There are various types of contractual relationship regarding how the work is priced and paid for.
Predetermined fixed amount to deliver the work regardless of manpower effort actually used or costs of any services or materials. Requires a precise defiition of the requirements upfront. If the client doesn not have a suitablydetailed set of documented requirements or there are areas of high risk the supplier could do an initial piece of work to document the requirements and understand level of risk before providing a quotation for the main project.
Sometimes referred to as cost plus. The supplier records amount of effort spent on the project (typically through timesheets), and tracks all expenses incurred for materials and services and then invoices the client at the rate that was agreed at the start of the project. ny risks that result in time overrun or extra effort are passed to the client. Does not need all requirements to be defined at the start of the project, and most suitable for agile methodology projects.
The client wants a set number of staff for typically a long period of time to perform tasks. Tasks and work don't have to be defined at the start of the engagement, typically the types of work and task are known so that appropriate skilled staff can be provided by the supplier.
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