Different forms of cooperation models with IT agencies

Project-based vs team-based collaborations

Prior to starting any type of collaboration, a crucial decision lies in determining the scope of responsibility you expect the agency to carry:

• Project-based collaboration – the agency is responsible for successful project execution. Your primary role involves defining project’s success metrics, which might encompass objectives such as creating a presentable website, building a thoroughly tested mobile app, delivering within the agreed timeframe and budget, or even broader business-oriented goals such as user satisfaction rates. 
• Team-based collaboration – the agency is responsible for curating the team, while your responsibility extends to overseeing the team’s performance and execution. The primary task of the agency is to assemble skilled individuals who will be placed directly under your management. 

The following illustration visually represents different angels of collaboration models based on the extent of responsibility. 

Both project-based and team-based collaboration types encompass two distinct models, illustrated in the following diagram and elaborated upon in more detail in the rest of this article.

Fixed-scope model

The fixed-scope (also widely known as fixed-price) model stands out as an effective framework under the project-based collaboration umbrella. This approach, specific for its well-defined scope and predetermined budget, offers predictability and control for clients throughout the project’s lifecycle. We will delve deeper into the details of the fixed-scope model, exploring its benefits, considerations, as well as ideal use cases.

 

Scope & Budget

A fixed-scope model relies on a well-defined scope of work and a pre-established budget. This model hinges on mutual agreement between the agency and the client about the fixed fee for an entire project. The agency bears the responsibility of delivering the project within the estimated budget and timeline. This model helps the client with predictability and financial management. On the other hand, agency often includes buffer in their budget due to higher risk.

 

Dynamics of a fixed-scope model

Within the fixed-scope model, both the agency and the client are involved in defining project prerequisites, milestones, deliverables, and acceptance criteria. The agency then crafts a detailed time and cost estimate based on these specifications. This process is also applicable to the time and material model, with the distinction that, in this case, the agency commits to a budget within a fixed scope. Once consensus is reached, the agency remains responsible for adhering to the predefined scope, budget, and timeline.

 

Applicability and considerations

The fixed-scope model thrives when project requirements are stable, well-defined, and unlikely to change significantly during the development process. It provides the client with a clear understanding of the project’s cost upfront, allowing for more predictive financial planning. 

 

However, this model may not be suitable for projects that require frequent iterations, as changing circumstances often lead to additional expenses and timeline adjustments. Therefore, the fixed-scope model is the best choice for stable projects and budget. Its predictability and cost control mechanisms align well with scenarios where clients want to have upfront financial clarity and are willing to adhere to a fixed project trajectory. Such projects often have smaller scope or are low risk.

Time and material model (T&M)

The time and material model emerges as a versatile framework that accommodates the project dynamics. As organizations navigate an increasingly agile landscape, the time and material model offers a strategic approach, allowing for real-time adjustments and iterative development. This section explores attributes, operational dynamics and use cases for time and material model.

 

Flexibility and adaptability

Similar to the fixed-scope model, the time and material model falls within the realm of project-based collaborations, yet it offers more flexibility and adaptability in comparison to the fixed-scope model. Within this framework, the agency bills the client based on the actual time invested by their experts. This approach is particularly suited for projects with evolving requirements, where multiple changes and refinements are expected. This model places the budgetary risk on the client’s side, while still upholding the agency’s accountability to align with the initial estimates and how much time is actually spent. 

 

Dynamics of a time and material model

In the time and material model, collaboration begins with an initial understanding of the project goals and requirements. The agency assembles a team of experts, and clients are billed for resources and their working hours on an ongoing basis. Each team member’s time allocation is tracked and documented by the agency, ensuring transparency and accountability. This model allows for greater flexibility, as the client can actively participate in the decision-making processes, prioritize tasks, and make adjustments based on real-time feedback from the market. 

 

Applicability and considerations

The time and material model empowers clients to effectively respond to dynamic market conditions, technological advancements, and shifting business needs. While offering more flexibility, it requires active involvement and collaboration from both the client and the agency. Effective communication channels, timely decision-making, and vigilant cost control are essential to harnessing the benefits of this model to the fullest. 

 

Therefore, this model is perfect when projects demand iterative adaptations, enabling clients to navigate changing landscapes with agility, while maintaining granular control over resource allocation and expenditure.

The next image describes the main differences between these two project-based models of cooperation:

Dedicated team model

Dedicated team model emerges as a potent approach to strengthen the partnership between the client and an agency. This model presents an opportunity for organizations to focus on control, expertise and long-term engagements to achieve business objectives. This section unravels the core attributes of a dedicated team model.

 

Long-term commitments with exceptional experts

Under this project-based framework, the agency is responsible for assembling a dedicated team of professionals exclusively aligned with the client’s project needs. This model offers a high degree of control and flexibility to the client, while the agency’s responsibility lies in recruiting and management of the team. 

 

Dynamics of a dedicated team model

In this case, collaboration between the agency and the client takes center stage. The agency works closely with the client to gain an in-depth understanding of their project goals and business objectives. Drawing from these insights, the agency carefully curates a dedicated team of individuals who possess exact skills required for success. This team becomes an extension of the client’s organization, dedicated exclusively to a particular project. The client maintains direct communication and collaboration with the team, making sure that everyone is aligned with the business objectives. The client directly participates in decision-making and task prioritization. 

 

Applicability and considerations

The dedicated team offers greater transparency and control to the client, while also enabling precision, collaboration and focus on specialized expertise. This approach is perfect for complex projects that would benefit from extended partnerships, enhanced control and deeper connection of each team member to actual business objectives. To dive deeper into the dedicated team model, we wrote a separate blog that you can read on the following link.

Team Augmentation

In the IT industry, the team augmentation has gained popularity as a practice where companies hire experts for short-term projects. This enables companies to avoid the hassle and cost of recruiting and training new employees. The necessary paperwork, training, and equipment for the employee are taken care of by the agency. Agencies offering team augmentation services provide a wide selection of skilled employees, making it easier for clients to find the perfect fit for their projects, especially when dealing with complex technologies that require specialized expertise. 

 

Bringing expertise and flexibility

Under the Team Augmentation Model, the agency acts as a talent provider, offering highly skilled professionals who are integrated into the client’s existing team. These professionals work on the project for a specific duration, contributing their expertise and knowledge to achieve project goals. The agency takes care of administrative tasks such as employment contracts, payroll, and benefits for the leased professionals, simplifying the process for the client. This model provides flexibility to the client by enabling them to scale their workforce up or down based on project requirements. It allows companies to access top talent for short-term projects without the long-term commitment and investment associated with hiring full-time employees. 

 

Applicability and considerations

While team augmentation offers distinct advantages, careful considerations are imperative. The model excels when enterprises require specialized skills for short-term projects or when there is a need for quick scaling. Businesses get access to top–tier professionals without long-term commitments.

 

However, potential drawbacks include intermittent commitment levels and higher overhead expenses. To maximize the benefits of team augmentation, effective project scoping, clear communication, and strategic resource management are pivotal. By leveraging this approach, companies could capitalize on exceptional talent while maintaining operational agility.

The next image describes the main differences between these two team-based models of cooperation:

Conclusion

Collaborating with an IT agency opens up numerous possibilities for businesses seeking to leverage technology for their growth. By understanding the different forms of cooperation models, you can align your project or team-building requirements with the most suitable approach. The fixed-scope model and the time and material model are grounded in project stability and flexibility. In parallel, the dedicated team model and team augmentation model emerge as strategic pathways, tailored for specialized skills and resource reinforcements. 

With this knowledge, you are now able to start collaborating with an IT agency with confidence, knowing that you have the tools to choose the right collaboration model that suits your unique business objectives.