March 12, 20134 Min Read

How to Choose the Right Business Model for Your Project

By Polina Ilieva, Solution Sales Specialist at Flat Rock

Once you receive a new project and you realize that you will need the assistance of a third party, some of the companies get frustrated, as they don’t know how to proceed. The following article makes an overview of the different business models, which can be used once you decide to outsource an IT project.

Turn-key project /Fixed price project/

A turnkey project is a project, which involves the submission of a complete product that can be used straight away from the client. It is suitable for short projects or projects with a very clear concept. The usual duration of fixed-priced projects is between a few days to a few months. Once the client submits the detailed specification of the project, the third party can estimate the project scope, its complexity and time schedule. After that, it can provide a fixed price for complete development. This business model is suitable when the client wants to plan the actual budget and does not require a direct control over the used resources.

Time and Material model

As the name implies, the model involves payment based on the number of hours of work completed per day. The ‘Time and material’ model is suitable for projects where the requirements are not precisely defined because they often change during the development and implementation process. This model defines a minimum number of hours for utilization in order to cover fixed costs. An agreed rate per hour is discussed in advance between the purchaser and the development company. The number of hours is recorded with a tracking system, which is maintained by one of the parties. The overall project cost is determined according to the amount of time and the resources used for the development. The most common payment way is on a monthly basis.

The ‘Time and material’ model can be used for projects that last from a few months to a few years. It allows the client to be flexible in the requirements and to have a direct control over the resources.

Dedicated teams

In case you have an upcoming project, but instead of outsourcing the whole work to a third party company, you may choose just to hire a dedicated professional, which is not available in house. This process is very flexible because you will be able to hire the person either for the duration of the project, full time or part time. The payment is made monthly according to the rates agreed in advance. The dedicated individual is available only for the client, if he/she is hired full time, and the provider cannot use him/her for internal tasks. The model is suitable in case you have an in-house workforce that covers most of your projects and you need additional IT assistance for specific work/tasks. It is also suitable for long-term projects.

There is a difference between a dedicated team and a mixed team. The dedicated team may work on a specific project and may not interact with the client’s other employees. While when there is a mixed team, the dedicated person and the in-house employees work in cooperation.

Flat Rock Technology’s approach

The usual Flat Rock’s approach involves the creation of a functional design specification document (FDS), according to which the development and the testing will be conducted. Afterwards, once the project is ready, it is delivered to the client for user-acceptance testing (UAT). Our development process looks as follows:

Flat Rock Technology provides flexible and bespoke solutions for each one of our clients. If you have an upcoming project and you don’t know how to proceed with it, please feel free to contact us and our solution specialists will advise you accurately.

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