Managing Vendors – Articles by Jim Everett

Tips on managing vendors, skills and competencies required

Fixed Bids Vs Time & Materials

Posted on | April 2, 2008 | CLICK HERE TO COMMENT OR ASK QUESTION

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I am often asked about differences between managing employees and vendors. This seems to be more evident when members of the vendor organization are working on the client site, or have regular dealings with the employee who manages the project.

One of the issues is that every change request, or extra work, results in the vendor saying it is outside the contract, or will cost extra. This happens when the contract was based on a fixed bid.

Fixed bids cap the expenditure but also limit flexibility and additions that may be required as a project goes along.

The alternative is to have an agreement based on time and materials. This allows a vendor to participate more like an employee, and not appear just money-focused around stepping up to extra tasks.

The downside is that there is less control over the expenditure and the scope of the project.

So the decision is a trade-off around which is more important – cost control or flexible work flow.

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