Price quote options advice

[scooby]

How do all, a spot of advice if you please.

I've to put in a quote for some work, approx 6mths PM, a couple of days a week. on reflection, I can see several ways for putting the costs together:

Daily Rate - Payment for each actual day done

Fixed price

Fixed Price, bonus on completion

I know there is some risk in this project delivering on time, as the current development team has dropped out, leaving it in tulip state, however we are suggesting the client go back to basics and create the core foundations of the application and expand once that is right.

Also with fixed price, there is the slippage risk and under quoting on the resource management side. Anyone know good ways round this that I can write in to the quote?

Is it reasonable to put "this is fixed price, based on 2.5 days per week over x weeks. Anything beyond this duration, that is not the fault of the PM Services provider, will require change control and additional charges"?

Is it reasonable to put payment dates (or payments on deliverables) in the fixed fee? I cant really afford to go 6mths with no dosh in my pocket...

Would you charge VAT on the fixed fee and bonus approach? I know you would charge VAT on the main charge as this is for services delivered.

Just what is the best option for this (with winning the bid and the tax man)? Anyone had similar experience please? All advice welcome!

Thanks,
Scoobs

[TheFaQQer]

Fixed price is probably the best from an IR35 perspective, since you are clearly demonstrating that you are taking some risk.

Of course, the downside is that you ARE taking some risk, and if it's not your fault then you could be onto a loser.

You forgot option 4 (which is the worst option) - daily rate with a cap. Oracle occasionally used to bid for projects on that basis, but they were few and far between.

If you can set milestones clearly, then there is no reason to get payment on each of those - 10% on contract signature, 20% on milestone 1, 60% on completion, 10% retention.

[scooby]

Cheers, not sure i like option 4... Although that would make it easy for me to manage the under resource issue! or do you mean you get 30days, pay for 30days, any more is my issue?

If this was me doing development, I can see the best option is fixed price, but as its the PM aspect and many things our of my control (i.e. dev work scoped by another company, not the one i'm providing too...) then this worries me.

[TheFaQQer]

Cheers, not sure i like option 4... Although that would make it easy for me to manage the under resource issue! or do you mean you get 30days, pay for 30days, any more is my issue?

Worse than that.

30 day cap - if you deliver in 20 days, you get paid for 20 days; deliver in 30 days, get paid for 30 days; deliver in 60 days, get paid for 30 days.

If there are a number of things that are outside your control, it might be worth getting a decent commercial solicitor to draw up a contract to minimize the risk for you - there would need to be a VERY detailed proposal and scoping document before I would consider it.

The main thing I remember from my PM training about planning was to think of a number and double it.

[scooby]

The main thing I remember from my PM training about planning was to think of a number and double it.

And add 10% contingency!

I know the top line I need to be within, but i may take the commercial solicitor bit to the main bidding co. Lets see how willing he will be to help me cover my arse...

[scooby]

is this a feasible clause / assumption for fixed price quote?

The quote is based upon a Project Management resource being assigned for 2 days per week for 26 weeks. Should it become obvious that the overall resource utilisation will increase by more than 30%, then a change control and impact assessment will be carried out to ensure the new requirement can be provided.