Imagine a CRM consulting project with inadequately specified requirements, no clear internal project manager, and ill-defined success criteria. \n\nYour consultant bids it on a time and materials (T&M) basis. You're in a rush, no time for a detailed RFP \u2014 you know the consultant can \n\ndo the job, but you need a budgetary number to get approval. We've all been through this drill: somebody brilliant suggests that this has to be fixed \n\nprice, it'll be easier to get project approval and manage to conclusion that way. You know, just like it would be when buying servers.[ For timely data center news and expert advice on data center strategy, see CIO.com's Data Center Drilldown section. ]But you're not buying servers: you're buying services. While 80% of CRM projects are formulaic and could be bid as a "standard project," \n\nthe other 80% of the project work is not only a one-off, but an unknown. Nobody actually knows the requirements, or the ramifications of \n\n"something simple," or the shape of your data, or the tricky parts of external interfaces. You may think you're signing up for a three-hour tour, but \n\nyou're on the way to Gilligan's Island.What if Fixed Price is a Lose-Lose deal?While fixed price projects are easy to measure, the simplistic calendar-and-budget approach misses the point. Will the project result in any \n\nvalue to the business? Did it satisfy the letter of the requirements without solving any real problems? Let's look at this a little deeper.You don't want to pay too much, so you get competitive bids. But all consultant have a powerful incentive to bid too high: they need the \n\nwiggle room to manage the risk of scope creep, weak project management, and ambiguous success criteria. This is particularly endemic in CRM \n\nprojects that have to satisfy right-brained types in Sales and Marketing. Look at it from the consultants' economic perspective: a fixed price \n\nproject must be more profitable to compensate for the extra risk. Listen to Alan Weiss, the dean of high-profit consultancies: he insists that his \n\nfollowers always bid fixed price because that's the only way to make real money. Only fixed price lets vendors hide costs and margins.Let's say you get lucky. Your consultant made a low fixed price bid. You win...except you don't. The consultants will be spending all their time \n\nduring the project trying to figure out how to deliver as little as possible and develop some engineering change orders (ECOs) or other tricks to get \n\nyou to pay more on their money-losing bid.Now let's say the consultant is a saint. They don't try to upsell you, and they eat the losses on the project. What happens next? They lose \n\ntheir talent. And no, those people won't come to work for you. So all the institutional knowledge they brought and the business process expertise \n\nthey developed for you on the project is gone. You get to pay for the learning curve all over again.What do you think the chances are that the consultant's bid is within 10% of the effort required to make your team happy? Or that you had the \n\nforesight to tell the consultant at least 90% of your actual requirements before the statement of work? And what about the rubber yardstick of \n\nsatisfying your users? Do you really think you can do that consistently, even when your own staff hasn't even analyzed your database before getting \n\nthe bid?Fixed Price Discovery, T&M TasksA common solution for these issues is to have the discovery and detailed requirements setting phase of the engagement be fixed price (perhaps \n\n10% of the expected project value), with the actual implementation tasks as T&M. Even if the follow-on tasks are done as fixed price, this is a \n\ngood step forward in containing risk on both sides of the table.This approach provides incentives for both the consultant and the internal project manager to manage scope creep, make sensible tradeoffs, \n\nand apply some "value engineering." But there's still the issue of the unknown: the subtle data corruption or the API glitch or the political subterfuge \n\ncoming from the Sales team (who \u2014 for reasons that are never clear \u2014 subtly oppose the project). In CRM projects of any size, \n\nthese unknowns and unpleasant surprises can account for 25% of the effort.Still think your team's initial task estimation is within 10% of the optimal outcome (where the users are actually satisfied, but without unneeded \n\nbells and whistles)?There's an old adage in politics, "If you can get the other side working on the wrong question, it doesn't matter what answer they come up \n\nwith." Maybe "how do I get it done at for $X" is asking the wrong question. All too often, the word "it" isn't tightly defined, guaranteeing a \n\nsuboptimal answer. And the unspoken issue is trust and tight management.Agile Fixed Price?You may not practice Agile in your organization. Fine. But know that CRM system deployments are best done in this incremental, \n\nuser-centered style. Salesforce.com and SugarCRM even build their products that way. If an incremental deployment style is the right way to do CRM, how does that fit with a fixed price project? Agile projects do have fixed \n\nbudgets and schedules \u2014 in fact, proper Agile projects have a better record of meeting those targets than conventional IT projects do. But \n\nAgile projects dont have a pre-determined set of features for any specific delivery. The requirement "cards" and "stories" are continuously \n\nevaluated and re-prioritized through the life of the project. Why? Because the business doesn't really know what's going to be valuable until it sees \n\nit, or even uses it for a while. In a perverse way, Agile is an ideal fit for CRM work precisely because the details and ramifications of your \n\nrequirements are seldom known until the project is underway.So an Agile project would have fixed price and a time-boxed schedule, but a variable set of deliverables. You get the most valuable \n\ndeliverables that could be produced for a given budget, but you don't get a fixed SOW.Making Agile work for consulting engagements will require the same project management skills and attitude adjustment that it does for internal \n\nprojects. But most consultants are living the Agile lifestyle already \u2014 the authors of the Agile Manifesto were consultants. So maybe the \n\nright question to be asking here isn't "how do we get it for $X?" but "given our fixed resources, how do we get the business payback from CRM in \n\nthe fastest way?"David Taber is the author of the new Prentice Hall book, "Salesforce.com Secrets of Success" and is the CEO of SalesLogistix, a certified Salesforce.com consultancy focused on business process improvement through use of CRM \n\nsystems. SalesLogistix clients are in North America, Europe, Israel, and India, and David has over 25 years experience in high tech, including 10 \n\nyears at the VP level or above. Follow everything from CIO.com on Twitter @CIOonline.