Right around the time the dot-com bubble burst, large companies began focusing their technology almost exclusively on cost-cutting initiatives. It makes sense: it was time to reduce the bloat that had been accumulated during the hay-days of the bubble. It was at this time that the Fixed-Fee Fixed-Scope (FFFS) contract became a wildly popular vehicle to control project costs. Companies and vendors would agree up-front to delivering a predefined set of functionality or requirements for a set price. Any future changes to scope would be negotiated and agreed-to (in writing) by both parties. This is the first in a multi-part series on why Fixed-Fee, Fixed Scope projects are bad for customers.

On the surface it appears that the FFFS contract is the perfect solution for any cost-conscious customer — you get the things you want at a price agreed up-front. As an extra bonus, all the project risk is transferred to the Vendor. If the vendor made an error in estimating during the contract phase, the vendor is contractually bound to deliver the agreed-upon requirements even if the effort is greater than originally estimated. Perfect! Also, now buyers can compare bids on a level playing field. If three vendors are bidding on delivering the same set of functionality — the right vendor is the one who comes in at the cheapest price. Perfect!

Perfect?

Maybe not so perfect.

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