How does a fixed-fee operations review work?

What does the client actually get?

Three deliverables, named in the engagement letter. A current-state process map of the flow under review. A prioritised list of constraints drawn from that map. An improvement plan, presented to the person who commissioned the work.

In the review I am running now, a twelve-week engagement with Halvard Logistics across two regional depots, the letter names exactly those three, with the plan presented to the operations director and covering ninety days.

How is a fixed fee calculated?

From an estimated day count plus a fifteen percent contingency. The day count comes from the scope: how many flows, how many sites, how many shifts to observe, how many interviews. The contingency covers the ordinary surprises of floor work without turning every one of them into a conversation about money.

The number on the signed cover sheet is then the fee. It does not move because a day ran long. It moves only if the scope changes, and a scope change is a written change request with its own fee.

How does this differ from day-rate work?

Day-rate work is charged by the day from the current rate sheet, with half days at sixty percent of the day rate. It suits short pieces where the scope is not yet clear. A fixed fee suits a review with a defined flow and a defined set of deliverables, because the client knows the price and I carry the risk of the estimate.

When is the fee invoiced?

In milestones named in the letter. For the current review that is three parts: on signature, at the mid-point review, and on acceptance of the plan. The deposit on signature is a real deposit; at Halvard it was raised with finance on signature day. The mid-point invoice goes to the depot cost centre rather than head office, because that is what the client asked for at the kickoff and it is written in the notes.

An invoice is issued when the milestone in the letter is met, not before. A meeting note recording that a milestone is close is not the milestone.

What is in scope and what is not?

The letter says. For the Halvard review the scope is receiving, put-away and outbound staging, and the letter states explicitly that warehouse management software selection is out of scope. Any request in that direction is a written change request.

That line exists because the question always comes. It came at the kickoff: the director asked whether the review could also recommend a warehouse system. I pointed to the section of the letter and offered a separate written scope if they want one. Whether they take that up is their decision, and the review proceeds either way.

What else does the letter settle?

• Payment terms for the engagement, which may differ from my standard terms and, where they do, govern that engagement only.
• Ending the engagement: either party may end it with ten working days' notice, with work to that date invoiced pro rata.
• Confidentiality: findings and depot data stay confidential and are never reused in another client's material without written permission.

How do I keep a fixed fee from going wrong?

By keeping the scope in writing, the measures separate and the next step clear. The scope is the letter. The measures are the three clocks of the map. The next step is always written at the end of a meeting, with a date: after the Halvard kickoff it was to send the interview schedule and the data request list within two days.

A fixed fee is a promise about price. The letter is what makes that promise keepable.

Q&A

The questions clients ask most about fixed-fee reviews are answered below.

Last updated 1 October 2026.