Warning geeks – I will use my accounting degree for something more than a beer coaster in this post.
Warning business folks – I will use my technical jargon and humor to belittle your craft.

No 10-K statements were harmed during the creation of this post

As a software consultant, you are a:

  • COG to the company your are employed by (as a consultant you are the inventory)
  • A variable cost to the company that hires your company (your consultant fees come out of OpeX)
  • A fixed cost if you are a W-2’d employee or a variable cost if 1099’d to the company that employs you (yes I know you can be a variable cost, W2’d employee but for the sake of argument, let’s keep it simple)
  • Included as a whole on a project that has been allocated in part or whole as CapEx

What does all this mean?  Your project most likely has been pre-assigned dollars that come out of operating revenue with no actual data on how much with really cost to complete.  Huh?  Dramatic pause…

Here is the way most projects get allocated money:

  • Year 1 – We made 100 dollars last year (Revenue) of that money, 10% will go to capital expense next year ($10).  Managers, bring your project estimates. 
  • Manager 1: We are building a new intranet portal.  How much will it cost?  Our last one 5 years ago cost around $3 and most of what we built for the last 5 years should be out of the box now, so I’ve read.  That means that this project should cost about a $1.50 (pronounced buck-fiddy), I think. 
  • CxO: If we divide the budget among you, you will use around 15% (1.50/10) of the overall budget.  That’s too high for your group.  You get 10% (1$).
  • Year 2 – Bring in some vendors to bid on this project. 
  • Manger 1: Mr.. Vendor, how much will this cost me. 
  • Vendor says (say it with me..)  about a $1.50.

Let the dilemma begin.  How do we deliver a $1.50 project with $1?  Here is where the variable, fixed costs and project triangle come in. 

  1. I can hire a bunch of different people at different rates and make up the difference
  2. I can augment my staff with the vendor staff (mix fixed and variable costs since the fixed costs are already paid for) .
  3. Reduce my …..dramatic pause

Let’s go back to the roadmap.  This contains, where are going (vision), how are going to get there (tasks) and what we want (requirements).  The vendors add how much it will cost to deliver on your requirements in the timeframe you are looking for (cost for vendors is people-rate * project-time).  This is where the infamous PM Timetable comes into play.  Scope, cost, schedule and quality. 

Remember however that the cost is already fixed ($1).  And the schedule is usually fixed (we gave an estimate of how long so we can come up with an estimate on how much to ask for). So what’s left?  Can you select the correct answer?

  1. Scope
  2. Quality
  3. Both
  4. None of the above.  I should be able to achieve everything I want with high quality, on time and under budget

The CORRECT answer is 1.  The most common answer is 4.  The result is 2.  Ok, Izzy, wrap it up.

Some funny quotes heard on my teams:

    • $50 if I do it, $100 if you help (quality)
    • How do I fit 10 LB of poo in a 5 lb bag? (Scope)
    • I can do it fast, I can do it cheap, I can do it right.  Pick 2. (All the above)

As software consultants, we are at a distinct disadvantage from the beginning, you are a variable cost which means that at any time, you’re services may no longer be needed, you must deliver a project for less than what it would normally take, you are not able use your regular circle of trusted Winston Wolfe’s AND you may have to work harder along the way.  I love this job!


Dear software people,

There will never be enough time, money or resources to complete your job; deal with it.


The man.