Once you have made the decision to partner up with a company that offers software development services, your next move should be all about choosing an engagement model that will suit your company’s requirements to a T. This model will represent the groundwork for your professional relationship therefore, selecting the right one will determine the success or failure of your collaboration.
There are three types of engagement models to choose from: fixed price, time and material, and the dedicated development team model. Given that it is a matter of which engagement model most closely matches the hiring business’ necessities and demands, questions such as “is the dedicated development team model better than the other two?”, are not the ones that should be asked.
Instead, companies that are looking to get the most out of their partnership, will seek to understand the differences between the three engagement models, and each one of their weaknesses and strong points. So let’s start with the dedicated development team.
Pros and Cons of the Dedicated Development Team
The dedicated development team engagement model implies hiring a team of experts, over which the contracting company will have full control. These specialists are provided by the vendor, who carefully selects the right IT professionals, after being given detailed descriptions of what positions need to be filled, the number of needed specialists, and required skills. But this is as far as detailing goes, because, when it comes the project for which the team is employed, there is no need for elaborated specifications.
Apart from this flexibility that we have pointed out, the dedicated development team engagement model also offers the benefit of scalability; clients can add or remove specialists from their remote teams, if project requirements call for it. Moreover, throughout the collaboration, each of the team’s members will always be solely invested in the hiring company’s delegated project, to whom they will report directly, so the project’s progress can be easily supervised.
As for the pricing model, it all depends on the size of the team; contracting businesses will have to pay for the specialists’ monthly salaries, to which costs such as the vendor’s fee or administrative expenses will be added.
And this is where the first disadvantage comes in; flexibility is a double-edged sword, in the sense that not knowing how long will the project take or how many changes in staff will the hiring companies need to make during their partnership, will result in the impossibility of establishing a fixed budget or even indicative one for that matter. And let’s not forget about the increased time spent on management and communication, and great amount of resources that will have to be used up during the collaboration.
Another issue that businesses could possibly face when choosing the dedicated development team engagement model, is that related to in-house employees’ morale. The latter can develop a narrow perspective, stagnate when it comes to their skill sets, and suffer from boredom, due to the monotony of tasks.
Advantages and Disadvantages of the Fixed Price Engagement Model
The keyword of this particular engagement model is “fixed”; the fixed price model is all about having a clear vision on the objectives that need to be achieved, the project’s requirements, and deadlines that have to be met. Everything needs to be thoroughly analyzed and calculated beforehand, so that no unexpected changes can arise during the collaboration between the hiring company and its vendor.
As its name suggests, this model entails a firm price that is established between contracting parties, and that cannot be exceeded. This represents a great advantage for the hiring company, as it can avoid unexpected costs or unforeseen or hidden expenses.
Moreover, contracting parties do not need to closely supervise the project’s progress, because everything is scheduled and planned from the very beginning, and deadlines are clear.
However, the fixed price engagement model has its disadvantages. Any modification that the hiring company wishes to make throughout its collaboration with the vendor, has to be negotiated and included in a document which has to be signed by both parties; this can be time-consuming and can affect the project’s duration.
In addition, any misunderstandings or unclear instructions can negatively influence the project’s well-being, and can give both developers and clients serious headaches.
Positives and Negatives of the Time and Material Engagement Model
The third engagement model on our list is pretty straightforward when it comes to the way that it works. Clients pay for the time the hired specialists dedicate to the project, which can vary in terms of complexity and length. Modifications can be done at any stage of the project, and work on the actual product can start right away.
In addition, this model offers great control and work can be divided into sprints, giving clients the opportunity to decide on which product features developers need to focus.
However, negatives associated to this model include unforeseen costs, because of changes that are being made to the project, delays and unmet deadlines, and an increased level of involvement from the client’s side.
Before choosing an engagement model, executives must have a clear view about their company’s objectives and budget. Only after defining their needs and closely analyzing each of the engagement models’ pros and cons, can businesses make the right decision and engage in successful partnerships.
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