Thursday, July 10, 2008

T&Ms should really be called "Time for Money"

Macadamian has several engagement models, the two most common models are Fixed Bid and Time and Material (T&M). Both are relatively common. However, I have come to realize that T&M contracts don't exist. They are this mythical creature -- like the phoenix -- fabled to exist, but rarely seen in their true form.

Why are T&Ms rarely seen? Because I have rarely been able to bill any material to the customer. It is the cost of doing "business". This means that any material we need for the project comes out of project margin. On shorter projects, this can mean a significant percentage.

The only real solution to this is to make sure you have thought of this upfront, planned for it, and let the business development folks know upfront. That way they can ensure it is covered in their margins.

The other thing we can do is stop calling them T&Ms. Perhaps we should simply call these "Time for Money", "Team Extensions", "Expert Time", or something really clever that shows our expert kungfu.

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