Vendor's Actual & Estimated Costs - Reasonable?

Cost Management Organizational Project Management Procurement Management

Anonymous

We started a new program with an IT vendor, and we have an MSA/SOW in-place for Time and Expense Billing (monthly). Our goal is to track actual monthly expenses vs. estimated monthly expenses, for the next 1-yr.

Actual Expenses - In an ideal world, we'd want the vendor to provide monthly actuals broken out by:
actual hours worked per person x total cost per person x resource utilization by project.
Our vendor is reluctant to give us any break-out, whatsoever. They want to provide us with a single dollar amount that they will bill us every month. Is this normal? Are we being unreasonable?

Estimated Expenses - We asked for their staffing projections broken out in the same way for the next 1 year. They've said they cannot do it. Our hunch is that they want to keep their margin as obscure from us as possible, but again, I'd like your feedback on if you think this is unreasonable.

Posted: Nov 21, 2023 10:50 PM

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Kiron Bondale Retired | Mentor| Retired Welland, Ontario, Canada

Nov 22, 2023 12:33 PM

Replying to anonymous

...

Thanks Kiron. For some more context:
-Framework is agile
-Program is in North America
-Software development
-Vendor cannot give us an estimated cost per deliverable
-Vendor cannot give us an estimated cost per month

In your experience (and for everyone else on the thread), the consensus seems to be that we're asking too much. I can see that, even though I tend to lean towards Rami's point-of-view.

If I can re-phrase things:
What would be a 'reasonable' ask for a monthly budget (forecasted out for the next 1-yr)? Assuming the vendor won't be able to split the cost out by deliverable, would it just be 'total estimated cost per month'?

Thanks all!

If they are delivering in an adaptive manner, I'd hope they would have a dedicated team working on your product. If they do, their daily labor cost is fixed. I can understand the hesitation around a cost per deliverable given the scope flexibility of an adaptive approach and the evolving nature of the requirements. However, based on a fixed per day/sprint rate, it is possible to determine your monthly cost and you could ask them to look at a fixed release schedule whereby any work items which are completed and verified prior to a release date will become part of the upcoming release. For example, you could have monthly releases with completed content slotted in for the next month's release.

Kiron

Posted: Nov 22, 2023 5:45 PM

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Vendor's Actual & Estimated Costs - Reasonable?

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