I am struggling with a business model for a professional services business where PMs are incentivized (financially) to collect for-cost change orders on fixed price contracts (i.e., Statements of Work).
I'd like to hear thoughts on whether folks feel this creates a conflict of interest for the PMs to act as an earnest guardian of their clients budget, or whether this is a harmless way to help ensure PMs are looking out for their employers profitability.
I’m concerned that incentivizing PMs in this manner could tempt them to intentionally provide shoddy service to customers with the intention of making them purchase changes later on. If even one PM gives the perception of doing this it might ruin your business’ reputation beyond repair.
After completing the contracted work, perhaps sales people could talk to the customer to sell them new features; assuming the PM did a good job the customer will likely be open to having more work performed. This arrangement would prevent the possible perception that your PMs aren’t working their hardest for the customers’ benefit. Saving Changes...
Any single dimension metric will cause unintended consequences which is why there should be a set of metrics resulting in a balanced outcome. For example, balance project profitability against customer satisfaction.