Cost of IT projects
In every creative work, the following factors influence the quality product or service:
- the time we spend on it,
- the money the customer is willing to pay,
- and the quality that we can deliver, finally giving the product.
These three elements are interrelated and doing something quickly, cheap and well seems impossible. Imagine the vault of the Sistine Chapel, which would have been painted not in four years, but for example in six months. It would rather not be as spectacular as it is at the moment.
The same applies to other projects and works, including those in the field of IT.
There is such a triangle
The triangle I want to tell you about is not a pyramid from Egypt, but a triangle of project creation (let’s take it as our working title).
According to this scheme, you can not get the equation such as cheap + good + fast = successful product. Let’s take a look: choosing two of three features, we get a product made cheaply and well, but not quickly; cheap and fast, but not good and good and fast, but never cheap.
By accident, I found a video that perfectly shows how creative work depends on time.
It is known that drawing is not an application code, but it does not matter much. Baking also requires the right ingredients and time to prepare it. From my own experience I know that baking a good cheesecake requires about 9 euro to be spent on products, then 30-40 minutes should be spent on preparing a “cake”, then 1.5 hours on baking in a water bath, adding time for cooling, etc. Thanks to this cheesecake is high, fluffy and certainly tasty. Shortening the cooling time can lead to the dough falling. Limiting the budget for the products will make it lower quality, and too little time will be spent on troweling cheese and other ingredients will lead to lumps in the mass. Simple, right?
The situation with IT implementations is very similar. A developer’s job is a profession that also relies on these three elements: time, budget and quality. There are, therefore, low-quality implementations or ones that are good, but the budget was increased or ones that needed more time.
Very interesting statistics are given by McKinsey and the University of OxfordThey refer to IT projects and their “burnout”.
What does this mean by this concept? Among other things, the fact that the duration of the project will be prolonged or its costs will increase significantly, or the quality of implementation and its benefits will be reduced.
In the case of budgets, they increased by 66%, the time needed to prepare a project – by 33%, and the benefits decreased by 17%. In addition, in very large IT projects with a budget of more than USD 15 million, each additional year spent on implementation increased costs by 15%. Exceeding the budget by 200% usually ends with the collapse of the project.
Incorrect estimation of project costs
There is one more thing, even if the estimated time for IT projects, that we give to customers would be multiplied by two since the beginning, projects could not be completed on time. The problem is not too short times but completely wrong assumptions during the valuation. Simply, each project is different and to value it well and to estimate its time, we must have a lot of information, which sometimes customers cannot provide us at the first, and sometimes even at later stages of cooperation.
This problem results from two things. First of all – clients do not realize how the work of a software house looks like, and secondly – specialists incorrectly value their and their teams work. Imagine that a new client comes to us and we tell him that writing an application will take us a week and it will cost 5 thousand euro, and the application will be so great that it can be given as an example. The client states that he has only 1500 euro, the application must be ready in 3 days and the most important thing is that it must work.
There is no Golden mean here, and this is frightening, because the customers will insist on a low-quality product that must be delivered to the market, and someone from the development company will sign under it. Many companies, regardless of whether they are from the IT or other industries, simply take another order to have financial liquidity. Harvard Busines Review reports that 1 in 6 projects increases its budget by 200%, and the time needed to complete the order by 70%. Is this incorrect estimation? Whether the contractor is unaware that he will not be able to complete the task within a certain time.
Sometimes we’re just lucky
Do you remember the cheesecake from the beginning of the text? Once I pulled him out of the oven too quickly. It grew slightly weak, but it was still good, though it did not look as impressive as it used to be. Do you associate Cecilia Gimenez? For many of you, this name may say something, but you could just forget because that lady had her 5 minutes of fame a few years ago. It was she who undertook the renovation of the nineteenth-century fresco “Ecce Homo” by Elias Garcia Martinez. In an effort to restore splendor to the painting, Gimenez distorted Christ’s face. After that renovation, the picture was nothing like the original version. What happened later? Somewhere in this story, a comic and slightly abstract theme appeared, and the “artist” was very lucky, because the “masterpiece” was loved by the internauts and tourists, and the town of Borja, where the fresco is located, earns an average of 50,000 euros from the sale of tickets.
Now let’s say: how many of us can say that the project slipped and then succeeded?
IT is a quite specific industry in which specialists are still missing, and projects, are often created from scratch. Hence the amounts that should be paid for their preparation. Many developers take orders well in advance, and finding a good specialist in many cases is nearly a miracle, especially during hot periods in the industry. In Poland, IT specialists not only work for domestic clients but are often contractors and subcontractors for international brands. You have to be prepared for the fact that if we care for specialists, we must “book” the deadline accordingly. Specialists always have queues to their offices. Even if you are going to a good hairdresser, you have to make an appointment in advance and pay the appropriate amount for shaving and clipping.
Let’s implement app quickly
However, if a client comes to us and tells us that he has a certain budget and needs to quickly prepare an application that, for example, will allow people to purchase potatoes “on the weight” with home delivery, we can actually do it quickly. “Quick” means using ready-made solutions available on the network, which may not always match each other, but ultimately the application will work and the cost will not exceed the budget. The cost of the employee’s working time is lower, but a large part of the finances will be redirected to the elements from which we will arrange the entire application. Finally, our application will work, but will we be able to test it? Will we check all its elements? We may not have enough time because we had to prepare it quickly. Remind yourself the video from the beginning of this text.
Let’s make the app cheap
Suppose the same potato customer does not have a large budget but insists that the application must be implemented. What happens then? Probably it will be dropped at the end of the queue of all projects, it will have a low priority of implementation, and the person who will be assigned to it is a junior developer who will deal with the project in a spare time after completing other tasks. This means that the order will be executed, but the waiting time for the final result can be very long. When I write this text, the following entry appears on the SEO group, which is an ideal summary of this paragraph.
I will show you one approach. Client: Why this project is so expensive? I’ll explain, the project is being made in order to achieve a goal. What purpose? Getting a result? Getting the best result (“HighScore”)? To get the best result, what needs to be done? You have to work with the best people. Specialists value themselves. Experts rule the market. And here is the answer. Why so expensive
Let’s do the job well
And here we are getting to the point. Creating a good project is the sum of all three elements: the price, time and quality that we want to achieve. Deciding to make an application to sell potatoes online, which is to be of the highest quality, you have to take into account many important factors, including to whom would it be targeted, what functionalities must be. You also need to think about UX and choose the right layout. You can not forget about the payment integration and many other important elements, such as the environment in which it is to operate (iOS, Android, or maybe something else). Thanks to good planning, we can avoid the most common mistakes and unnecessary costs. The mentioned report by McKinsey and the University of Oxford says that 45% of projects encounter the following problems:
- setting unclear goals,
- unrealistic project deadline,
- the complexity of the project,
- no control over the project,
- unforeseen events.
By opting for comprehensive implementation by the developer, according to the optimal cooperation rules, customers receive more than just a product. There is something here that can be called a supreme service or perfect hospitality. The project manager keeps the care of the project, the client becomes part of the team, there is time to conduct tests and analyzes before the product enters the market. Here there is no place for the rush, half-measures, for ill-considered activities. The triangle mentioned does not apply here, because each side knows what its expectations and obligations are. This is how the best projects are created.
In any work, it is important that both sides respect each other. Cooperation is a kind of partnership and establishing relationships that should be long-term. The customer expecting high quality must be aware of the fact that the price increases with it. And the contractor should estimate the time and budget so that there will not be awkward situations in which we will have to convince the client that the project is already completed, we only need two weeks and a few additional thousands of euros.