Fixed bid or Time & Material contract ? Choices gone awry benefit vendors

This is a continuation from last week, please click here for the earlier part

After prolonged discussions, debate and extensive negotiations, the project was signed off with the final vendor in a proclaimed win-win scenario with a fixed bid for the defined scope. The project was complex, audacious and mammoth in its attempt and intent to deliver functionality with breadth and depth that had never been attempted before. The customer and vendor were equally excited with the casting if successful would leapfrog both into elite league of customer case studies and success stories.

The project got off to a great start with participation from the leadership teams from both sides solemnly offering their unstinted support promising to leave no stone unturned towards success. The team brought together from various business streams as well as different locations represented the able and willing though not necessary the best. They understood the challenge and opportunity in front of them, daunting and exciting, they believed with support from the leadership team they can climb Mount Everest !

First milestone achieved within the defined timeline boosted the morale and charged the team to start believing that they could indeed pull it off. Aside from the congratulatory back slapping there was a renewed energy towards every task and adoration for the CIO who kept the team together with a balance between coaching, mentoring, critiquing decisions and helping find a better solution. The first milestone was important though not critical; they knew it and the journey was about to get tougher and daunting.

Time flew after that with rush of activity taking its toil; they missed the next milestone creating a sense of urgency and pressure to make up time. The vendor started getting edgy as every creeping day added to the cost and reduced profitability for the project. Reports moved from Green to Yellow and then Red quickly with escalations that resulted in frayed and short tempers. The management instead of looking at what needed to be fixed started asking who was at fault thereby undermining team and leadership credibility.

Each decision was challenged and hypothetical exception conditions were cited to demonstrate ineptness of leadership. The noise reached a crescendo demanding change to rescue the project which was critical to the company with large investments committed. The team rallied behind the Project Manager and CIO providing a vote of confidence which was brushed aside; convenient scapegoats, the duo were replaced by a wannabe CIO and dozen experts who visibly formed a coterie.

In the large unparalleled project, the new team out of depth agreed to vendor’s every point turning status from red to green within a fortnight. The vendor seized the opportunity to push in cost escalation due to reasons attributable to the customer; after all they had replaced their team members while the vendor had retained the entire contingent. Some of the business team members sensed an opportunity to prove a point and pushed through large set of customizations to retain existing process.

Score and more programmers descended bringing with them further extension to scope and project timelines. What was thus far a controlled project running to defined specifications and timeline was now a free for all – change this and change that – because other change was accepted. The project bore no resemblance to the disciplined approach that was the hallmark of the earlier team which had a purpose and direction to where they were headed and what would be the outcome at the end of the project.

By the time the original go-live deadline arrived, the project had transformed into a massive custom development factory using the product only as a foundation. The fixed cost model was converted to time and material since no one knew the end point. The management and specific CXOs who had taken a tough stand against the earlier IT leaders accepted the new situation with lame justification that the solution would now be well tailored to enterprise processes though they had lost on best practices, cost and time opportunity.

Business patience elasticity was tested to its limits until opportunity loss started hurting market share and murmurs of dissatisfaction could not be controlled. Additional experience and grey hair was brought to the rescue; with 100% cost overrun, 80% slide in timelines, and 40% reduction in scope the project was eventually declared live. No one celebrated the event, no joy left in the milestone that was a molehill to the aspirational Mount Everest. Life had gone round dishearteningly and disorienting the disappointed expeditioners.

What about the original PM and CIO ? They had quit happily on the suggestion of the management early on around the time of the original go-live milestone !