Most ERP and operations programmes are still bought by the day. A supplier estimates the effort, the client approves a rate card, and the meter starts running. It is familiar, easy to procure and simple to invoice. It is also the single biggest reason programmes overrun without anyone being clearly accountable.

Time and materials made sense when delivery was slow, manual and hard to predict. Two things have changed. Delivery itself is faster: reusable assets, accelerators and AI-assisted analysis mean that work which once took a team a month can be produced in days. And clients have learned, expensively, that paying for effort does not buy outcomes. When the input is cheaper and the outcome is what matters, a model that prices the input is on borrowed time.

What T&M actually costs the client

The day rate is the visible price. The real costs sit underneath it.

The risk sits with the buyer. Under T&M every estimate is a forecast, and every forecast miss lands on the client's budget. The supplier is paid whether the design is right or wrong, whether the go-live holds or slips. Scope creep, rework and re-planning all generate billable days.

Effort and value drift apart. A team can be fully utilised for months and still leave the business with nothing it can operate. Weekly timesheets tell you who was busy. They do not tell you what was finished, what was accepted or what the business can now do that it could not do before.

Transparency is retrospective. The client learns the true cost after the hours are spent. Steering groups review burn against budget, which is a measure of consumption, not of progress. By the time the numbers look wrong, the money has gone.

The incentives point the wrong way. No supplier sets out to run a programme long, but under T&M there is no commercial reason to finish early, simplify scope or challenge a requirement that adds days. Efficiency is a cost to the supplier and a saving to the client. That is not a partnership.

Decisions get deferred. Because the meter runs regardless, unresolved business decisions do not stop the billing. Design continues around the gap, and the gap becomes rework later. I have written before about what the business must decide before ERP design; T&M quietly removes the pressure to decide at all.

The alternative: Output Delivery Units

An Output Delivery Unit is a defined, verifiable piece of delivery with a fixed price attached. Not a phase, not a headcount, not a number of days: a specific output the business can inspect and accept. A process design signed off by its business owner. A configured and tested order-to-cash flow. A data migration passed against agreed reconciliation criteria. A cutover plan rehearsed and approved. A 30-day discovery that produces a scoped, costed roadmap.

Each unit carries four things:

  1. A definition of done that the business owner, not the supplier, confirms.
  2. Acceptance criteria written before the work starts, in operating terms the business recognises.
  3. A fixed price, so the client knows the cost of the outcome before committing to it.
  4. A named owner on each side, so decisions have a home and a deadline.

A programme becomes a sequence of such units. Some are bought up front, some are released when earlier units are accepted, and some are never needed because an earlier unit showed the business could do without them.

How ODUs shift risk and restore transparency

Risk moves to the party that controls it. The supplier controls how the work is done, so the supplier carries the effort risk. If a unit takes longer than estimated, that is the supplier's margin, not the client's contingency. The client keeps the risks it genuinely owns: making decisions on time, providing data, freeing its people.

Progress becomes visible in advance, not in arrears. The client sees the whole programme as a list of priced units, knows what each one delivers, and can see at any point which are accepted, which are in flight and which are still to be released. That is a very different steering conversation from reviewing burn.

Scope discipline is built in. A change is a new or amended unit with a new price, discussed openly. It cannot leak into the programme as unexplained extra days.

Speed is rewarded. A supplier that delivers a unit in half the estimated time keeps the margin. The client gets the outcome sooner. Both sides now want the same thing, which is the point.

Decisions get made. A unit cannot be accepted until its owner signs it off, so the business decision it depends on has to be taken. The commercial model does the governance work that T&M leaves to good intentions.

Where the model needs care

Fixed price is only as good as the definition behind it. Vague units produce disputes, not certainty. The work of writing acceptance criteria up front is real and it belongs to the business as much as the supplier. Some work is genuinely open-ended: stabilising an operation that is failing, or providing leadership through a period of change, is bought as capacity because the output cannot be specified in advance. The distinction is simple. If you can describe what finished looks like, buy the output. If you cannot, buy the capability, and put a defined output at the end of it as soon as you can.

What to ask your next supplier

The suppliers who can answer those questions are the ones whose delivery has caught up with the times. The model of paying for effort had a long run. Paying for output is what comes next.