Sanjay G
Learning and facilitating to meaningfully learn, think, and 'create' ; also expand the context of computing.
During recession, is the trend of fixed cost billing of software projects increasing? If so, what are the consequences and implications for industry and also for developers' education?
Answers (5)
The increase in fixed cost of billing has multitude of implications for the industry. Firstly the scope of work has to be very precisely defined in the contract which means rigorous Requirements Analysis process with little room for unknowns or scope creep. Second the estimation process has to be foolproof to cover all possible efforts and costs, it can not be based on gut feel or assumptions. Third the Risk Management practice should be efficient enough to identify all possible risks, plan mitigation actions and track them. Most important will be the productivity levels of the team there will be very less chance for rework and the delivery has to be right first time. From a developer's education perspective its not just the ability to code but having the knowledge and skill for doing it following the best practices and standards is important. Secure coding, Testing, Code and Configuration Management, Code Review, Code reusability are going to be the differentiators between a sought after developer and just another developer.
Eric R
Technology pricing guy
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Hi Sanjay-
Hidden in Abhijit's comments is tremendous opportunity. Fixed price projects give developers to capitalize on increased efficiency and quality. Under per-hour billing, if a developer became more efficient, the client gained, not the developer. Fixed price billing reverses this: The developer now gains when he becomes more efficient.
This trend means the better developers will make more money, not less.
Al M
Computer Professional in IBM Midrange
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I think you are mistaken.
Different people & companies that market software ... they have different styles of offerings ... some charge by the hour that it takes to do the job, so with continually improving technology, they can get the job done in less time.
Some charge fixed price for commodity.
Recession has effect of tighter money, so postpone education until economy healthier, except people who have enough saved that they are able to go after a university degree, thinking to exit about the time the economy is rebounding.
Tim H
Technology Consultant at Mousetech.com
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I actually prefer fixed quotes, both as a vendor and as a customer. And yes, I have seen some indications that they're getting more popular in the circles I move in. Whether they're indicative or not I can't say.
When I buy software development, I have a reasonable expectation that I'm going to buy a (more or less) fixed product, and therefore it should be possible to quote a fixed price.
Unfortunately, the longstanding practice has been not to do so. Instead, people quote hourly rates, with Everyday Low Prices[TM], treating software development like some sort of meat-grinding operation, and then running into massive time and expense overruns, frequently killing both the project and the credibility of developers both large and small to actually do /anything/ worth-while.
I blame this on 2 things.
1) If you honestly quote what it's really going to cost, people won't stand for it, and go looking for someone who'll promise that Everyday Low Price[TM]. We're too accustomed to looking for the cheapest solution instead of the most effective one, excepting (alas) certain big-name products, where the perverse opposite seems to apply.
2) Even if you did quote an "honest" price, people (both customers AND developers) fail to allow for the All You Have To Do Effect.
"All You Have to do is..." has caused more IT misery than just about anything. Computers are STUPID. They do exactly what they're told. In excruciating detail. No more, no less. It's not the complexity of systems that usually makes them fail of delivery, it's the sheer number of simple piddling little details. I personally have lost far more time getting simple things to run right than I have to in getting esoteric things to run at all. Unfortunately, we tend to estimate time needed based on system complexity more than on volume of work.
My own rule of thumb is to calculate "All You Have To Do" time, then triple it. It still often falls short, but at least it's less embarrassing.
Robert A
Microsoft .Net Expert at Independant Consultant
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I have found that big companies are still DPH(dollar per hour), just that the DPH is lower by 25%. The smaller companies however are taking a hybrid approach; they want both. They say they are willing to pay 'xx.xx' dollars per hour with hours not to exceed 'yy'. The consultant agrees to do the work at the rate they agree on, and if necessary "eat" the additional cost.
Implications? A lot of companies are gonna get screwed. Most engineers cant estimate for squat; the old "take a guess and triple it". If the problem you are being asked to solve isn't understood to the point you know what needs to be done, the old "triple it" isnt going to make much difference. So businesses will hire engineers at less than they are normally willing to take, to do work that they cant estimate, and when they run out of time ( and thus money), they will quite, leaving the company to either file suit against the engineer(not likely), or hire someone else at additional $$ to finish what was started.
The engineers who succeed and profit in this environment are the ones who can analyze problems and break them into understandable pieces. Einstein once said "the answer to every problem is easy once it's understood". To understand the problem and its solution, one needs to understand the technology( tool space ) they propose to solve the problem with. I expect those who enjoy software engineering because its "fun" and a boundless "lego set" will do the best. Typical, unpassionate college types will fail miserably.
My 2 cents
