Transparency, preceded by client education and reinforced by communication, is crucial to the success of software projects - anything less is simply misleading and manipulating clients.
The IT sector has been scarred by vendors providing low estimates when tendering for projects simply to get a foot in the door of large organisations. Clients are often strung along so there is a substantial level of dependency on the implemented solution, and gradually the scope of the project broadens to a more realistic actualisation. The client is unable to achieve return on investment without increasing project spend.
Scope creep syndrome is common: the initial estimation appears clear-cut and fits the client`s budget and timing requirements perfectly. Once the project is under way, however, the true extent of the project is revealed. As a result of scope creep, companies can end up paying more than twice the original estimated cost for the project.
Open and honest communication about realistic cost expectations should be established and agreed on up-front, together with the method of calculating costs and timing, the implications of scope change and the negotiation process for any possible cost adjustments, should they be required.
Transparency is crucial - even in the fact that certain factors have to be built into the cost estimation, such as realistic expectations regarding productive work hours. A typical development team, for example, does not operate at 100% efficiency for every hour worked in a day. Trust plays an important role in achieving transparency between vendor and client. An ethical solutions provider will tie itself to its estimates so it has to deliver within the scope and share the risk with the client.
Without shared risk, which contractually obliges project delivery and completion within a set duration and cost, proposed time frames can blur, and there is nothing committing the provider to complete the project within the proposed time frame and budget.
A recent international report published in the US by Deloitte Consulting suggests that outsourcing is falling from favour with many large organisations around the world. In the survey, which covered organisations in manufacturing, consumer business, financial services, technology, media and communications, healthcare, transportation, energy and the public sector, more than half the participants identified hidden costs as the most common problem when managing outsourcing projects.
Similarly, 57% of respondents said they had had to absorb costs for services they believed had been included in the contracts with vendors. Limited transparency in vendor pricing and cost structure was identified by 81% as the reason for having to pay additional costs for a project.
The market is becoming increasingly sensitive to poor estimations for projects and the industry is feeling the brunt of it. The only way to overcome this problem is to be realistic with cost estimations and to build a relationship with clients based on trust.
Six pertinent issues ensure the vendor-client relationship is conducive to transparency:
* Ongoing education to prepare the client for transparency.
* Sound analysis conducted with the client up-front to investigate as far as is possible the full scope of the project.
* A project team with good estimation skills.
* Honesty and objectivity surrounding the pricing structure of the project.
* Incentives in place for the team to get the job done within the time frame without sacrificing quality.
* Constant communication to keep the client up to speed with every milestone, challenge, complexity or lack thereof and financial hurdle.
Some clients prefer to hear good news than the truth, and are likely to be seduced by a lower quote into a cycle of dependency on a vendor. Clients should be taken through each step of the process in advance of the project to provide as much insight into what can be expected and anticipated.
Lack of transparency may sometimes put the client at risk. Transparency, however, breeds accountability. The more transparent a vendor is, the more accountable it needs to be.
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