If you’ve signed an SI engagement in the last decade, you’ve probably read the same SOW. Hourly rates by seniority. Estimated hours per phase. A total that looks like a budget — but isn’t quite a budget. Six months in, the original number is gone, a change order is being drafted, and someone on your finance team is asking how this happened.
The answer is structural. In a time and materials contract, the vendor’s revenue grows when the project takes longer. Slowness, revisions, and scope creep all show up as additional billable hours. That’s not a moral failing — it’s the math working exactly as designed.
The fix isn’t better project management. The pattern hasn’t shifted in over a decade because the pricing model underneath it hasn’t shifted. Change the unit from hours to outcomes, and the incentives flip entirely.
