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They fail. It’s hard to get it right. The scope can always change and it’s a minus-business. That’s right. The way those fixed prices for projects fail is because they were built had most the only way we are taught to create prices: you create a scope, add some time/resources and a buffer, and is all focused on how much effort/work/time/resources it might take. If you miscalculate, you take the big hit. And that’s backwards. It doesn’t take into account how much money it will mean to the customer when they have what they want. It doesn’t take into account how much they’d be willing to trade off for a kind of outcome. And you can fix-price that outcome. How to start? Figure out what it means to the customer to have their situation where they want it. Figure out what’s that like in money terms. [aka Value] Think of something that would make sense for a 10th or a 5th of that money. [aka Price] Think of something that would mean for you a 10th of that new figure. [aka Cost] That’s your formula. |