Transparency and trust

Most recently, I returned from a regular working meeting with a respected Customer, at which we had a long and extremely exciting discussion about the necessary costs and, accordingly, the cost of a small subproject. At the meeting there were six people with fairly high grades, developed communication, negotiation skills and extensive experience in arguing their position. The meeting was delayed, the parties were persistent and as a result agreed on a compromise result - the Customer received a discount comparable to the cost of the time spent knocking it out. That is, in financial terms, the result of the meeting is close to zero, the time spent will never be replenished, but at the same time we managed to get closer to completing and transferring the required value to the Customer. And all the way back I wondered - could we solve the problem more efficiently? Could it be possible to save time and resources, our own and the customer, but at the same time achieve the same result? Where is the growth point that will allow you to solve problems faster and spend less?

And here I would like to talk about trust between the Contractor and the Customer. There is a widespread opinion that in conditions of high confidence between the parties, the project team works easier, the projects are more successful, the result for the Customer is greater, and the revenue (profit, etc) of the Contractor is higher.

I began to deliberately reflect on the topic after reading the article respected A. Orlov when I was a student of Stratoplan. In short, the article describes the evolution of trust with increasing transparency. The main task was to build long-term relationships with the Customer and ensure a small but constant work flow. Unlike projects with specific deadlines and results, after which the team disbanded and the next project could be organized after a long time, a scheme with constant orders for the development of the functional was built with one of the Customers. At the same time, the coordination of each order took up to 1 month, during which the functionality was not created, the team stood, the business customer was sad in anticipation. Based on the results of the coordination, the project was launched, the team began its work and, as often happens, the customer began to make changes, which entailed a revision of the conditions, time lag and all the resulting difficult situations. All in all, the perfect candidate for an experiment in trust. The goal of the experiment was defined as reducing costs while maintaining revenue levels.

As recommended in the article, I started by increasing the level of transparency. To do this, all proposed estimates for services were as detailed as possible in terms of a set of tasks, rates are open, results and restrictions are strictly formalized. The second action was the proposal to conclude contracts after the work was completed, taking into account the real costs of the time sheets, plus an analysis of the introduced changes that appeared in the course of the task. The customer did not risk anything, since they agreed that the cost would not be higher than the announced value. Through this exercise, we demonstrated the adequacy of the estimates and the effect of fuzzy staging on the final results. The second plus - the customer was very closely acquainted with the team and the specifics of the work. Already at this stage, I, as the project manager, I got the benefit of reducing the costs of coordination, because the Customer no longer had reasons to analyze the estimates in detail, but there was a real interest in formalizing the task as clearly as possible and here colleagues from IT independently worked with the business customer to clarify the requirements. And we lived in such a scheme for about 9 months, after which it turned out that the costs of the Customer remained at the same level, the team spent 20% more time, while the speed of functional conclusions and customer satisfaction subjectively increased due to the rejection of numerous discussions of CRs and who is to blame for them. The increase in costs was due to an early start and differences in production from the final implementation.

Having discussed the current situation with the Customer (openness - remember?), We came to the hypothesis that if:

  1. Determine the minimum required team size and specific team members
  2. Give the customer the opportunity to prioritize tasks and make changes on their own
  3. Reduce bids by switching to 100% involvement of the minimum necessary team
  4. Give an opportunity to build a team when necessary,

then you can get more functionality for less money, while maintaining the interest and confidence of the Contractor, which makes it possible to quickly increase the volume without long contract procedures. At the same time, I agree - the Customer took upon himself part of the risks, but received more flexibility in the implementation.

At the moment, the approval of estimates has been forgotten, one contract for a year with an easy renewal procedure has been concluded, a team that is stable and fully satisfied with the Customer constantly delivers the result to operation, creating complex and poorly formalized components at the beginning of work. I, as a Contractor, received a constant income in a competitive market with a minimum level of risk and easily predictable profitability. At the same time, 95% of the effort goes to create value instead of dancing around the estimate.

I will try to increase the level of trust with other Customers, see where this leads.