Before signing a contract with you, we organize a short meeting to determine your needs and requirements for our services. On this basis, we propose to you the most suitable type of agreement, which will be beneficial to both parties. Learn about the two types of contracts we offer our clients at the beginning of a business relationship.
“Time & Material”
T&M (Time & Material) agreements are contracts billed for time actually spent working for the client. It is a so-called “hourly contract” during which the client agrees to pay, based on the hours worked by the team on the contracted project.
Benefits:
- Lower total cost of software development,
- Practically any possibility of changing the scope of work at any time,
- Possibility of choosing employees assigned to the project,
- The feeling of having its own IT team without problems connected with recruitment and training of IT specialists,
- In the case of engagement of only one programmer, this programmer has the support of the entire Fingoweb team (a big advantage compared to hiring one programmer alone),
- Payments regulated on a monthly basis,
- No tedious and time-consuming project acceptance.
Weaknesses:
- No typical warranty – if the programmer made a mistake, fixing that mistake is included in the billing to the client,
- No guarantee of the final price.
For this type of contract, we follow a few basic guidelines that we use every day on projects.
Below you will find the top 10 principles we follow at Fingoweb
- The client is responsible for the cost of each hour spent on the project, including labor:
- Developers
- Testers
- Project managers
- Graphic designers
- Other people involved in the project
- At the client’s request, we determine the exact team working on the project or right size of the team depending on the needs.
- Meetings and conversations with the client during the project, are also part of the team’s work.
- We require at least one meeting per week with the client to discuss work completed and to plan new assignments.
- The T&M system allows for setting one rate for all programmers and people working on the project, or separate rates for junior/mid/senior programmers, testers, project managers, analysts, graphic designers, etc. It all depends on individual agreements with the customer.
- In the T&M billing system there is full transparency of working hours. The client pays only for as many hours as were actually spent on the project.
- Upon request, estimates can be prepared and must be approved by the client before work begins.
- Time spent on estimates is also a cost of the work,
- We do not guarantee that the work will be done at the estimated cost, but we do guarantee information when we see a overrun in the budget so that the client can decide what to do next.
- the T&M system allows you to agree with the customer that small items (e.g. up to 1 hour) do not require confirmation of the valuation, which saves time (no downtime while waiting for valuation approval).
- The client receives a report each week with the hours that were spent that week working on the project.
- It is possible to set a limit of hours that can be used per week, after exceeding the limit the team stops working
- Client has 3 working days to reject the hourly report. Lack of information means acceptance of the report.
- Each month the client receives a VAT invoice for the work done on the project in the previous month. The number of hours listed on the invoice corresponds to the number of hours from the weekly reports in that month on the project.
“Fixed price”
Fixed price contracts are classic contracts with a fixed, unchangeable price. In case of this type of contract, neither used time nor resources have any influence on the final fee for the solution. Based on the analysis performed, we present our offer which already includes all costs related to the development, design and construction of the system or application.
Benefits:
- A fixed, upfront price, for the service,
- A 12-month warranty to correct errors found “in the price”,
- A predetermined fee schedule,
- Accurate description of the whole before the start of the work (which is also often a disadvantage).
Weaknesses:
- No ability to stop work or change scope after contract is signed without time-consuming contract renegotiation.
- Any additional Change Request (CR) that is not written into the contract must wait until the main contract is completed or requires renegotiation and rescheduling.
- Often higher price – the higher price consists of much more expensive and accurate documentation (sometimes this is an advantage) and additional “safety buffers” for possible programmer errors or pricing errors. Due to the fact that the risk of execution is entirely on the side of the contractor, the contractor compensates this risk with a higher price.
- Often a longer project start time, due to paperwork that can and sometimes does take months before the team starts the first work on the project.
- Often longer time required to complete the task. The longer time consists of:
- The need to prepare very thorough documentation of the work to avoid customer disappointment that an option is not available in the final product.
- The need to carry out a very thorough acceptance, since the signing of the protocol means acceptance of the work and any subsequent changes will be additional fees.
- Time spent on negotiating whether a given thing should be done at a given price or not (this is a very common problem with poor quality documentation done quickly to get the work done as soon as possible)
- No choice of employees and less sense of having your own team, in this way of working the only thing that matters is the final result in accordance with the contract.
