Pros and cons of Function Points
The fixed-rate contract:
On one hand, the supplier can actually check the product costs and delivery deadlines. But he also assumes the risks of the pre-project estimate even if the final cost ends up to be superior to was initially planned.
On the other hand, the customer will be charged for any changes, which involves less flexibility and potentially higher costs in the end.
The contract based on body shopping:
If “Body shop” is involved, the changes can be easily fitted out. But the risk is assumed by the customer because he has no visibility on the progress of the project in terms of cost and deadlines.
It is not in the subcontractor interest if the project ends too quickly because he charges the client fees.
Contracts based on a price per Function Point:
The Function Points are a standard norm (IS 14143) allowing to measure objectively the quantity of software produced or to be. The customer can compare prices of various suppliers.
The supplier is not disadvantaged when he faces changes or demands of new features. The price changes along with the number of Function Points.
By analogy, Function Points are to software what kilometers are to transport. For example, if you pay a fare, you cannot know the price in advance. On the contrary, if the price depends on kilometers, you can know in advance how much you will pay, which is the best way to optimize the ride.
Unit-based cost models are a flexible solution which allows to prorate the service.