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Drafting a fixed price quote

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    Drafting a fixed price quote

    I've been asked to prepare a quote for an implementation/integration project and they insist on a fairly fixed price.
    I immediately said no and explained how software development works etc.
    My plan is to provide them with an estimate based on a daily rate x amount of days planned and put a clause that if the scope changes or it takes more time I will simply charge more days at rate xxx/day.

    Has anyone got experience drafting up such proposals? It is very much in the proper Ltd territory, so perhaps there is a better forum to ask such a question, but ukbisinessforums isn't one in my view...

    #2
    You need bottomed out, signed off requirements. This is your baseline for estimation and what you should be measured against. If there aren't any then suggest an initial price for gathering and sign off. Then quote for the remainder of the work against them.

    And whatever your quote will be, double it. At least.

    Comment


      #3
      Pretty much what GB9 says I think. Try and timebox the requirements phase and quote for that initially giving plenty of time for review/rework/sign off etc. Then quote for delivering against these agreed requirements. Try and break up the delivery into small stages, potentially with interim payments against them. Also, reserve the right to re-estimate after each of these stage gates. Also, try and document as far as possible, how each stage is to be measured, i.e. what the assessment criteria are as this will remove subjective analysis.

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        #4
        if requirements will change, see if they will accept a contract in which 80 to 90% of the cost is to agreed requirements and the rest for changes.

        The problem I see for a one man band is how to manage failure of the client to meet its obligations that would allow you to deliver yours.

        If you are uncomfortable, you could give them a fixed price quote, and also a separate T&M daily rate quote.
        The material prosperity of a nation is not an abiding possession; the deeds of its people are.

        George Frederic Watts

        http://en.wikipedia.org/wiki/Postman's_Park

        Comment


          #5
          Recommend reading 'the Consulting Bible' by Alan Weiss, it has some excellent advice on fixed price proposals and templates too.

          Since reading it I have moved away from day rate work because it is directly tied to my time. Much more lucrative to have several fixed price jobs on the go at once. You have to change your mind set from 'how much is my time worth' to 'how much value is the finished tool/software provide', and how can you measure this? Time savings x hourly rates etc.

          For a fixed price technical build, offer a 2-3 month bug fix support clause in the proposal, and use this to up the price. Then after this you could suggest a monthly fee for ongoing support.

          Comment


            #6
            Originally posted by Vandalay View Post
            Recommend reading 'the Consulting Bible' by Alan Weiss, it has some excellent advice on fixed price proposals and templates too.

            Since reading it I have moved away from day rate work because it is directly tied to my time. Much more lucrative to have several fixed price jobs on the go at once. You have to change your mind set from 'how much is my time worth' to 'how much value is the finished tool/software provide', and how can you measure this? Time savings x hourly rates etc.

            For a fixed price technical build, offer a 2-3 month bug fix support clause in the proposal, and use this to up the price. Then after this you could suggest a monthly fee for ongoing support.
            Thanks, very useful indeed - I am also looking into ways where I can go path the daily rate glass ceiling - I had another thread on that a while ago and still struggling tbh

            Comment


              #7
              Originally posted by speling bee View Post
              The problem I see for a one man band is how to manage failure of the client to meet its obligations that would allow you to deliver yours.
              Even if it's three man band, how would that shield us from it?
              In general what clauses should I use to shield my consultancy against such problems?
              Is sth along "The consultancy shall not be be responsible for any delays caused by the client or a 3rd party" ?

              Comment

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