For any software and web development company, it is very much required to decide what kind of business model should be offered to clients for developing software or web application projects. At present, there are various engagement models being offered by companies and Time and Material is one such model that has been widely used by various IT and software companies across the globe.
Time and Material business engagement model has become the one of the most popular pricing model among the offshore software and web development companies that provides greater flexibility to manage entire development efforts and resources. In many cases, due to less information about the exact requirement of project, it becomes difficult to do accurate estimation of total cost, resources and effort that is required to complete the project. In this case, Time and Material pricing model becomes attractive option for companies at the time of signing contract with the client. In a broader term, Time and Material is kind of pricing model that is used for those projects which does not have defined scope, specifications and execution plan at the initial stage of its development.
This model becomes preferred option in various situations such as, (1) If project does not have clearly defined requirement. (2) If the project has frequent design and development changes with each development phase. (3) If the duration of completion of project is not clearly defined. (4) If the project is of large scale and has more complexity. (5) If the new emerging technology is being used for developing the project etc.
Under this model, the billing is done on hourly basis and client pays on the basis of the number of hours spent on completion of particular phase of project. A detailed report that consists of number of hours spent on each task within the project, are provided to client for review and then the billing is done accordingly. This type of engagement model follows best practices of software development methodologies such as agile development methodology and the entire project is divided into different phases and each phase consists of certain tasks with defined timeline. It follows all major SDLC timelines. Company and client work with hand-in-hand approach where client can define the priority of tasks and monitor each phase of development with greater flexibility. In order to have smooth execution of project, company forms a project team consists of a project managers, account managers along with other team members, infrastructure based upon the project requirements. This model provides flexibility to make the balance in team size and workloads related to project.
The costing of project depends upon the project team size, time and efforts of each team member given to assigned tasks of a development phase. Before finalizing the costing, client needs to provide scope of the project with estimated time line. The payment schedule depends upon the duration of a phase and could be monthly or weekly basis as per contract’s terms and conditions.
As a broader benefit, unlike the Fixed Price and Time Model, Time and Material Engagement Model provides more flexibility to client in terms of modifying the project specifications and deliverable based upon the changing market requirements. Apart from this, client has more control over implementation and cost occurred in developing the project.
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