On the surface a fixed price project and a fixed budget project might seem the same, but they definitely are not! A Fixed Price Project the client and the consultant agree upon a fixed set of features at a fixed price. A Fixed Budget Project, the project expense will not exceed an agreed upon amount. Features will be prioritized and will be addressed until the budget is exhausted or the project is finished (whichever comes first). Both have a "not to exceed" budget, but that's where the similarities end. www.panopticdev.com

1. Fixed BudgetFixed Price
vs
FOCUS
INFLATED BUDGET
WORKS BEST
Forces client to
take a hard look at the
requirements
NO INFLATION
WORKS BEST
Feature set
frozen
High Risk,
budgets have
to be inflated
Risk is on
consultant
With well knowing
requirements such
as painting a house
FLEXIBLE
Can add
new features
Time and
Materials based
Shared
Risk
Project Savings if it takes less time to complete
Project costs the same even if it takes less time to complete
UNFLEXIBLE
With changing or
unknown requirements.
By definition
software projects
have high variability
$$$ $$
Fix Priced and Fixed Budget
projects might seem similar,
but they are not.
RISK
RISK
INCENTIVE
Reduce cost to
increase margin
INCENTIVE
Prioritize features
to build the
best product
for the money
FOCUS
To implement
features as
quickly as possible
www.panopticdev.com