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We have got the situation when our FP project is running over the time without visible end date. The initial agreed scope is accomplished so we would like to release the team. However the customer provides small changes requests which require every team member participation , however they are not fully loaded. Such partial load influences on financial metrics of the project.

Customer does not want to pay monthly fee for 100% reserved team. It's good for them since they have timely service and pay for change requests only. It's not beneficial for us to keep people partly loaded where we can not plan their workload beforehand.

How do you resolve such cases ?

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You are a party to the contract. This means you have to protect your party's interests in the agreement, which you are NOT doing now. You say your customer does not want to pay for a fully loaded team but wants the benefits of a fully loaded team. All customers would want that. You answer needs to be: pound sand (not literally).

Your price for a small change request is the greater of the actual effort required or the cost of the resource that you are unable to sell elsewhere. The net result would be a fully loaded team for that change request. Here's an example: if a team had to travel for two whole days round trip in order to do work that takes only four hours, do you believe the customer would only pay for the four hours? No way. They would be on the hook to pay for the four hours plus the 16 for travel.

If you are concerned you will lose the business to an alternative, if there's an alternative willing to lose money, let them. No contract is worth it if you are not meeting your interests in the agreement. There are other clients out there; go get them.

Your FP formula is: Your costs + Your margin + risk = fixed price.

Your costs include unused utilization of your resources. It is part of the cost burden.

EDIT to answer question in comment: You indicated your original scope at your original FP is finished so there is nothing more to do with that. Whatever CRs you have already agreed to at whatever price you indicated is a commitment you cannot back out of. You need to complete that scope and invoice for that price and live with the reduce profit or loss you experience. For future CRs not yet agreed to, here is your chance to price it building in the extra cost and margin for non-allocated hours for which your resources are not fully loaded. It does not matter if it is T&M or FP or CP. What matters is you load your total costs in your price build up.

Since this will show an increase in price for your customer, you need to have a sit down and explain the deal. Since you are a party to the contract, you have the right to explain your position in the deal. If your customer balks, then let him compete it. Every other seller will build the price the same way.

  • David, Your statement is correct. But what is better to do now? Finish FP contract since the scope is accomplished. Then come up with another type of deal so that we can handle change requests. It could be T&M with min - max limits. (is there such cases ?) Dedicated team ? – HappyPM Jul 3 '15 at 13:54
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  1. Make a T&M contract with them and ask customer to pay for the effort spend on the CR/Bug fix. This way you will be paid for effort put in and also utilize the team members on other projects
  2. Cross train the team members such that you can release some of the members. The cross trained members will be able to do other peoples work.

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