How not to drain your entire budget if you order development?

In IT, the issue of effectively managing a project development budget is not the least ...
In IT, the issue of effective project development budget management is not the least important. Incorrect resource allocation can lead to serious financial risks and significant losses. Today we will look at how to avoid common mistakes and optimize development project costs.

Budget planning

The first step to success is proper budget planning. It is necessary to take into account not only the immediate costs of development, but also possible unforeseen expenses. This will help to avoid situations where the project stops due to lack of funding. We recommend that you make a budget with a certain reserve to be able to react flexibly to changes in the development process.

Clear development planning

When planning the development of your own product, you need to be clear about what you want to get in terms of results. When you get an estimate at the first dive into the product, it's important to realize that this is a preliminary estimate, and in the process, the cost may vary as nuances will start to emerge that weren't obvious when you were introduced to the idea. In this case, you should accept this truth and be able to work with it To do this, you need to stay in touch with your team and always update your forecasts.

Working conditions

It is important to determine the terms and conditions of working with the contractor in advance. Most often, many studios work according to this format: 1. Develop the terms of reference 2. estimate the cost of development 3. Sign a contract with a fixed amount of payment Usually with 50% upfront payment before development starts and with subsequent payment after project delivery. At first glance it looks simple enough, but this format may not be suitable for development from scratch. After all, not every customer can correctly write their TOR.

Development of TOR

A high-quality technical specification is certainly an important part of development. After all, only with it, you will be able to convey your business needs to specialists who will translate them into code language. But the disadvantage of working with TOR is that during the development, it can not be supplemented and make any adjustments. After all, it will cost you money and delay the process of creating the product.

Project work

The cost of your project may change during development. But the amount in the contract will remain the same. To protect themselves from such risks, developers can either charge you 50% more in advance or sell you additional work later for a higher rate. The main problem is that you can't see how much time the developers are spending and can't make adjustments to the process. Sometimes it's better to forgo complex features so you don't spend all your money and get a finished product. With a flat fee, you don't have to communicate a lot with developers, but it can degrade the quality of the product. You may end up spending more money than in other work formats.

Hourly development

Hourly development - a format of work in which you pay only for the actual hours spent by developers. This approach is convenient because you simply describe your request to the executor, you are estimated how many hours it will approximately come out. After you pay your rate, the project manager demonstrates the result every week. Thanks to this model, you: 1. Gain a complete understanding of the project budget costs 2. You see how much time and effort goes into the work and can make product decisions based on that. 3. you can easily change requirements without having to make adjustments to the ToR. 4. you track deadlines by observing changes in team performance It's important to remember, hourly development requires active participation from both the implementer and the customer.

Conclusion

To conclude this article, we would like to share our opinion on what would be best: 1. To work under the following conditions hourly development. 2. Continuously participate in the process. 3. Request reports on time and effort expended. 4. Request updated cost estimates as the work progresses. 5. Be prepared to make changes and not be limited to the statement of work. 6. Avoid working with contractors if there is no trust. Also friends, if you want to realize your product without extra cost, you can contact us for a with a free consultation. We are always ready to help!

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