Work Flexibility base Business Models
A: Firm Fixed Price (FFP): The fee to provide the product or services is quoted and fixed for the duration of the contract. FFP contract shifts the project risks to the Provider, who is responsible for cost, performance and profit or loss. The Buyer pays a fixed fee and does not need to know what the Provider is actually spending on the project. We provide detail SRS and sign off the key features and its functionality for this Project execution model.
B: Time and Materials (T&M): The fee is quoted as an hourly rate plus the cost of materials, supplies, or travel expenses. The T&M contract is used when the Buyer wants full control over the project. Provider profits are factored into the hourly rate and the Buyer is billed for the hours worked. Midas Automation Technologies recommend it for those projects which expect some changes during project development from client.
C: Cost Plus: There are actually several variations of Cost plus, they include: Cost Plus Incentive Fee (CPIF), Cost Plus Fixed Fee (CPFF), and Cost Plus Percentage of Cost (CPPC). Each of these covers the Provider’s costs and an additional fee that is calculated in various ways in an attempt to limit the Buyers costs. A major distinction between CP and FFP or T&M contracts is that with CP contracts, the Provider costs are disclosed to the Buyer for reimbursement. It mostly used for RPO model.
D: T&M with Not to Exceed (NTE): This is a variation of the FFP contract where the Buyers tries to get the best potential price while capping total fee paid to the Provider. NTE contracts are usually an attempt by the Buyer to benefit if the project finishes early, and limit exposure if the project runs long