How to Read, Assess and Judge Software Development Quotations from IT vendors?

[Editorial Notes: How do I hire an IT vendor? This is a very frequent question, a lot of non-geeky entrepreneurs often ask and here is an article which details out the necessary details you should expect from an IT vendor]

If you are a client hiring a vendor IT team for software development, then it is very essential to get a detailed proposal or quotation from the vendor for the proposed application. After getting the detailed proposal, it is equally important to understand the various elements of the proposal so as to make sense of the work needed, the hours estimated and the charges proposed.

These above mentioned two steps will make sure that you are paying *just enough* for the quantum of work needed and not something excessive as per the usual over-estimations made by vendors.

Sometimes vendors would have legitimate estimations of the number of man hours & number of modules needed to develop an application. However, many times, these numbers are overestimated to account for slack, change in requirement, bugs, testing and project management.

The overestimation hurts the pocket of the client as vendors will never return the money even if they actually did take fewer hours than proposed to get the work done.

Here are a few tips on getting a detailed quotation:

  1. The proposal should list all modules needed to make the software.
  2. Modules should ideally be divided into the following categories:
    * project management
    * interface graphic design
    * frontend components
    * controller logic
    * backend components
    * testing
    * resolving bugs
    * documentation
    * demo
    * final deployment.
  3. Each such module should contain list of functionality and features needed. Each such functionality or feature should contain the total man hours proposed by the vendor for doing the task.

Here is an example of a fairly standard list of features for an ‘e-commerce and photo intensive’ online store.

Interface Graphic Design
* Overall  Template design like header, footer and style-sheet for all pages – 8 hours
* Editing of images using photo-shop – 4 hours
* Form elements look and feel – e.g. Buttons/Arrows/Dropdowns/selections etc. – 2 hours
Frontend Design
* User Control flow – Overall navigation – 10 hours
* Data Listing – 2 hours
* Prefetching of large images for faster access – 5 hours
* User login – add/edit/delete users – 8 hours
* Forms for enquiries/submissions/data retrieval – 3 hours
* Client side browser processing for various actions like slideshow, events, generating text etc. – 5 hours
* Payment Gateway incorporation – 15 hours
* Secure Transaction signatures – 12 hours
* Generating reports – 14 hours
Controller Logic
* ORM mapping between backend and frontend – 20 hours
* Calculations or complicated algorithms for sorting data items as per price, quantity etc. – 20 hours

Backend Components
* Database design for storing items, storing prices, storing user accounts – 50 hours
* Data Archival and Manipulation – 12 hours

Project Management –
40 hours
*Design of application SRS (Software Requirement Specifications)
*Design of application DFD (Data Flow Diagrams)
*Design of application engineering architecture
*Monitoring of the overall development


* Browser compatibility of interface across many standard browsers like IE, Mozilla, FF, Opera, Chrome – 3 hours
* Tests for controller logic – 10 hours
* Software QA od database and frontend components – 10 hours
* Design of an intuitive interface – 15 hours
* Mocks and Feedback from engineers and client. – 5 hours

  1. Each module must also contain the technologies proposed by the vendor for software implementation. E.g. Ruby on Rails, PHP, ClearSilver for  templates, MySQL vs. MsSQL etc.
  2. Furthermore, the vendor must attach a detailed Data Flow Diagrams and Engineering Architecture diagram that explains the application control flow.
  3. There should be delivery milestones set in place for each module along with demo dates and final delivery timeline.
  4. The invoice payments must be broken as per delivery milestone and should Not be upfront upon finalization of order.

Understanding the detailed Proposal/Quotation

It is best advised to seek the help of a professional software/IT consultant to understand a vendor’s proposal.

  1. Study your software requirements and make sure that the list of functionality/features mentioned in the modules matches the same. There should not be any extra features. If so, you can get them removed and reduce the total hours of work needed.
  2. Look at the technologies proposed for implementation of the modules and confirm with an IT consultant if these are scalable, viable and practical given your software needs. Outdated and old technologies take longer to develop on and are not dependable in the long run. Switching to newer technologies e.g. switching to ruby on rails from or from PHP will save atleast 20% frontend development time for the client.
  3. Look at the project management hours – The vendors charge for project management Just so that they can fully understand your requirements and make a list of features that you require. This is unnecessary. Save on these.
  4. Show the number of man hours proposed for each feature to a 3rd party unbiased IT consultant – Seek their advice and understand if the time proposed is legitimate for that quanta of work. Very often consultants will give you justification for why the time should be reduced saving you valuable money.
  5. Make sure the vendor covers tests for all modules mentioned in the proposal.
  6. Calculate the price being charged per hour by the vendor and see if it makes sense given your industry and size of business.

Consulting firms and professional IT consultants will often work with you to reduce the vendor’s proposed project management hours + overall man hours by as much as 40%.
This can lead to huge savings.

Most often, consulting firms charge nothing for initial primary consultation. Hence always seek their 3rd party, unbiased advice and benefit from their value addition. 

What’s your opinion?

[Guest article by Ritika Sanghi, ex-Googler who now runs Atlogys Consulting. The article has been reproduced from author’s blog.]

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