Traditionally, all business relationships begin with lower levels of trust between the parties. We have had our past experiences informing our behavior to be wary of open ended and ambiguous contracts when working with service providers. For many things this is appropriate. However for complex systems development, fixed cost has one major shortfall. It will take more time.
We all know that the longer things take the more money they will cost, so insisting on a fixed price does nothing to save you money. You might have someone to blame for the schedule delay, but is that really the most important thing? When trying to launch a product the one thing you don’t have the luxury of, is time.
Omnica has been successful employing time and materials contracts for development for many years. We believe that it does several things that benefit the project, the customer, and ourselves.
- Product Benefits
- Reduced tracking overhead. (we proceed through the project as quickly as possible without delays caused by scope and cost discussions.
- We apply the right resources that are needed at the right time. (prototyping for example)
- We are free to be creative and explore improvements at any time
- Customer Benefits
- Closer working relationships (everyone involved is free to incorporate new ideas)
- Reduced Tracking overhead. (you get progress and a bill every week)
- Speed. This is the fastest way to get to product completion. (No development ever fits the initial plan)
- Omnica Benefits
- Happier employees (less stress, max creativity)
- Reduced tracking overhead (wasted effort is minimized)
- Reduced Risk (We only focus on making a successful product)
Ultimately we can all agree that the process of developing a new product is difficult and fraught with change. Why then would we want to have a contractual relationship that does not allow for this? It just does not make sense. Therefore time and materials is appropriate for creative work like medical product development. This is not to say that we should not have budgets and schedules. On the contrary, these are necessary for all businesses. However if the business decides that a change in direction is warranted, you want to be able to pivot quickly without spending days, weeks or months renegotiating contracts, and losing momentum.