Results of Underbidding Software Development Quotes

Brett MillerOutsourcing, RFP, Software Development0 Comments

The Loses of Legitimate Software Development Quotes

A couple of years ago we responded to a web development project Request For Proposal (RFP) which was fairly complicated. The list of requirements were substantial and our company spent a good amount of time studying the requirements and considering potential approaches to handling the response and the project in general.

In order to win the potential client’s confidence, we felt it was important to fully document the project’s goals, establish a well defined set of estimates for development hours and costs, and to clearly demonstrate that we had a firm grasp on the their needs. In the end, the proposal we presented was quite comprehensive and included many options to thoroughly accomplish their project goals.

Our proposal even went so far as to enumerate optional deliverables that would further enhance the project goals without adding substantially to its costs. We worked closely with the client’s representatives, developing project parameters, answered every question, and addressed every concern. It seemed to us that we had established a solid rapport and that we had achieved one of our main goals … to win their confidence. After all, not only was this an important project in terms of the client’s future, but it was also a large financial investment for them.

At the same time, we were also aware there was an offshore development company quoting on the project. Oddly, their proposal called for six times more development hours than what we had estimated. If they were planning to use senior level developers with the proper expertise, this seemed to be a way out of line. But there was an even larger anomaly between the two quotes. Even with the high hourly estimates in their proposal … their cost still only came out at about two thirds (67%) of ours.

Not surprisingly, the client indicated that they thought we had the stronger proposal, with better ideas, but at that price … they had to go the offshore route. It is a valid perspective and while we have heard some real horror stories with offshore development, we had no choice but to simply offer our best wishes for the success of the project.

Plea For Application Development Help

Eight months later the client contacted us again with a plea for help. As it turned out that offshore development company was using people with only marginal experience. There were language barriers that were creating confusion and miscommunications, and many of the tasks that had been completed were only superficially operative or poorly focused on the projects’ overall functionality and intent. Additionally, the vendor had started to refer to some of the general functionality as outside the scope of his original proposal … and wanted more money to finish the work. We were also told that they were becoming less and less responsive to their needs … as they began to focus more of their attention on the their next big client.

We have seen this scenario before. Web development, as in many other industries, has some unscrupulous vendors who believe in the “tell them what they want to hear” type of bidding. In retrospect, the unusually high number of hours in that offshore companies bid should have been a big red flag. Please don’t get me wrong, I’m not saying that all offshore vendors are bad, because they’re not. These companies do however, entice clients because of what appears to be lower hourly rates. But six times the number of development hours has to tell you that something is just not right. To me, it indicates that the skill sets or communication abilities of the team might not be up to par.

Proper software development is challenging and requires strong skills and equivalent experience. And let’s be honest, it can be difficult to tell a potential client that the project they want to put in place will be … well … costly.

I would like to tell you there was a happy ending to this story … and there was! but not necessarily in terms of cost. The client ended up hiring us to “fix” their broken project. Yet it was not without its inconveniences and additional costs.

Much of the structure that had been put into place by the other vendor was at a parochial development level (to say the least), and some of it was not useable at all. The first step was to evaluate all their work and to determine what was reusable. It quickly became very obvious why the skills of an experienced developer are worth a few extra dollars in a project of that complexity (really of any complexity). The original vendor’s inexperienced developers had used many non standard programming and incorrect object oriented techniques to achieve core functionality … it was a difficult and time consuming process to rebuild things properly.

The project ended up taking more time than originally anticipated and it cost considerably more to fix than if we had just won the bid in the beginning. But the client was appreciative that we were willing to step in and rescue their project.

Unfortunately, the client is still involved in trying to work out certain contractual issues with the original vendor … and the end product does have some sluggishness as a result of the poor architecture that was originally put in place.

Software Development Quoting …

Client Perspective: Exercise great caution when selecting a software development vendor. Don’t be enticed by cheap hourly rates. If you work with an offshore vendor, be prepared to spend more time communicating and documenting to ensure clear requirements. Also appreciate the relationship of cheaper rates with higher failure risks.

Development Company Perspective: Don’t underbid … honesty builds the strongest client relationships! Be patient, software projects have a way of coming around many months (or even years) later. Only hire the very best developers to avoid project rework and difficult situations with clients.

*This story is told with the permission of our client, though they have requested anonymity and are not mentioned anywhere in our website.


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