What’s wrong with billable hours

Clients start haggling on a hour by hour basis sometimes. Some want to review tasks and how long each took and whether the hours add up. Sometimes, it takes so long to figure out the conclusion of the haggling, that you've already lost 2 or 3 hours of non-billable time on the haggling itself.

With weekly billing, the haggling is reduced.

I come up with better lower costing solutions when the stakeholders express WHY the feature is needed, what problem it solves. Then we and I can creatively explore HOW to solve the problem. There's usually several ways to solve anything, many that vary by orders of magnitude in terms of cost or architectural complexity.

If I am dictated always on the HOW, handed fully solutioned work to implement like a monkey I rebel and have a long talk about how this won't work. I never have had to quit over this stance but I would if it wasn't reconciled.

So when I say control, that's really what I specifically mean by that word. The ability to negotiate and explore the HOW with the why being firmly in mind.

If you are an honest person and do business the right way, T&M is the way to go. If you want a higher effective hourly, then you would pad fixed. That doesn't make you professional though; it makes you dishonest if you purposely inflate.

If the company needs it to be fixed to compare apples to apples or their finance dept requires it, then submit your fixed scopes and run your business. It's professional to be flexible. And to not fight client processes and procedures.

You will not win a lot of great business if you have only 1 way to run your projects. Some larger companies will take a vendor that costs way more but offers better terms like net 45 or net 90.

I'm a professional. I run a business with employees that's grown every year. We do both, but it's better T&M. All time is logged with descriptions of what was done. We bill based on seniority.

We still do time estimates on items that are T&M so my team is accountable, thinks about their approach and time, and so the client can have an idea of what they are committing to. They don't care if it goes over, it just can't get out of control. And they need this information to triage and approve requests.

T&M with time estimates is a professional way to go. Some of your estimates will be off, some will be under. Just make sure clients understand that and traffic your wins and losses. And if you find out your 24 hr task is going to take 60 hours, notify the client as soon as you discover that to avoid surprises.

I'm experimenting with a more traditional contingency budget which is explicit in the estimate. In that manner, a fixed bid would be done but the client would be aware that there could be unknowns that result in tapping the contingency budget. And if it's not tapped - they don't pay it. So rather than try to bake the unknowns into the fixed which the client would pay regardless, I can have the contingency reserved if needed but be more palatable against a competing bid that wraps it into their fixed.

So say, 100k fixed bid, separate 20% contingency for unknowns for my bid. Versus another company's 120k fixed bid, no contingency. Both possible 120k spend. One may not use contingency and thus be 20k cheaper. The other - 120k is paid no matter what.

Anyone do that on their larger projects? How is that received?

I just say this has a complexity of 1,3,5,8 or 'too big to say'. Each feature is a 1-15 minute conversation to get this number. Then they ask well how much time is that? I then answer "We have three months of velocity data, x points per developer per week accepted into production over the last ten weeks so those five new points for that feature will take one developer 4.1 days to complete with a variance of plus or minus 1.8 days. If you need better precision, we can take a day or two to really break down the work and get the uncertainty to at best a ten percent variance.