NoFixed.org

Most RFPs for web services request a fixed bid. The theory is that fixed bids are guarantees that eliminate risk. More than a decade of research shows that reality could not be further from the truth.

More often than not projects go through several change orders equating to missed deadlines and significant cost overruns. Often features do not meet expectations or are removed all together. While the cost overruns are bad enough, something gets lost that can never be recovered: opportunity.

Clients often notice some of the flaws at launch but many others will go unnoticed. Many websites and online marketing campaigns have hidden flaws driven by vendor shortcuts or lack of knowledge that undermines the performance of your web presence. Often a client doesn’t know their site is underperforming until years later. Till some astute person, often a new hire or outside advisor reveals how the competition has built a virtually insurmountable online advantage. Yes, the client has spent years loosing revenue but most importantly they have lost time, the one assets you can never get back.

The primary problem with fixed bid it pits the motivation of the vendor and client against each other. The client wants to get as much work as possible for their fixed price. The vendor maximizes profitability by working as little as possible. Given that most RFP’s, whether they are two pages or two hundred, only define requirements at a high level, both parties have way two much lee way to develop very different delivery expectations.

This is not to say that all fixed bid vendors are disreputable and will try to deliver substandard product. There are many excellent fix bid vendors that maintain their good name by delivering exactly what they promised. Great fixed bid vendors are excellent at rigorous project management that kill scope creep and thus in theory delays and cost overruns.

This methodology also kills the innovation that is necessary to build a great online presence. New ideas are the enemy of a fixed bid project. In a well executed fixed bid project what clients don’t get are all the great ideas outside the rigid structure of the contract or all the great ideas the stakeholders, users and team generate as the product develops. Idea evolution is a necessity to assure the right product and best product is built.

Lean non-fixed bid projects are a significantly improved model for reducing risk, assuring expectation are met and capturing enhanced performance. A proper non fixed project uses a simple yet time tested method for assuring client and vendor goals are aligned, communication. It replaces contractual adherence to a set of preliminary high-level requirements with periodic demonstrations of work and discussions about evolving strategy and priorities.

At first it might seem that without rigid adherence to exacting pre-defined feature sets project bloat would be rampant. Non-fixed projects are free to follow agile principles to introduce a different yet much more effective cost controls. Fixed-bid contracts sets the cost of a large project, effective non-fixed relationships fix the cost of a series of small projects. Clients are given a tremendous amount of cost control, able to adjust the appropriate quality to cost ratio based on frequent review actual working features. Furthermore, agile methodologies enable additional cost savings by leveraging lean manufacturing dynamics. Just in time strategies assure time is not wasted on planning and development that will not be needed.

Accountability is significantly improved through heightened transparency. Clients are shown demonstrations and performance reports early and often. Clients are not surprised after months of being left in the dark. They can decide if they are getting their money’s worth within a few weeks and continue to evaluate every few weeks. This keeps vendors on their toes, constantly striving to prove value.