As a project manager, tackling a fixed price project can be a challenge for both parties. But there are some simple ways you can make the process smoother. Agile management is now one of the most popular methods for project management. When used correctly, it can make the whole process smoother, also improving trust.
Many clients still prefer to use fixed costs, so it’s important to understand their requirements and expectations from the start. By following our tips listed below, we hope you find handling your next fixed price project more manageable.
1. Create a list of priorities
Managing expectations is key to success with a fixed price project. Once your client has expressed their expectations for the project, break these down into smaller deliverables and their must-have elements. Anything that isn’t a top priority can be pushed into a later release date.
This is important to do at the start of the project and will help make the process more focused for everyone involved. By prioritising the most critical elements, you can create a foundation that you can build on in the future.
2. Understand the end goal
Having a clear aim is integral to any project’s success. And for a longer, fixed price project, it can keep your team motivated throughout. Understanding the value the project will add to the client’s business and how you will achieve the end goal will improve motivation. Changes are to be expected throughout the process, but by keeping the end goal in mind, you’ll find it easier to overcome any issues that arise.
3. Expect changes
Don’t go into a fixed price project with the expectation that nothing will change along the way. Agile project management encourages you to effectively combat issues which can be challenging when you have a fixed budget. Instead of changing items, you’ll work to exchange these during the process.
Clients can swap similar-sized elements out, which makes it flexible for both and satisfies their needs. This means you won’t add additional work to the plan or increase the cost and time associated with the project.
4. Communication
Communication is critical to any project’s success, and for a fixed price project, this is especially true. Communicating with your client regarding the progress of the project is essential. Regular updated schedules should be created to guarantee expectations are managed.
Team communication will also need to be streamlined to ensure everyone receives regular and thorough updates. The owner of the product also needs to be available to answer any questions that may come up. This can help avoid unnecessary delays and errors due to a lack of communication.
5. Break down the price
There’s a tendency with fixed price projects to fixate on the overall cost. To create an overview, start by listing the features and defining the individual cost of each feature. This is a far more efficient way to work, and is vital to help companies estimate realistic costs that align with their current work and offerings.
This may take a little extra time and effort, but will give your client more confidence that everything they need is covered. It will also avoid any ambiguity in the future and prevent any back and forth regarding items not covered in the price.
6. Use smaller contracts
A fixed price project is often associated with long-term work, but a contract that spans dozens of features may spread over a couple of years. Breaking these contracts down into feature contracts which include two or three items, will benefit both you and the client.
When a fixed contract is used, it can be both costly and time-consuming to adjust features or renegotiate contracts. This can cause unnecessary tension between you and the client, whereas a smaller agreement will allow for more flexibility. The benefit to the client is that they can quickly stop production or change the product’s course entirely if required. With the ever changing technology industry, this is key to avoid product duplication and failure.
7. Update the client
Updating the client on the progress of your fixed price project is key. This is especially true if you are on a longer contract without the smaller contracts recommended above.
Communication is key to success, and without regular updates and timely communication about issues, a fixed price project can very quickly go wrong. Hold regular meetings where you and the client can express your concerns about any elements of the project.
This will also allow you to review the progress with the client, who can point out any issues before it’s too late to go back and adjust them. You’ll find regularly updating the client can improve the process and save you time and potentially money in the long run.
8. Understand the benefits of a fixed price project
While many companies moan about the negatives of fixed price projects, there are still some great benefits of using this method. The certainty of costs can help you forecast your earnings for the upcoming year and offers you stability even during uncertain times. However, you will need to keep an eye on any changing costs within your business to ensure you are not jeopardising profit.
In the unpredictable times we all find ourselves in, having guaranteed work for the foreseeable future can be a huge benefit and reduce stress and fear within your team. Fixed price projects allow you to budget for the upcoming months and pay your team without worry.
While there are some disadvantages to fixed price projects, when implemented with these tips above, you’ll find the benefits easily outweigh them. Clear communication is crucial for success. By offering flexibility and understanding to your client, you’ll be able to satisfy their needs and guarantee income for your company for a longer period.
