The Mediocracy of Price / Man-day in nearshore engagements
By: Date: February 2, 2018 Categories: articles

You’ve made a choice and decided to partner with an offshore or nearshore development team in Romania, Poland, Russia, or perhaps India, but you still want to understand the costs that come along with produced results. We like to refer to this as your “Software Output vs. Man-day Costs,” and this provides a correlation between determining the progression of your software’s development and level of output versus the investment to get there.

Unfortunately, finding one solid figure on the maintenance of your software output regarding price per man-day is not always the simplest to calculate. As with many things software related, bugs, coding errors, and other technical difficulties frequently arise which makes it tough to provide man-day cost estimates accurately.

The objective here is getting a total figure by using the man-day billing method. It is not impossible to do, but it does get hard to gauge depending on the complexity of the project. Nearshore software development companies that use man-day billing often find their initial client quotes are almost always off, and in most cases not in a good way.

Does your software development fall in line with your man-day cost? Do you actually want or need the lowest price per man-day? How can you track progress and follow what phase your investment is in at the moment using a man-day pricing model? These are great questions that plague my inbox quite often. While there is no one-all answer that I can tell you, there is, however, other ways of looking at your man-day costs to find out what’s working and what’s not.

Where can I find the Cheapest Price Per Man-Day?

If you are searching this term, then you may already be fishing in the wrong waters. The results that come back will certainly cost you a lot less upfront, as lower man-day rates could lead to a feeling of urgency to get clients work completed as fast as possible. Quick turnovers are great, everyone loves them, and when deadlines can be beat, internal or external clients love them too, but there is a big dark side to how lower man-day costs add up.

As far as my experience and customers tell, most low costing or cheap nearshore / offshore software companies run into one of two problems. Either the productivity at the cheaper rate is compromised, or little progress happens as hours add up or the work is completed so quickly that the final product mimics and screams mediocracy. Or, the same engineer works two man-days per day to make up for the low quoted man-day rate, and none of these man-days is actually a full day.

Can I Measure Man-Day Costs and Software Output?

A quick and simple answer is yes. Your man-day costs can be figured and tied into your software productivity based on a series of story points, notating the level of productivity within certain time constraints or number of hours to measure your actual man-day price, or what you are paying per story point delivered. This approach correlates progression-in-development with time spent or dedicated time to solving problems/bugs within a given man-day.

How can I Track Progress and Follow My Man-Day Costs?

Your man-day price or rate can be calculated when it is associated with certain tasks, allowing progress to be displayed in a temporal arrangement according to the process and the duration spent to complete the process. This is really the only time it is necessary to track man-day costs in terms of productivity. The overall focus is on software output and the level of productivity of your development team. If sprints are being conquered and story points achieved across the board then tracking man-day hours should be the least of concern. Lower man-day rates are great in some circumstances, but the level of productivity and the quality of output should always be the main focus.

Have you had projects where productivity fell below par and wondered why’d that happen?  Send me a message. I’d love to hear from you!

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