Agree with the recommendation. Sometimes we come across people with a value system not to over-charge. My recommendation to these folks is to write it into the contract that any "time cost" savings will be passed back to the customer. This also is coupled with early finish incentives. A healthy combination of such contracts have created long term win-win relationships.
Down-side: works great for people with low business integrity and ethics. Moth parties will over bid and will end up with off the record benefit sharing.
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If the project mgr figured out it would take less than the budget, he should have involved the customer before the end of the project, to see if they a) wanted to cut costs or b) wanted whatever of the remaining features they could get incorporated.
Another customer might have been happy to get the features included for same price but no-one wants a surprise.
Think of project mgmt like an erp supply chain, it needs continual feedback and adjustments up and down the line, so no one is surprised when the supplier says A) they can't get the extra material, or B) simply delivers it without being requested. THink how silly that would look.
Another customer might have been happy to get the features included for same price but no-one wants a surprise.
Think of project mgmt like an erp supply chain, it needs continual feedback and adjustments up and down the line, so no one is surprised when the supplier says A) they can't get the extra material, or B) simply delivers it without being requested. THink how silly that would look.
Is that correct to inform customer that you will be completing the task early than estimated, is this doesn't give an impression that project is over estimated/budgeted, i agree if it's a Time & Material project we can still inform the customer, what if it's a fixed cost project?
such as writing a report, you as the analyst sometimes know that the client needs these fields not specified. If I'm sure I add them tho doesn't hurt to check with the customer to see if they need extra feature etc.
This is left out of the 'waterfall' or standard IT project methodology, as something undesireable, 'scope creep' but is incorporated in more flexible methodologies such as RUP or 'Rational Unified Process' where you have several iterations during construction, between inception, elaboration and before hand over of course.
This gives you 'opportunity' to 1) make the product meet the customers needs better 2) be more sure that it meets their needs early, when change costs less, by involving the customer in early prototypes, etc.
Your accounting needs to be flexible enuf to account for scope changes early. Later scope changes are less desireable.
This is left out of the 'waterfall' or standard IT project methodology, as something undesireable, 'scope creep' but is incorporated in more flexible methodologies such as RUP or 'Rational Unified Process' where you have several iterations during construction, between inception, elaboration and before hand over of course.
This gives you 'opportunity' to 1) make the product meet the customers needs better 2) be more sure that it meets their needs early, when change costs less, by involving the customer in early prototypes, etc.
Your accounting needs to be flexible enuf to account for scope changes early. Later scope changes are less desireable.
Is that correct to inform customer that you will be completing the task early than estimated, is this doesn't give an impression that project is over estimated/budgeted, i agree if it's a Time & Material project we can still inform the customer, what if it's a fixed cost project?
As someone who uses a lot of fixed price contracts, I can tell you that over-estimated budgets are just part of the game. If the consultant under-bids, we expect them to deliver for the fixed price and absorb the loss. If they over-bid, we don't expect them to give us a refund. That wouldn't be fair. That's the risk we take in running fixed price contracts. But believe me, if we know that a consultant repeatedly over-bids, we probably won't give them much business in the future.
If the contract says on such and such a date for completion, with no extra money for later delivery / overruns in cost and bad estimates for time. then fixed costs work great from the viewpoint of the customer / client.
for the supplier a fixed date with performance bonus and penalties works better.. give a bonux payment for early delivery of required quality [ if not a padded time in contract ] charge penalties for late delivery.
this promotes the supplier to meet the contract at least in terms of timing and quality.
When I was doing contract work in electrical, this was how all contracts were worked out. I had the "incentive" to get the wireing in and pass inspecton by the due date at the latest. [ with construction type work dates are not ammended because of issues no-one can control, like weather. delays due to weather do add to overall time and should be "padded" into all time estimates, so this really pushes for you to work hard. ]
for the supplier a fixed date with performance bonus and penalties works better.. give a bonux payment for early delivery of required quality [ if not a padded time in contract ] charge penalties for late delivery.
this promotes the supplier to meet the contract at least in terms of timing and quality.
When I was doing contract work in electrical, this was how all contracts were worked out. I had the "incentive" to get the wireing in and pass inspecton by the due date at the latest. [ with construction type work dates are not ammended because of issues no-one can control, like weather. delays due to weather do add to overall time and should be "padded" into all time estimates, so this really pushes for you to work hard. ]
On a fixed price contract, the concept of goldplating is even more important. You need to deliver what the client expects - and not more. In a fixed price contract you would definitiely not want to goldplate. You also don't give the money back. You bid for a certain price and deliver what you promised. The customer pays you what they promised. No goldplating, no refunds - just everybody happy.
If your project is being tracked using Earned Value, adding the extra features will probably put you over budget.
From the Agile Manifesto: "We have come to value customer collaboration over contract negotiation." This doesn't mean contract negotiation is unimportant, but it does mean customer collaboration is more important.
If you treat your client as a partner and your client treats you as a partner, then surprising your client (even a good surprise) is a bad idea. A smarter idea is to collaborate with the client when you recognize the opportunity to restore the deleted features.
Garry L. Booker
www.projectfrontier.com
If you treat your client as a partner and your client treats you as a partner, then surprising your client (even a good surprise) is a bad idea. A smarter idea is to collaborate with the client when you recognize the opportunity to restore the deleted features.
Garry L. Booker
www.projectfrontier.com
In developing projects for customers I would definitely agree that the best method is collaboration. This helps to build a common bond between the client and shows that you are truly trying to work in their best interest.
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