Models Of Cooperation In The IT Business

In most cases, it’s tough to have full control over the working process. This is especially true in cooperation with a remote development team. It’s important to discuss all the approaches, technologies, conditions and other crucial issues related to development before the project launch. This is why you need to choose the right type of IT model to avoid unpleasant situations like communication gaps or fake commitments, set the price rate for work and get the ready product.

What Do You Need To Choose For Your Business?

There are several types of models. Differences between them might seem subtle. However, they vary regarding price, attitude and added value.

Dedicated Team

This model of cooperation is pretty specific. It’s suitable for clients who want to expand the team or companies that need additional workforce with special skills, knowledge and extensive experience to solve the issues in the project. The model can be easily customized to different business requirements, and, it’s considered the most popular among other models. In other words, you hire the team that becomes your employees for a certain period.

Pros of the Dedicated Team

• Direct communication. You can always contact the new team to discuss crucial moments during the work.
• Total control. You can check and manage the work process on your own.
• Reliable team. You hire people who become a part of your team and are interested in productive collaboration.
• Flexibility. In this case, you’re able to change the goals or terms depending on the specific situation.
• Efficiency. The employees who will work with the same product for an extended term can increase their productivity during this time.

Cons of the Dedicated Team

• High Price. Compared to other types, this model requires more resources. With that said, this is justified by the fact that it is usually used for more complex products with higher prices.
• Time. It requires more time and effort to hire a team with high skills and vast experience.
• Management. You are responsible for managing the process, and that’s why you will need to invest in this direction.

When does it really work?

If startups or companies of any size have:

• a lack of resources;
• a lack of expertise;
• a shortage of time.

Fixed Price

This model seems very attractive to many customers. It looks simple. You write the project requirements, pass them to the developers' team, and wait for the result. Using such a model, the project seems verytime and cost are negotiated when the contract is signed. In most cases, Fixed Price cooperation is applied to small-scale projects or solutions which can be created in several fixed price iterations. Also, this type doesn’t include active client involvement in the workflow, and the project manager completely controls the process.

Pros of Fixed Price

• Without control. The development process is carried out by the project manager. However, if the client wants, he/she can also participate.
• Structural properties. You have a particular signed statement that defines when a certain portion of the function will be implemented.
• The clean result. The contractor you choose is highly motivated to deliver a quality product, so you don’t need to worry about his/her working hours.
• Safety. In case the product does not meet the requirements and you don’t like it, you need not pay for it.

Cons of Fixed Price

• Time. You should be ready to spend significant time, even weeks, to discuss requirements and deadlines.
• Lack of control. The team members will manage the process.
• Lack of communication. Of course, you won’t be excluded from contract management. However, you don’t have frequent interaction with the team.

When does it really work?

If MVP projects or small businesses have:

• a limited or fixed budget;
• agreed time frames;
• clear requirements.

Time And Materials or Hourly Rate

Time & Material (also called “pay-as-you-go”) model doesn’t define the clear requirements at the beginning. It’s more suitable for projects which cannot be estimated in advance. Moreover, the model provides flexibility for the project. You can add specialists with different skill sets as well as exclude other members during the project development. As for payment, the development effort is billed at the end of every month, based on the mutually agreed upon hourly rate. The main point of this model is that it offers flexibility of specifications and project adjustment according to other requirements and needs.

Pros of Time and Materials

• Flexible payment. If you have a specific budget, you can discuss it with the team and negotiate the relevance of particular features and implementation methods. Besides, this model allows paying step by step for each completed piece of work.
• No costs for preparations. It isn’t necessary to make special preparation. All the processes will be considered a part of the workflow.
• Agile. This model is cohesive with Scrum methodology, including such elements as a sprint, daily and retrospective meetings, and other components.

Cons of Time and Materials

• No schedule. You don’t know when a finished product will be delivered.
• Problems with the budget. You do not have a full image of the final sum you are going to pay.
• Time. You need to spend your time on project management.

When does it really work?

It works when mid-sized projects and startups or product owners have:

• expensive resources;
• a limited budget for recruiting;
• dynamic requirements.

Make Your Choice!

All these models have different approaches, and their implementation will also be different. If your project is short-term, it will be better to choose the fixed price model. This model requires well-designed project characteristics, and all of them implementation willefore the project is launched. However, if you need skilled developers for your project, the dedicated team is the best choice.

If comparing the time and materials model with the fixed price model, budget requirements and the project as a whole are more flexible. If you have a large or medium-sized project, this model is what you need, since it offers full control over the development process and budget.