Cooperation Models | NAPA

Time and Materials Model

The most common type of contracts in the outsourcing industry

      Definition

The time and materials (T&M) model is a contract type that is used to reimburse one party based on the time spent on the projects, the materials used, and other fees related to the service being provided. This is also known as a cost-reimbursable contract or cost-plus contract. The T&M models (“pay as you go”) is the best choice when the requirements of a project are not clearly defined at the beginning, especially if the scope of work is likely to change during the development process.

img
img

      Advantages

Dynamic scope of work

One of the biggest benefits of this model is that it allows clients to adjust requirements and deploy new features without disrupting the workflow significantly. The involving parties are not obliged to follow the original software project plan under a T&M contract. As a result, they can simply adjust not only the project specifications but also the team size based on their current needs and priorities.

Transparency

Since a fixed-price model just allows the client to participate in the development process during the initial planning phase, customers will have no control over the progress. In a Time and Material contract, the clients will get significant transparency. The customer has total power over the development and can interact directly with the engineer if something goes wrong.

Cost control & Budget flexibility

Cost control and budget flexibility are two more strategic advantages of the T&M model. Customers can effectively plan out their budgets due to clearly defined price units. Furthermore, with a deeper understanding of the entire process, the client can simplify or remove specific elements or functionalities at any time, saving costs and eliminating unnecessary charges.

Fixed-Price Model

A great fit for small and medium scope projects

      Definition

A fixed-price model (also known as a firm-fixed-price model) is a type of contract in which both the customers and the vendors agree on the scope of work, deadlines, and amount of money needed to complete the project before the development process starts. Even though the scope of work is fixed, there's a high possibility you'll need to add some extra features along the way. As a result, deadlines may be pushed back and expenses may arise.

img
img

      Advantages

Low-financial risks

Fixed-price contracts provide a predictable scenario for both the contracting parties, providing both with stability over the life of the contract. Buyers do not have to be concerned about the cost of goods or services rising unexpectedly, disrupting their business plans. The seller is confident that the value of their goods or services will not plunge significantly without warning.

Simple cost estimation

In a fixed-price contract, the amount of time and money that must be spent on the project is accurately and rigorously defined. In other models (time and materials and dedicated team), it is expected that extra requests from clients, recommendations from developers, and other factors would arise throughout the working period, all of which are highly unpredictable. That is why estimating web projects is challenging, but not in the case of fixed-price models.

No need to control the process

A fixed-price contract is an ideal choice for customers who don't want to get too involved in the work process. After the initial planning phase, the development team is assigned a detailed route to follow. So, the clients don’t need to handle most of what is happening and they can focus on their core business.

Lab-type Development

A reliable and cost-effective approach to large or long-term projects with changing scope

      Definition

Lab-type development model is a business model that refers to a long-term agreement between the clients and service providers to supply software specialists. These experts are selected based on their experience and skills and the client's needs. The customers can choose to manage the team themselves or engage a project manager from the service supplier to supervise the development process.

img
img

      Advantages

Cost-Effectiveness

In the lab-type contract, you get advantages of all the cooperation models. You get flexibility in time and material together with predictability in cost. You can define members and budgets in advance while ensuring project performance and scale the team size as your needs. In comparison with hiring in-house, hiring a dedicated team for a project is more economical without recruitment and administration worries. This is especially true if you offshore development to countries with lower rates like Vietnam.

Tight collaboration and control

At NAPA, we ensure a professional team with experience and skillsets meeting your specifications with the required number of people in the specified length of time. They are dedicated to your project, offer you helpful advice, and consider the smallest details that you may have neglected. With this engagement model, you have tight collaboration with the team and control over the project even working remotely. As great things are born in effective collaboration, this model helps to make your long-term planning successful.

Fast-Paced Development Cycle

When it comes to tight scheduling, unanticipated cases, or adjustments in the scope and priorities of the project, this engagement approach is a great choice. With team flexibility and a customer-centric approach, the entire process can be completed at a fast pace than the other models. You can quickly and easily optimize the team size and distribute the workload to serve new goals. All team members are involved in refining workflows, brainstorming solutions, and accelerating the process to meet the schedule.

img-backgroundimg-background

Get free consultation

A free consultation is available to discuss your business needs, no obligation, just a friendly chat to work out how we can help.

contact-napacontact-napa