Why I Built a House On a Time and Materials Basis

Any time a service provider is hired to provide something, whether software or a new house, both buyer and seller enter into this relationship with expectations.  A buyer expects to get exactly what he asked for at a fair price the seller expects to make a reasonable profit.  Any buyer entering into an agreement who cannot accept the seller’s right to a fair profit is operating outside the sphere of “good faith”.  This applies equally to the seller who cannot acknowledge the customer’s right to get what they want.  This is the minimum basis for a business relationship.

On the surface this seems pretty simple, but, as in all complex undertakings, the “devil is in the details”.

In order for these objectives to be met for both parties, they need to be mutually compatible.  In complex undertakings, such as large medical software development efforts, there are various options for such a business relationship.  I will discuss the two most commonly considered: Fixed Price and Time and Materials (T&M).

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