11th November 2016

Tenders and proposals - no more fixed price/fixed scope projects

Simon Wakeman
Managing Director

As a digital agency MD, I’ve reviewed a lot of tenders and requests for proposals (RFPs).

I’ve seen great ones, long ones, short ones and totally incomprehensible ones.

When a new RFP drops into our inbox, the first thing we do is excitedly open it and try to understand what problems you’re experiencing. What’s the challenge you’re facing and how might we go about solving it?

Then once the euphoria of pitching for an exciting new project has worn off a bit, we get down to the finer details.

One of those details that I look at early on is how your tender talks about pricing and scope.

The big red flag that I’m looking for is when we’re being asked for a fixed price to build a website with a defined list of features.

The difficult conversations

It’s sad to see these kind of RFPs where there’s obviously been a lot of work put in upfront to specify in great detail what must be provided on the site.

And it’s often an important but difficult conversation to tell a prospective client that it’s a false economy to have spent time and money working out these very detailed requirements before they go to market for a digital agency.

But the bottom line is that in the real world it’s impossible to have enough detail to inform a fixed price website build. And I want to explain why.

As a leading open source technology agency we’re in the business of creating digital solutions that solve problems.

It’s impossible for us to work out what that solution is without properly engaging with you, your audiences and your stakeholders.

It's about you and your business challenges

We have a tried and tested process that’s all around rapidly learning about you and your challenges - and then rapidly iterating potential solutions until we have one that we can prove works. Then we get on and build it with you.

So the reason that I worry about being asked for a fixed price upfront for a fixed scope project is because it means you’re asking us to play a guessing game.

In fact you’re asking us to make a lot of guesses.

You’re asking us to guess what’s behind the problems you’re experiencing.

But it’s impossible to capture the depth of evidence that’s needed in a tender document and our investigations at the start of a project build on successive layers of learning.

You’re asking us to guess what the solution to those problems might be.

But we know that the best solutions come through iteration in our thinking and prototyping. Our early guesses are refined over and over again before we settle on a final solution with you. You’re buying our expertise to come up with that solution, otherwise if you had the same expertise in-house you wouldn’t need our help anyway.

You’re asking us to guess how much time it’s going to take to build the website or product that solves those problems for you.

But we know that all but the most simple builds have some risk in them. That risk might come from a complex integration with an as yet incomplete third party API or be because your commercial KPIs haven’t been decided yet. These kind of uncertainties make accurately estimating the build cost of a project at RFP stage virtually impossible.

We're not going to make guesses

So by asking for a fixed price build and combining it with a fixed scope for the site, you’re asking us to make a lot of guesses and then make it our problem if we guess wrong. Which, just like every other agency, we probably will.

That’s why we’re taking the brave step and and saying that we aren’t playing that game any more.

From now on we won’t submit project proposals that fix both the cost and scope of projects.

I know this breaks a few of the norms that have grown up around fixed pricing in the digital agency world. And I also know we’re not the only agency that’s speaking up about this (for example here, here and here).

At Deeson we know it’s really important that projects with our clients are shared endeavours. Delivering a great digital solution is about learning and creating together. That means a sharing of the risk in that process as well as the benefit.

For a lot of my career I’ve worked client-side, so I do understand where fixed price projects comes from. The pressure to ensure a project is delivered on or under budget is common.

In fact most clients don’t have the luxury of unlimited budget for their new website. Our agile process is designed to provide the flexibility that’s needed to get the solution right, deliver the most valuable functionality as cost effectively as possible, while recognising that our clients have to manage within fixed budgets.

Open and honest collaboration

Through collaborating openly and honestly on a project, we know how to make sure you get the best value from your fixed budget. We can also give you help in understanding whether that budget is realistic based on our experience of more than 200 open source website and application builds.

To manage the scope of a project in line with a fixed budget we have to work together with our clients. This is something we enjoy doing and do every day.

But this collaboration requires a recognition that the scope of a project can’t be fixed upfront if budget is fixed as well. In my experience it’s increasingly hard to find a credible, high quality agency that will choose to do this. If they do, it’s worth thinking about why they’re willing to do this and asking them what risks they’re prepared to take.

I’m lucky that at Deeson our clients recognise that managing budgets alongside scope is at the heart of the successful long-term, value-led partnerships that we enjoy with our clients.