Choosing the Right Software Partner, Part 4: The Engagement Management Process

A strong engagement management process keeps complex, custom software development projects on track for success. It’s essential that you (the client) are regularly involved in conversations about the budget, scope, and key decisions.

This is the fourth post in a four-part series aimed at helping you select the best software development partner. The series covers each of the characteristics you should look for in potential partners:

  1. Longevity
  2. Great people
  3. Experience
  4. Engagement management process

In this post, I’ll focus on the engagement management process.

Below, I’ve outlined the questions I would ask when evaluating a firm’s engagement management process, and I’ve included my experienced perspective on answers I’d like to hear. The goal is to help you evaluate potential partners at a foundational level and focus on what’s really important at this stage.

Elements of Engagement Management

As a client, I want to create the most value for my budget. I’d like to have some level of assurance from my potential partner that my project goals can be met within my budget.

Custom development is ripe with risks. The devil is in the details, and everyone is at the point of maximum ignorance at the start of the project.

Therefore, I don’t expect a development partner to give me a fixed quote or bid on a project. Fixed quotes are more appropriate for pre-developed software purchases or subscriptions. Instead, I’d rather see a development company’s hourly rate or a per-week rate for a given team.

I’ll also want to know if my potential partner has worked on projects of similar complexity (as discussed in Part 3 of this series), if they believe my budget is adequate to achieve my goals, and what processes they use to manage scope and budget. I’ll ask the four questions below to help me evaluate my potential partner’s engagement management process.

1. Given the high-level description of my project, how will you determine if my budget adequately funds my project?

I want to know if my budget is in the ballpark to meet my high-level goals. I know my project will include tradeoffs, and I’ll always have more ideas than budget. But I want to make sure I can fund a minimum level of success that generates value and helps me secure future investment.

I’ll want to see my potential partner apply methods that help me validate my budget. I like to see budget models and validation methods, such as applying historical project data from projects of similar complexity (as discussed above), bottom-up estimation of big chunks of work, and high-level estimation of a team structure and hours over time, based on their experience.

It’s important for me to understand their budgeting methods so I can collaboratively shape the budget target and possibly compare with other budgeting work. Having a budget model gives me much more insight and early management tools than getting a simple budget figure as a quote.

2. What is the structure of the team you would assign to my project? What are roles of the team members? What’s the average weekly cost for the team?

This question helps me understand my potential partner’s assumptions about the capacity and skills required to do my project right. Seeing these details will help me collaboratively tune the capacity and skills needed.

For instance, my potential partner could be under or over-allocating project management (or delivery lead) capacity. Perhaps my potential partner budgeted for only a half-time project manager, but I believe my project needs a full-time person based on the stakeholder communication and alignment work I’d like them to take on. Or perhaps I have the capacity to serve as the project manager on this project, and I’d like to remove those hours from the budget model.

Having a grasp of my potential partner’s average weekly team cost and capacity can help me shift my mental model to thinking of the project engagement and team as an internal team and considering a pro forma profit and loss model. I can extrapolate the monthly expense of the team, consider how much value the team can likely produce over time, and determine when milestones need to be hit.

Instead of thinking of a fixed set of scope for a project budget, I can start to think about having access to a delivery pipeline over time. I’ll look at how I can incrementally produce the most value, which will eventually exceed the cost of the team. This model of thinking provides a timeline and value structure for better scope management, risk management, and prioritization.

3. What is the basis of your billing model?

I want to know the basis of my potential partner’s billing method, as it’s at the core of their budget projections.

Many custom software development companies use an hourly rate or charge by the team week based on the type of team:

  • If my potential partner uses an hourly rate, I’d like to know the rate and whether that rate varies for different team members.
  • If my potential partner invoices by the team week, I’d like to how the underlying team effort is managed and how many hours I’m likely to get from each team member. Being able to calculate an effective hourly rate from a team-based billing model allows me to compare with potential partners who have an hourly billing model.

My personal preference is to have a team that bills by hours worked and has a common, blended rate for all team members. I believe getting charged for actual hours worked is the most fair way for a partner to charge for their time. The blended rate encourages flexibility and doesn’t create any disincentives for the team to fluidly self-manage task assignments. For example, a designer could take on some project management responsibilities without anyone worrying about how slightly different billing rates might impact the weekly cost.

4. What is the process you use to track scope and budget and to help me make tradeoff decisions early, so we can effectively manage the project?

I want my potential partner to have a good process and tools to help me manage the scope to fit my budget and schedule. Seeing examples of tracking and reporting tools and knowing the frequency of progress updates will help me understand the level of granularity I’ll be able to participate in and manage.

For custom software development, I’ll want to see that my potential partner is using Agile methods of some kind and that I’ll be able to participate in sprint planning and review sessions if needed. I’ll want to see status reports that identify risks, progress, and extrapolations for the future. I’ll want to see that tradeoff decisions will be detected early by the team and that the team is capable of bringing me recommendations when tradeoff decisions need to be made.

Next Steps

The questions in this series are helpful for focusing conversations with sales consultants from potential partners. They’re not comprehensive, and I recommend that, once you narrow it down to one or two partners, you do things like:

  • Visit your potential partner’s office and meet some of their teams
  • Call client references
  • Collaboratively develop an engagement budget model and proposal

Please leave comments or contact me with feedback on this series. I’m interested to hear about your experiences applying the questions and if you have ideas for additions or improvements.