Financial Services
IT Software

Situation

Solution

• Application development software category

• Previous development trend was overspending projects by 50%

• Prior development on a time and material basis

• Higher rates from specific ‘branded’ software provider

The client was a global investment bank which needed to develop a financial reporting application to replace a number of legacy systems and to comply with financial reporting regulations.

The project was to be an extension of a previous development. This initial development had been delivered at more than double the original budget and with significant performance issues.

All previous developments were bought on a time and materials basis.

Some of the skill sets required could only be sourced from a particular software provider at rates significantly higher than the ‘normal’ market price.

• Benchmarked project roles

• Skill sets were rationalized as ‘proprietary’ and standard

• Issued a competitive tender for standard skilled developers

• Converted to fixed price contracting

A competitive tender process was put in place including benchmarking project roles and daily charge rates.

The roles within the critical software provider were analyzed and where skill sets were believed to be generic to the market place the chosen supplier was encouraged to obtain these skills via contractors or training of own staff.

A fixed price contract with remuneration and incentives was instituted based on the achievement of agreed deliverables, including functionality, performance and time.

Development activities were moved off-site and offshore.

Benefits

• Project costs were reduced by 50%

• Annual savings were €3.6 million

• Cost avoidance through elimination of overtime and project timeline fees

On a like-for-like basis, this project cost nearly 50% less than the previous year’s budget. This represented a saving of €3.6 million.

Costs of the project were fixed and transferring the risk of non-late delivery to the supplier achieved cost avoidance.

QP Group produced a delivered solution that operated as requested in the timescales required.

This formula for procuring application development software was adopted as best practice for all future acquisitions.

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