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Consider this, a crucial element of business is risk management. People and companies who don't wish to manage a particular risk will choose to outsource it. For example, by paying an insurance company $x per year, I can be pretty confident that my legal liabilities for my [car, house, etc] won't exceed a certain amount per year. In the case of certain projects, companies who are looking to reduce their risk look for fixed-price contracts. In a fixed-price contract, much of the risk of the project is on the vendor's side. So the vendor who offers a fixed-price contract has to be very confident, that they have done similar projects many times before, are very familiar with the costs and risks, and have reliable paperwork, processes, and people who mitigate all the risk factors on a daily basis. If the vendor manages the risk well, and successfully implements the project, they can make a good profit. When you as a vendor offer a "time and materials" contract, or hourly contract, you have much less risk. The hiring company is taking all the risks, that the project scope is well defined, that the people and processes work properly, and that the work is performed efficiently. So the question really goes back to you, do you have project types where you have lots of experience, and can confidently offer a fixed bid? If yes, put together a very solid proposal, with a tight SoW and very detailed contract terms. In the course of the project, manage the risk daily, and raise a red flag quickly in case of problems. If not, avoid the risk, and stay on a time and materials basis. |