It's About Adapting Quickly to the Situation

The world is in a constant state of flux. In the realm of software development, and beyond, the unforeseen is a regular occurrence. By the way, is there a word that means something faster than an instant? It would fit best to describe how quickly it is necessary to act in order to keep up. The time and material contract in this scenario enables us to respond with remarkable swiftness.

For example, somewhere, someone updated a library (a set of functions that programmers use in writing code) that has not been updated for years - and now this update does not allow the application to work properly.

Someone fixed an error in a small program - the layer between the server and the application, which had not been fixed before - and this fix breaks the interaction between the server and the application, no matter how strange it may sound. Somewhere, the server's capacity abruptly became insufficient, causing the site to fail to load.

With time and material contracts, we can adapt to these situations in the blink of an eye.

It's About Focusing on the Main Thing

Having an unlimited budget for software development is great, of course, and it's also like standing in front of a vast array of ice cream flavors and trying to decide which one to choose. The more options there are, the easier it is to lose focus.

When working with limited budgets, it becomes essential to practice meticulous project management. This not only leads to a more streamlined organization of work but also enhances control over the development process.

Such careful management enables responsible individuals to gain a deeper understanding of the project's current status, chart the course of progress, plan expenses, and effectively manage time and resources.

It's About Embracing Full Responsibility

Do you know who becomes truly successful? It's those who wholeheartedly embrace full responsibility for their projects. They are the ones from whom no one will ever hear: "It's your fault that the project failed, you spent the budget without foresight, and you couldn't meet the deadline."

Based on our experience, we can safely say that projects that become successful always begin with individuals who are personally responsible for them.

Limited Budgets Are Great!

Limited budgets in project development contribute to more efficient resource management, transparent control of the development process, and more accurate planning of priorities and deadlines.

Among our customers there are those who came to us with a cool idea for a huge educational project, and with a very tiny budget for such a project, and they had only a student scholarship from their income. Now it is a profitable and developing online business. Bravo to the brave guys who understand that limited budgets are a good thing!

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