We get asked for fixed-price quotes on complex enterprise projects. The answer is always the same: we don't do that. Not because we're afraid of commitment. Because fixed-price contracts on genuinely complex work make both parties worse off.
The Incentive Problem
Fixed-price contracts create a zero-sum dynamic. Every change the client wants costs the vendor money. Every shortcut the vendor takes saves them margin. The contract turns the relationship adversarial. Not because either party wants that. Because the structure demands it.
The vendor pads the estimate to cover unknowns. The client pays for risk that may never materialise. When change requests appear (and they always do), both sides reach for the contract instead of reaching for the best solution. The conversation shifts from "what should we build?" to "what does the contract say?"
43%
of enterprise projects experience significant scope changes after contracts are signed
Source: PMI Pulse of the Profession, 2018
Forty-three percent. That's not exceptional. That's normal. Complex projects generate new information. New information changes requirements. A contract model that punishes change punishes learning.
What We Do Instead
Time and materials with structure. Not a blank cheque. A framework that gives the client cost visibility without locking both parties into a number that was, at best, an informed guess.
Phased delivery. We scope in phases of four to eight weeks, each with a defined outcome and a cost range. The client approves each phase before it starts. They can stop, pivot, or reprioritise at any boundary.
Transparent reporting. The client sees where every hour goes. Weekly. Not at the end of the project. Not at invoicing time. Weekly. If effort is trending above estimate, they know immediately, and we discuss options before it becomes a problem.
Regular check-ins. Every two weeks, the client sees working software. They know what they're getting for their money because they can see it, test it, and give feedback.
Capped phases. If a client needs a hard ceiling for budget approval, we cap individual phases. If we hit the cap, we stop and review. This gives procurement the number they need without the fiction of a fixed price across a twelve-month project.
The Trust Trade
Fixed-price feels safe. You know the number. You can budget for it. There's a comfort in certainty, even when that certainty is built on optimistic estimates.
Time and materials requires trust. You're trusting that the team is efficient, honest, and transparent. That's a higher bar. It's also a better foundation for the kind of collaboration that produces great outcomes.
We've been doing this long enough to know: the projects that succeed are the ones where client and vendor are solving the problem together. Fixed-price contracts make that harder, not easier.
If the project is simple enough to scope with certainty, it's simple enough that you probably don't need a bespoke build. Use a SaaS product. For genuinely complex work, the honest answer is that nobody knows the final number at the start. The question is whether you pretend otherwise or build a model that adapts as you learn.
We choose the second option. Every time.