Prashant SonwaneSr. Program Manager| Winjit Technologies Pvt LtdNashik, Maharashtra, India
Actually, when sales team has a pressure to win more projects to achieve their monthly target, many of the times team either places bid in between given budget by the client or places a bid closer to the business competitor.
From development team perspective, if budget is given less than required actual efforts then deadline becomes critical also profitability decreases.
What would be the best way or activities needs to apply in such situations? Saving Changes...
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Prashant SonwaneSr. Program Manager| Winjit Technologies Pvt LtdNashik, Maharashtra, India
Can anyone please contribute on this? Saving Changes...
Deepesh RammoorthyICT Project Manager ( PMP®AgilePM®Certified ScrumMaster® (CSM®))| Australian Red Cross Blood ServiceTarneit, Vic, Australia
PMBOK Procurement Management chapter is invaluable , especially relating to the type of contracts. Fixed Price contracts are always going to be beneficial to the Buyer and Cost Reimbursable contracts to the seller.
Therefore you as a seller must always go for a Cost Reimbursable contract , either costs plus fixed fee, Costs Plus incentive fee, Costs plus award fee etc.
If you can get an incentive amount of money to finish the project quicker, negotiate a cost plus incentive. with the customer.
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1 reply by Prashant Sonwane
Apr 24, 2017 3:31 AM
Prashant Sonwane
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Deepesh Thanks a lot for your valuable inputs. We actually work with "Fixed Cost" project and that price had finalized by the Sales team. But when that project comes to development department then due to some technical complexity or lack of analysis few modules takes more than expected hours. This extra hour ate profitability, as well as the project, didn't deliver on-time.
Can you suggest best practice to overcome on it?
Saving Changes...
Deepesh RammoorthyICT Project Manager ( PMP®AgilePM®Certified ScrumMaster® (CSM®))| Australian Red Cross Blood ServiceTarneit, Vic, Australia
You can also consider Costs Plus Fixed Fee where you will be paid your Project Costs plus a fixed fee no matter whether project goes above or below cost. Saving Changes...
Prashant SonwaneSr. Program Manager| Winjit Technologies Pvt LtdNashik, Maharashtra, India
Apr 24, 2017 2:20 AM
Replying to Deepesh Rammoorthy
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PMBOK Procurement Management chapter is invaluable , especially relating to the type of contracts. Fixed Price contracts are always going to be beneficial to the Buyer and Cost Reimbursable contracts to the seller.
Therefore you as a seller must always go for a Cost Reimbursable contract , either costs plus fixed fee, Costs Plus incentive fee, Costs plus award fee etc.
If you can get an incentive amount of money to finish the project quicker, negotiate a cost plus incentive. with the customer.
Deepesh Thanks a lot for your valuable inputs. We actually work with "Fixed Cost" project and that price had finalized by the Sales team. But when that project comes to development department then due to some technical complexity or lack of analysis few modules takes more than expected hours. This extra hour ate profitability, as well as the project, didn't deliver on-time.
Can you suggest best practice to overcome on it? Saving Changes...
Deepesh RammoorthyICT Project Manager ( PMP®AgilePM®Certified ScrumMaster® (CSM®))| Australian Red Cross Blood ServiceTarneit, Vic, Australia
Pre sales team shouldn't be agreeing to fixed price at all unless scope is clear.... Fixed price is when the scope is extremely clear. You are set up for failure. Your organization needs desperate project governance and management to not let the pre-sales team quote without evaluating scope Saving Changes...
Prashant SonwaneSr. Program Manager| Winjit Technologies Pvt LtdNashik, Maharashtra, India
Thanks, Deepesh. Surely we will explore it.
Meantime, I am thinking to establish a coordination of Sales team with Subject Matter Expert before they quote on projects. Saving Changes...
Usually we mention +/- 20% in project estimates/costing while submitting proposals. This gives you a room to correct your estimates along with scope elaboration.
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1 reply by Prashant Sonwane
Apr 27, 2017 2:02 AM
Prashant Sonwane
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Thanks, Sonali.
Saving Changes...
Prashant SonwaneSr. Program Manager| Winjit Technologies Pvt LtdNashik, Maharashtra, India
Apr 26, 2017 9:58 AM
Replying to Sonali Malu
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Usually we mention +/- 20% in project estimates/costing while submitting proposals. This gives you a room to correct your estimates along with scope elaboration.
Thanks, Sonali. Saving Changes...
Sergio Luis ConteHelping to create solutions for everyone| Worldwide based OrganizationsBuenos Aires, Argentina
I was Director of Professional Services in one of the top ten companies in the world related to product and software services. The way we fixed that was when the company understood that the risky part of each sale was professional services. So, for each bid the professional services manager or director sign off was required and a presales professional was included working with the sales person and the client to uderstand the needs. What we did in the interim was: 1-publish all the estimations with Barry Bohem`s Cone of Uncertainty reference about the deviation we have becasue the phase we are. That was published internally but was the mean to clearly advise all involved people (business people) why we can loose money and prestige as company due to the future problems just in case the project was sold. 2-we put in place a risk management process where all people was involved and was risk assigned just in case it applies (all people mean the subsidiary director for example). 3-we understood after reviewed lot of information regarding own company and other companies in the market that to charge 20%-25% in case of projects with local people or 30%-35% in case of offshore projects will help us with the numbers BUT that was did in some extreme conditions because to apply this charge did not avoid the risk and more of the times could put you out of the group or companies that could gain the project. Saving Changes...
