Fixed-price or time-and-material management? This is the question on every agency’s lips when it comes to selling projects. On the one hand, project management offers reassuring flexibility. On the other hand, fixed-price contracts promise ironclad budgetary control. The problem is that, poorly managed, fixed-price contracts can quickly become an operational nightmare.
But the good news is that, with the right reflexes and sound management, fixed-price contracts can become a powerful lever for profitability. Here’s how to structure it (and optimize it) without compromising your margins or your peace of mind.
Self-managed project vs forfait: two management approaches
Self-managed project: flexibility and permanent adjustments
With time and materials, you sell time. You’re paid by the day or by the hour, which means you retain great flexibility in execution. This solution is particularly well-suited to exploratory or iterative projects, or long assignments with a changing scope.
Fixed price: commitment to results, pressure on margins
A fixed price implies a commitment to results. You deliver a project, not hours. The scope is fixed, as is the budget. The customer is reassured, but on your side, the pressure is high: every load variance or delay costs you. This model demands solid anticipation, cost control and surgical steering.
The keys to winning flat-rate management
1. Lay a concrete frame from the start
The first lever is scoping. Before starting, you need to establish a clear scope, detail the deliverables, set a realistic timetable, and make sure that everything has been validated with the customer. Structured project management reduces grey areas and aligns everyone with the same expectations.
2. Work in iterative mode
Even in a fixed-price context, adopting a logic of sprints, milestones and regular validations enables you to keep a firm grip on progress. You avoid the tunnel effect, reduce the risk of rework and maintain a constant dialogue with the customer.
3. Monitor the right indicators, in real time
It’s not enough to know what you’ve planned. You need to be able to constantly compare forecast and actual. Tracking time spent, cost variances, project profitability to date… These are the key signals you need to act in good time. Good staffing management is decisive here: it links mobilized resources, their actual costs, and project allocations, to give you immediate visibility.
The "wet-finger package" trap
Fragile estimates = margins at risk
Quoting a package without a reliable basis means taking an unnecessary risk. Too many agencies continue to respond to invitations to tender with vague estimates, hoping for the best. But poor estimates pay off sooner or later: either in the form of an unanticipated overcharge, or a collapsing margin.
Quotations based on your actual data
To secure your quotations, you need to rely on your actual data: how long did similar projects really take? What non-billable time (meetings, approvals, coordination) should be included? What are the real costs of internal and external resources? Sales management that’s well connected to your production enables you to build your packages on solid foundations. And so protect your margins from the outset.
What if the real solution was a hybrid?
First fee-based, then flat-rate: an agile approach
Many agencies adopt a hybrid approach: they start out on a contract basis to frame, prototype and test hypotheses, then switch to a fixed-price contract once the scope has stabilized. This is an excellent way of combining agility at the start of a project with controlled profitability during the production phase.
Flexible, unified management
But this mixed approach can’t be improvised. You need to be able to juggle easily between several contractual logics, without duplicating tools or losing visibility. Multi-model management allows you to apply the most appropriate model to each project, with complete fluidity.
In a nutshell
Package deals can be a tremendous growth driver… or a permanent stress factor. It all depends on your ability to manage, structure and monitor it over time. If you lay solid foundations, manage in real time and retain the flexibility to adapt your organization, you can turn it into a real competitive advantage.
Want to take your business to the next level?
Package deals should never be a risky gamble. With the right tools, it becomes a reliable, controlled and, above all, profitable model. By centralizing project management, staffing, workloads, costs and time spent, you can finally manage your fixed-price projects with precision – without losing agility.
Furious was designed to do just that, offering agencies and law firms a comprehensive, easy-to-use ERP system that makes management as clear as its strategic vision.
Ready to transform your project management?
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