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My friend Nick Malik recently posted about programming, contracting and pay.

There's a book here somewhere, but sadly it has no audience, and therefore not worth writing. 

Programmers seem to have a genetic defect when it comes to understanding the relationship between their efforts and their pay.  It's not going to happen, they don't want to, and you can't make me. 

Personally, I think that it's a crime that "From Serf to Surfer" is out of print.  It was one of the best consulting "pull yourself up by the boot-strap" books I've ever read.  The advice is relevant to ANY consultant in ANY field.

Programmers seem to understand that "my work is worth $x.xx an hour" but they do not understand the WHY behind it. 

 

 

Here's a quick little story problem to test your job worth intelligence.

 

Let's imagine that company JKL has a particular job function (FooBar) that has to be done.  That job function will have to be done for at least the next 6 years.  The FooBar job function is so important that there's even a FooBar department.

 

JKL's FooBar department has 100 dedicated people doing the FooBar job.  Every one in that department makes $50K annually. 

 

JKL access to a consulting group which offers a tiger team of 5 expensive programmers, each of whom cost $200K annually, and have track record of completing their projects on time and on budget.

 

The tiger team says that they can, in 1 year, automate the FooBar department such that the department can effectively cut %50 percent of it's staff at the end of the project.  

 

The tiger team has one other condition, on successful completion of the project; each programmer will get an additional $100,000 a year for the next 5 years regardless of their employment status with the consulting company.

 

Assuming that the programmers will be successful, and that JKL stays in business for at least the next 6 years, should the company hire the tiger team, and if so, just how much is this project worth to JKL?

 

Posted on Friday, July 13, 2007 1:06 PM Contracting , Agile Development , Con Livus | Back to top


Comments on this post: Programmers and Capitalism - The $10,000,000 question

# re: Programmers and Capitalism - The $10,000,000 question
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I LOVE this problem. I wonder if many folks who are used to building complex systems can do the very basic math to figure it out. I won't throw in a spoiler. The answer is incredibly obvious.

Of course, in a truly competitive market, the moment one consultant points out this business case to JKL, then JKL will do well to spend some money to figure out the details of this project and put it out for competitive bid. That way, if two different teams both bid, and they both have great track records, and one costs less than the 3.5M quoted by your tiger team, then both JKL and the winning team will benefit.

The marketplace can be brutal. But the numbers can be large. You are right... most people miss this fact.
Left by Nick Malik on Jul 13, 2007 10:27 PM

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