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Fixed-Price Projects: Potential Challenges

A fixed-price project is a stumbling block between clients and contractors. While clients always strive to secure themselves and not to overpay, contractors are stressed with fear of failing such projects.  This article highlights advantages and disadvantages of the fixed-price projects on the example of quality assurance.

As in any business, clients of quality assurance companies are always willing to get the lowest price for the best quality. However, fixed-price projects are not considered to be the best choice for the testing team.

Imagine that you need to estimate the time you spend on breakfast. 10-15 minutes? Good! And if you’d like to drink another cup of coffee? A couple of minutes more. And if you don’t have coffee? Five minutes less. The same thing happens when you try to estimate software testing. There is an average amount of time for each type of testing, but you never know whether something unusual could happen. As a rule, it always does.

What the Client Thinks

Let’s analyze the situation from clients’ point of view. They assume that they’ll save a good amount of money if they can have a fixed-price project. Since the price is negotiated in advance, it will be easier for them to manage the budget. Moreover, the testing team will be concentrated on accomplishing their tasks on time, so they will not waste money on unnecessary things.

In this case, as the client supposes, the testing team is the one to take all risks. Budget overspending, downtime, other problems – this is what the testing team should concern. The contractor is not interested in spinning out and losing out. Therefore, the client thinks that testers would adhere to implementation period.

In addition, if the client is not acknowledged with IT sphere and doesn’t understand how software developing and testing is operated, they don’t realize whether the task is clear enough to be fulfilled during the necessary time. Quite often clients put testers in strict conditions to be sure they don’t overpay and no one cheats them.

What the Client Should Know

Knowing how unpredictable testing is, clients should be ready to get their project overvalued, since QA team does not take responsibility for all risks free of charge. If the development team has unclear requirements, they realize how expensive reworking could be and they include possible loses in the project price.

If clients are not competent in testing, they are in danger of having their business requirements unfulfilled, although all obligations according to the contract are met. For example, functional tests have been done, but performance testing has been ignored. Thus, the client might receive the software that corresponds to all functional requirements, but can’t be used because of its slowness.

Testing team can miss the set deadline for a variety of reasons. For instance, you have to gather the team again after a long break. If you can’t engage the specialists, who had worked on the project earlier, you are going to spend some time to get newcomers introduced to the project.

Fixed-price model doesn’t allow keeping a separate team for the project, because very often testers are involved in several projects at a time. If there are dedicated team or time & material projects, they are considered to have a higher priority while fixed-price projects are treated as secondary ones.

Why You Are Most Likely to Lose

Because of such projects’ complexity, usually just one side wins when the project is completed. For example, the win-lose case happens when the client is able to make the team carry out all conditions they agreed about, even if the testing team had some obstacles and can’t make it in time. Then the testing team loses.

The lose-win case is about accomplishing client’s functional requirements in time, but missing the business purposes of the product. The team reports they have done all tasks, but the software is not mature enough to be released. Hence, they offer extra services for extra money to be done. Now clients lose money. They have calculated investments and hope to have success on the market, but realize they need to increase the budget. The project doesn’t look as attractive, as it has been before.

Anyway, fixed-price project can turn in collapse for both sides. The lose-lose situation happens in those rare cases, when the testing team fails by the end of the project, refusing either to continue or to rework, since they find the project unprofitable. The client also loses both money and time.

How to make the both sides benefit from the project? Learn some tips to reach a win-win situation in the second part of the article.

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