Our Contractual Engagements at AppSpring

At AppSpring, we understand that each project is unique, and selecting the appropriate contractual framework is crucial for success. We offer various types of contracts to align with our clients’ needs and project specifics. Below, we outline the primary contract types we engage in:

Time and Materials (T&M) Contracts

In T&M contracts, clients pay for the actual time spent by our development team and the materials used. This model offers flexibility, allowing for adjustments as the project evolves. It’s particularly beneficial when project requirements are not fully defined or are expected to change during development.

Example: A startup came to us with an AI-powered dashboard idea but as any start-up, the requirements started to change as the validation of the product progressed. By working under a T&M contract, we were able to say “yes” to the constant change in the priorities, we focused on refining their requirements, develop and deliver without worrying about in progress work. Our client was able to incorporate user feedback along the way no matter what he initially defined for us as requirements. The result was a highly tailored solution that fit their needs perfectly.

Fixed-Price Contracts

Fixed-price contracts involve a predetermined price for a project with clearly defined requirements. While this model provides cost predictability, it is less adaptable to changes. We typically recommend fixed-price contracts only when:

  • Requirements are thoroughly documented.
  • Best practices are followed in the requirement specifications.
  • Dependencies, such as design mockups (e.g., Figma designs), are resolved in advance.

It’s important to note that fixed-price contracts often come at a higher cost to account for the risk of unforeseen requirements. Additionally, managing scope changes can be time-consuming, potentially delaying the project and impacting the client relationship.

Example: A logistics company required a custom mobile app with pre-defined features and a strict deadline. Since they provided well-structured documentation and finalized UI/UX designs, we agreed on a fixed-price contract. However, when they later requested additional functionalities that were missed during the initial definition, we had to go through a formal scope change management, which was time consuming and delayed the project. Not every functionality was subject to an exchange as the client needed most of the things, so the discussions about having to add more cost and time generated a lot of friction. During the development one of our developers discovered the integration to the 3PL system was going to take more time and effort than estimated as the 3PL system got updated to a new version with Exposing a more powerful but complex API. When we tried to explain to the client, the client was not willing to cover the additional cost and given the contract doesn’t included the version of the 3PL we committed to integrate to, we had to assume this extra effort, with a great feeling of unfairness. This is why we usually recommend a more flexible model.

Capped Time and Materials (T&M) Contracts

At AppSpring, we prefer capped T&M contracts, which combine the flexibility of T&M with a maximum budget limit. The key difference between capped T&M and pure T&M is that capped T&M includes a prior effort estimation. This means that before starting, we provide a budget estimate, and we commit to notifying the client if we detect significant deviations.

When a deviation occurs, the development work is paused, and we discuss with the client how to adjust the project scope or budget before continuing. This ensures financial control while keeping the project adaptable to changes.

Mandatory Weekly Budget Review Meetings

To maintain transparency, AppSpring holds a weekly meeting with each client to present the budget consumption status. This allows for proactive decision-making and ensures that clients remain informed about project costs.

Example: We worked with a fintech startup under a capped T&M model. Initially, the estimated budget was set for a six-month development cycle. However, during the third month, a new compliance requirement emerged, significantly increasing development effort. Thanks to our process, we flagged the deviation early, paused development, and discussed alternatives with the client. This allowed us to adjust priorities and stay within budget.

Comparison of Contract Types

Contract Type Flexibility Cost Predictability Risk Management Client Involvement
Time and Materials High Variable Shared between client and developer Ongoing collaboration
Fixed-Price Low High Primarily on developer Minimal, except for scope changes
Capped Time and Materials Moderate Moderate Balanced Regular involvement with budget reviews

Why We Favor Capped Time and Materials Contracts

At AppSpring, we believe that every hour spent by our development team adds value. Capped T&M allows us to maintain flexibility while ensuring that clients stay in control of their budget.

Unlike fixed-price contracts, which can become rigid and slow down progress due to scope change negotiations, capped T&M ensures that the project moves forward while staying within financial limits. Regular budget reviews also create a structured approach to cost management.

At AppSpring, we are committed to building strong, collaborative relationships with our clients. By choosing the right contractual framework, we can work together to achieve your project goals efficiently and effectively.