Time & Material considered harmful, the drive perspective

In Lean software development, the two authors described several contracts including time & material contract. Here’s a brief summary about the pros and cons of t&m contract:

• Deal with uncertainty and complexity better than fixed-price contract, but it simply shifts the risk from vendor to consumer.
• Encourage self-serving behavior instead of efficiency, on the downside from a vendor perspective.
• Encourage more involvement of customer.

Basically it seems that it benefits vendors more than customers. But it does have some negative impact on the working-level people in the vendor organization, from the drive/motivation perspective:

• It hurts the autonomy. Now there’s an equation between your working time and the money you made for company. It’s very hard for the company to enable the 20% personal time policy like Google does, if it’s not impossible.
• It hurts the purpose. Now there’s an equation between the number of people in a project and the money it made for the company. It shifts the purpose from focusing on the highest priority things, limiting WIP to finding some work to improve the utilization, whether it’s important or not at the moment.