Hidden Costs: Non-clear Financial Conditions

Hidden costs – a problem we are dealing with. Before the beginning of the development process the vendor establishes his price, but very often during the work the real price can be higher previously set.

Best price is one of the most important benefits of outsourcing software. Sometimes this merit can be lost, because we face the hidden-costs-situation, and working with more expensive local developers turns out to be more profitable than with a remote team.

There are mainly three types of cooperation between the customer and the developer:

  • project outsourcing – for a client – is a transfer of the project to the remote development team, it means that the team is competent and will offer the most appropriate technologies, processes, development, testing, etc. in the particular situation and will release the product to the specified date.
  • time & materials – the form of agreement where the customer is charged for all of the hours of work fulfilled and materials used during project delivery.
  • dedicated team – can be any team assigned to one development initiative.

In this post we will try to answer the key question: “How can we avoid hidden costs related to software development in project outsourcing, time & materials and dedicated teams?”

Questions:

  1. Explain, using examples, what refers to the hidden costs of project outsourcing, time & materials and dedicated teams.
  2. Is it possible to foresee hidden costs before working with the executor?
  3. What can we do, if the work with a remote software development team has already begun, but the development turns out to be more expensive?

Expert’s answers:

  1. Maarten Pors (Independent Project Manager & Consultant)
  2. Kate Terlecka (Scrum Master, Coach and Trainer from Poland, author of “Control Your Chaos” blog and owner of BrassWillow)
  3. Aviram Eisenberg (Founder and CEO of Ignite – a global software development company that specializes in Agile R&D)

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