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Engagement — Two Clear Contract Models

Fixed-price contract with milestones for defined development projects, hourly budget for ongoing consulting and tasks of uncertain scope. No personnel leasing.

How an engagement is structured shapes the entire project — from the first conversation through ongoing collaboration to acceptance. Clearly drafted contracts protect both sides: the client from surprises, the contractor from expectations that are not part of the contract.

Two proven contract models are available. Which one fits better depends not on which is cheaper — but on how clearly the project goal can be described at the outset.

Fixed price

1. Fixed-Price Contract (Goal Agreement)

Suitability: Suitable for development projects with a clearly describable result and defined milestones — typically end-to-end developments, hardware designs, FPGA designs, firmware modules with defined functionality.

How it works:

  • Clear goal definition and statement of work upfront
  • For larger projects, breakdown into stages (milestones), each with an agreed partial payment
  • Invoicing after delivery of each milestone (or after delivery of the full result for smaller projects)
  • Payment within the agreed payment term (typically 14 or up to 30 days)
  • Final acceptance and final payment after complete delivery
  • Changes during the project are agreed separately

Advantages for the client:

  • Price guarantee: The total price is fixed before the project starts. No nasty surprises at the end.
  • No risk through advance payment: Payments are only made after the relevant deliverable has been provided.
  • Risk allocation: Effort overruns are borne by the contractor; that is the essence of a fixed-price contract.
  • Firm delivery commitment: What is delivered is in the specification. Disputes about ‘not what I meant’ are shifted to the upfront clarification stage.
  • Milestone safety: You only pay for actually accepted work results.

What you as the client must provide:

  • A sufficiently clear task definition at project start
  • Timely acceptance of milestones (typically within 5-10 working days)
  • Provision of necessary background information (existing interfaces, technical documentation, access to target systems)
  • Punctual payment of invoices within the agreed payment term
Hourly budget

2. Hourly Budget

Suitability: Suitable for ongoing support, consulting, code reviews, analysis tasks, and for projects whose scope is hard to estimate at the start — exploratory work, bug-hunting in someone else's code, analysis of inherited software.

How it works:

  • Agreement of an hourly budget as the maximum framework for the engagement
  • Billing only for hours actually worked
  • Monthly invoicing with activity records
  • Payment term 14 or up to 30 days from receipt of invoice
  • No advance purchase of the budget — costs only arise for hours actually worked
  • Top-up of the budget possible when it becomes clear that more work is needed

Advantages for the client:

  • No risk through advance payment: You pay for work performed, after it has been performed
  • Flexibility: You pay exactly for the work performed, no more and no less
  • Low entry barrier: Even small engagements are worthwhile because no extensive specification is needed
  • Quick response: Short-notice requests can be handled within the agreed framework directly, without renegotiation
  • Transparency: Activity records make every hour traceable

What you as the client must provide:

  • Clear prioritisation of which task comes next
  • Provision of the information needed for each task
  • Acceptance that the exact effort per task can only be roughly estimated upfront
  • Punctual payment of monthly invoices within the payment term

Which Model Fits Your Project?

SituationRecommended Model
End-to-end development with clear specificationFixed-price contract
Hardware or FPGA design with defined requirementsFixed-price contract
Bug analysis or code takeover with unclear scopeHourly budget
Ongoing consulting over several monthsHourly budget
Support of an external project with selective inputHourly budget
Fixed-price requirement from internal cost centreFixed-price contract

When in doubt, I recommend an hourly budget for the first weeks — once requirements are clear enough, the engagement can be converted to a fixed-price contract. This transition keeps the entry point low-risk.

Project Management in the Contract Model

For end-to-end developments, project management is included in the fixed-price contract — requirements specification, architecture, milestone planning, reviews and acceptance documentation are part of the delivery scope. If project management is requested solely to accompany an existing client team, this is preferably handled through fixed prices per deliverable: requirements specification, architecture document, trace matrix, FMEA table, and so on. Hourly budgets are possible, but are better suited to ongoing technical accompaniment than to clearly delineated documentation deliveries.

What Is Not Offered: Personnel Leasing

Status: explicitly excluded.

Personnel leasing (Arbeitnehmerueberlassung, temporary staffing) is explicitly not offered. This follows from the company structure as an independent consultant with own company — the two contract models above cover all common project constellations.

In practice this means:

This distinction is not just a formal question — it protects you as the client from possible social-security consequences that can arise with disguised personnel leasing.

Initial Consultation and Non-Binding Project Assessment

Every engagement begins with an initial consultation in which the project is briefly discussed. On this basis, a rough effort estimate emerges along with a recommendation for the contract model. The initial consultation is free and non-binding — even if no engagement results in the end. NDA-readiness for confidential projects is a matter of course.

A typical initial consultation lasts 30-60 minutes and takes place by phone or video conference. Subsequent project work also takes place predominantly remotely — this lowers costs and allows for a focused way of working. To prepare the initial consultation, a brief email with project keywords is sufficient.

General Terms and Conditions

The General Terms and Conditions apply to all engagements. They govern liability, warranty, confidentiality, contract duration and special cases such as early termination. The T&C are drafted to be directly usable for typical embedded projects; deviating agreements are possible on a case-by-case basis and are negotiated separately.

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