I’ve covered the subject of the differences between Fix Bid or Time and Materials contract in the past, but it bears revisiting because it continues to spark controversy among developers and clients alike:

Which is better for web development quotes?

• Fixed Bid – The agreed upon fee covers the entire project and will not change.
• Time and Materials – The scope of the project is agreed upon along with an hourly rate, but the final cost of the project depends on how long it takes and what additional expenses are incurred.

From a client’s perspective, the fixed bid seems like a no-brainer. It allows for concrete budgeting and predictable installment payments, which makes everything much simpler. It also gives the impression of costing less because there’s no chance that complications down the road will increase the cost of development.

From the developer’s perspective, time and materials is the no-brainer because it provides them with the flexibility needed to focus strictly on creating the very best software rather than battling with a budgetary brick wall.

However, as usual, reality lies somewhere in between these two extremes.

The Truth About Fixed Bid Quotes.

It is true that a fixed bid arrangement has its benefits:

• It demands that the client and the developer spend potentially substantial time up front determining the exact full scope of the project down to minute details.
• It engenders good communication prior to the start of the project, which gives both parties an opportunity to test each other out for compatibility.
• It provides the client with that additional peace of mind described above: they know exactly what the project is going to cost before signing on the dotted line.

However, realistically, there are some negatives that need to be addressed:

• The time required to adequately plan out a fixed bid project is almost always cost-prohibitive for the developer, which unfortunately leads many to cut corners in doing their due diligence. The only profitable way to survive when doing so is to over-estimate.
• Despite all of the best intentions, it’s almost impossible to accurately predict every minute detail of a project’s scope and requirements ahead of time, so a fixed bid situation tends to lead to some sort of conflict down the road: either the bid needs to altered due to a change in project scope, or the developer ends up feeling cheated doing more work for the same fee, affecting quality.
• The inherent issues with a fixed bid arrangement lead smart developers who need to keep their businesses afloat to include adequate padding in the quote to cover all reasonable contingencies, meaning a fixed bid is generally quite a bit higher than what you can expect to pay if time and materials is your preferred bid methodology.

The Truth About Time and Materials Contract Quotes.

It’s tempting – since I’m a developer – to claim that there’s no downside to time and materials quotes. After all, this method of quoting:

• Allows for maximum flexibility without having to magically foresee every twist and turn of the project in advance.
• Places the developer’s and client’s focus where it belongs: on the quality of the end product, rather than on an artificial box created by a predetermined price point.
• Often ends up being quite a bit less expensive in the long run because there’s no need for the developer to arbitrarily pad the initial quote in expectation of complications that don’t end up occurring.

And these are all true. But I would be remiss if I failed to mention the one major factor that scares so many people away from time and materials bidding.

You have to trust your web developer.

That’s really what it comes down to. Clients are understandably hesitant to hand over their wallet to a developer who could theoretically pack on unnecessary hours and questionable added expenses just to pad the final project bill.

But, in response to that concern, I need to ask:

If you’re truly worried about that, shouldn’t you be focused on selecting another developer instead of worry about whether time and materials or fixed bid is better?