A low day rate does not establish a low-cost outcome.
Choose the payment model around uncertainty
| Model | When it can fit | Buyer control |
|---|---|---|
| Fixed fee | The output and dependencies can be bounded. | Define acceptance, exclusions and change procedure. |
| Time and materials | The work requires discovery or changing priorities. | Manage burn, staffing mix, approvals and a budget boundary. |
| Milestone-based | Useful outputs can be accepted in stages. | Tie payment to clear evidence of completion. |
| Capped discovery then delivery | Uncertainty must be reduced before committing the full project. | Require discovery outputs that can support the next decision. |
A supplier taking responsibility for an outcome may price contingency. A buyer directing every input retains more delivery risk. Choose consciously rather than assuming fixed fee always transfers all risk.
Write the scope around acceptance
For each deliverable, name the content, format, review owner, acceptance criteria and review period. State the buyer inputs and access needed. Define what happens when an assumption fails and how schedule or price changes are approved. Avoid “support as needed” unless its boundaries are clear.
Include knowledge transfer, documentation, work-product rights for counsel to review, and a plan for ending the engagement. A project that creates permanent dependence on the supplier may have a different value than one that builds internal capability.
Compare staffing and productivity assumptions
Request roles, seniority, locations, estimated hours and management effort. Ask whether proposed individuals are committed and what replacement approval applies. Confirm subcontractor responsibilities. A blended rate can conceal a staffing mix that changes after award.
Normalize travel, expenses, tools, overtime and minimum billing increments. Separate optional phases. Test whether a lower fee depends on unrealistic buyer effort or an unusually short review window. Ask for the assumptions that would trigger a change request.
Govern the work while it is happening
- Maintain a deliverable and decision log with named owners.
- Review forecast-to-complete, not only invoices already incurred.
- Approve scope changes before work begins under the new scope.
- Track buyer delays and supplier delays separately.
- Accept deliverables against evidence and record remaining defects.
Sources & context
- UK Government · Risk allocation and pricing ↗Public-sector guidance connecting the party controlling a risk with the pricing and allocation of that risk.
The decision frameworks and illustrative examples are original editorial guidance. Sources support the stated context; they do not endorse this guide.