HW23: Chapter 22


22.6. Fixed-price contracts, where the contractor bids a fixed price to complete a system development, may be used to move project risk from client to contractor. If anything goes wrong, the contractor has to pay. Suggest how the use of such contracts may increase the likelihood that product risks will arise.

Fixed-price contracts may increase the likelihood of product risk because the contractor will be responsible for any additional cost beyond the amount that they won the bid for and they might forgo some aspects of software engineering in order to deliver a product in budget on time. For example, the contractor might not put as many resources into testing their system if they believe that they will go over budget because, as we’ve read, software projects can easily go over budget, and testing makes up a large part of the budget. This would result in a product that is complete but not tested and therefore prone to more bugs than normal.  

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