Stroll through your local Ford dealership and look at the rows of F150’s, America’s most produced vehicle. Ford sold 820,799 in 2016.
Find two that are EXACTLY alike. I mean same EVERYTHING. Find two so alike the invoices are identical. Betcha can’t.
Same thing is true of industrial add-ons like the SCADA systems we design, assemble, install, configure and commission. We put them on oil and gas wells that many claim are all alike. But, we’ve never seen two wells exactly alike.
Yet we constantly hear there should be a fixed and firm price for every well we complete. After all they are all the same. Not quite.
First off there’s distances into the oil field. One well is 1 mile off the hard stand road, the next is 15 miles. That alone makes the travel time so different, there cannot be a single price reasonable for all. That is unless the one price fits all amount is based upon the furthest distance.
Forget the different layouts of well, tanks, pipes, walkways, gensets and compressors. Each site has different wire ways and tubing paths – different lengths, bends, overs and unders.
Then there’s the workflow with the various techs doing the installations of various components. Some work simply gets in the way of others. One day it’s a clear space to work in. The next day it’s not.
I guess the smart move is to figure about the absolute furthest site, with the most convoluted layout and the least coordinated workflow. We might calculate the highest possible cost and price the standard fixed price one size fits all amount that covers all contingencies.
That’s a much bigger number than managing the project, identifying issues along the way, correcting situations before they become problems and charging a fair rate for time and material.
Same thing works for Ford. Read the invoice details. You pay for what you get in that particular truck. Seems to work for hundreds of thousands of American truck buyers.