Vendors may use the phrase “time and materials” (t&m) to describe how they engage in projects and invoice their clients.
The phrase t&m has been laid to rest at Atomic for several reasons. First, the phrase doesn’t accurately describe how we engage with our clients. At Atomic, we certainly don’t work without profit. And we have an innate desire to be more efficient.
T&m is an inaccurate way of describing our business relationships and ignores a lot of other work we do. For example, we spend considerable time and effort helping customers set a budget. We’ve established really strong patterns of estimating and tracking our work. We’ve got highly refined charts that report on progress toward completion. If we were truly working t&m, the only thing we’d have to do for customers is track our time.
T&m should be a red flag to you when considering a vendor. When you hear t&m you may think of the monetary equivalent of dropping a thick copper bar across your car’s battery terminals (high flow, uncontrolled, explosive burn).
Why would we have ever used a phrase that is both inaccurate and potentially damaging?
We want to describe the opposite of something we avoid, namely “fixed price, fixed scope” (fp/fs). Our aversion to fp/fs is based on the very sound reasoning that it’s not a good way to base a relationship between client and vendor for building custom software. Fp/fs may be a good relationship for highly specialized and repeatable work like mowing lawns or oil changes.
Atomic has dropped the phrase “t&m” in favor of “fixed budget, scope-controlled” to describe our preferred business relationship. As in “we do fixed budget, scope-controlled projects.”
We help our customers establish a budget, we carefully estimate and track our work, we provide a simple update every week that shows our progress, and we deliver the project in the budget that’s been set. To the penny.
We reliably hit fixed budgets and collaboratively work with our clients to build the best possible software for that budget.
We push hard on our clients to build the right features, and build them to the right level of complexity, to get the most possible value for the fixed budget.
The right level of complexity is achieved by managing the depth, breadth and scope of features. When you represent your product in a story map, you can hit your project budget by subordinating the scope of total experiences (breadth), tasks within an experience (depth), and level of ease (polish).
By fighting to build less, and what’s right for users and business goals, we believe that our clients will see a return on their investment sooner and possibly allocate additional budget in the future to extend the product we’ve built them. It’s quite common that our projects are funded in multiple phases, just like smart investments should be made.