Agile is a method of software development that is often associated with the business process transformation (BPT) movement. While it is a popular way to train and study software developers, it can also be used for a variety of other purposes as well. A fixed price program is a type of project that begins with a set price and continues to increase in cost as the scope of the work becomes larger and the time required for completion is greater. This article will explore the benefits of implementing a fixed price devops or agile project, its pros, and cons, its risk, and reward, as well as potential pitfalls of implementing such projects. Let’s get started:
What is a Fixed Price Program?
A fixed price project is a type of project that begins with a set price and, when necessary, increases in cost as the scope of the work grows. The goal of a fixed-price project is to make the project cost as light as possible so that the payment partner can begin work in earnest. For example, let’s say a software development team wants to write a website that receives various events as events and reacts to them with new events. They have six events to write about, each with a price tag of $100,000.
After writing six events and having the project budgeted at $75,000, the team must decide if they want to increase the price to $100,000 or not. One of the biggest advantages of implementing a fixed-price project is that it can help reduce the risk of overheads. Overheads are generally incurred when the scope of work increases and the payments become more than the project budget. Therefore, a fixed-price project can help mitigate the risk of overheads. Unfortunately, implementing a fixed-price project also comes with some disadvantages. These include:
Cons of implementing a fixed-price project
Increased complexity – As the project grows, the risk of overheads increases, which can lead to overheads, complications, and reduced project quality. Another downside of a fixed-price project is that it does not account for inflation. Therefore, clients who use fixed-price projects can experience an increase in project costs solely based on the cost of inflation. For example, if the cost of living in Los Angeles increased six percent over the length of the project, that might increase the overall project cost by two-thirds.
Increased risk – Having a fixed-price project can increase the risk if the client is not careful with the amount of work that is submitted. If the work is overly ambitious or includes too much time-sensitive work, the cost could exceed the project budget. Another benefit of implementing a fixed-price project is that it helps mitigate the risk of overheads. As the number of events grows, the risk of overheads diminishes, which can help reduce the risk of having an overspend.
A fixed-price project can be an effective way to reduce the risk of overheads and maintain quality. However, it should be considered along with the alternative method of change management. This article has provided some insight into the benefits of implementing a fixed-price project and its pros and cons, as well as the potential pitfalls of implementing such projects. The final thing to keep in mind is that fixed-price projects are not a remedy for every issue that can occur in the project planning process. They are only a way to reduce risk and maximize the return on investment.