The old truth says: “time is money”, and Time & Material is an example of literal understanding and translation of this slogan into practice. It is better to pay for the service with an accuracy of up to a minute than pay in advance and wonder if you have spent too much money.
What is Time & Material?
Time & Material is a development work valuation model in which the client covers the costs of time and materials of the contractor. In other words: the payment is made on the basis of labour costs. The client receives an invoice with the number of man-hours spent on programming tasks.
Why Time & Material?
First of all, because this solution works in a situation where it is impossible to determine in advance the total number of working hours or the deadline for completing a project such as the creation of a website.
Programming works are characterised by the fact that both their pace and the complexity of tasks change throughout the project. For example, if the creation of your website is based on the Minimum Viable Product model, then due to the subsequent iterations, and thus – the testing of solutions, it is difficult to predict what elements will be final. This can also be the case for an existing website for which the client wants to integrate their website with external interfaces. All of this has a direct impact on the time needed for project implementation.
Advantages of Time & Material?
- Flexibility. Managing the project as part of the Agile methodology allows you to respond on a regular basis and define tasks in the context of the current requirements. So, T&M fits here as the most effective form of work time tracking, obviously. It is easier to plan over short distances, but also – to estimate the resources needed.
- Transparency. Thanks to project management tools, the client has an insight into the whole of works: they see how much time the programmers have spent on the project in total; they see how much time the tasks take.
- Communication. This is an advantage, but also an obvious need arising from the T&M model. In order to manage the project well, communication must be systematic. And thanks to the fact that it is being carried out regularly, the whole process remains constantly updated.
- Reducing the financial risk. T&M provides the ability to predict overspending. If one can see that the task takes too much time and does not cause any progress in the project, and maybe even blocks other works, it is possible to opt-out of the task or change its scope. It is, therefore, taking action in advance in the case of costs being incurred. In this way, the financial risk is being reduced.
When to use Time & Material?
- Comprehensive project. If the website is to be an extensive one, with many functionalities, numerous integrations and the involvement of at least a few programmers, T&M will be an ideal solution. Why? Because it is difficult to foresee all the variables in a comprehensive project, especially when it turns out at the initial planning stage that the work can take many months.
- Testing the solutions. If the website is to obtain its final shape after the attempts to use individual functionalities, and it is not known which of them will be the final ones, T&M will also be the most effective in this case in the context of management. Why? Because obtaining information about a website is a process. An ongoing analysis corrects the ways to achieve the goal.
- Expanding the current website. If the existing website requires some changes, a not very complicated reconstruction, a redesign of basic elements. Why will T&M also work then? Because these do not interfere much with the architecture, the code of the website. Changes can take relatively little time. It is better then to control their cost through T&M than to pay for the service in advance, which in this situation could pose a risk of overpaying.
Time & Material at Droptica
In order to effectively use the advantages of T&M, this model must be correctly implemented. Droptica has many years of experience in projects based on T&M. We know that the key factor is also the fact that the client should be aware of the obligations on their side.
An example is the Product Owner as a contact person on the client's side. There must be someone with whom the communication will take place on a regular basis. At Droptica we work within SCRUM, which effectively supports the cooperation with the Product Owner. Thanks to SCRUM, we manage the project dynamically and use all the advantages of T&M described above.
Below are our answers to the most common doubts we have to address when we start working with a client who has not previously used the T&M model.
Before starting the project, the client is not sure how much the service will cost or is afraid that it will be too expensive.
Defining the scope of tasks is the basis. Thanks to the analysis and preparation of project documentation, we precisely define the time needed to complete the tasks before they start. The more we know about the details of the assigned tasks at the beginning, the more accurately we can estimate the project implementation costs.
The client is afraid that they will pay for an unfinished service or the service will eventually prove to be more expensive.
One of the fundamental rules of our work is to keep the client informed about the progress. Therefore, if we notice an unfinished task getting close to the initial estimation, we inform the clients in advance and set the next steps together. In this way, we control the costs so that they do not exceed the limits.
The client wants to be sure that remotely working programmers do not waste time on tasks for which they will want to get paid.
The client controls the developers' work. The client can ask questions via the Slack messenger, in JIRA – they can see how much time is being spent on a given task. In addition, the client can participate in daily team meetings, during which the developers report the status of works, talk about the plans for the next day. Therefore, there is no need to fear that time may be spent inefficiently.
T&M is a solution working in the common interest of the orderer and the contractor. The client can clearly see the costs incurred during the project, and thus they control the budget on an ongoing basis. The development agency, on the other hand, performs tasks to use the work time within the client's budget.