There is a similar and common problem in the software development industry - the choice of fixed-price or time and materials. In my experience, fixed-price typically:
1. Involves long lead-times before starting work, while research/investigation is performed in order to quantify the amount of effort required
2. Requires very detailed scope and requirements that are NOT open-ended - it is very rarely "deliver business objective", and usually "deliver X, Y, Z technical items"
3. Turns in to a game of "ah, but that was/was not in this implied term in the specification!"
4. Are either "too cheap to be true" or horrendously expensive due to priced-in risk
5. Doesn't frequently deliver good outcomes for anything remotely complex that isn't planned with such detail and so far in advance it's obsolete by the time of delivery
Time and materials usually works, as:
1. A fair rate for the time of the individuals/teams involved, based on skills/experience required, is established
2. Suppliers are selected based on portfolio, recommendation etc. rather than cheapest price i.e. who underestimated the specification the most
3. Greater flexibility when a change in direction is requested or advised
Now, cars - like software - are complex things. There are tens, sometimes hundreds of potential causes for a particular symptom/fault. For common faults, one could know that the likelihood is that it's 60% cause A, then 20% cause B, then 5% cause C.. then declining returns as you go to cause Z+. A garage could offer fixed priced diagnosis of symptoms and repair of fault based on these likelihoods, as they are reasonably quantifiable, and as regular, the cost to the garage of the extremely difficult to diagnose Z+ cause can be balanced by the 85% of diagnoses ending at C. For rare faults, it's a guess.. a business would need a kind of "repair insurance" policy to mitigate the huge potential financial risk.
The problem comes with the fact that in the parc of 30,000,000 cars in the UK alone, covering tens of thousands of different variants, with thousands of parts each - and in the abscence of any robust data sets giving transparency - it's virtually impossible for all but the most specialised of garages to manage that risk without indemnifying themselves with very high prices. It turns in to a 'socialised' cost of repair. You'd also need to apply such a system universally, or you could pay somebody to diagnose a fault as "really serious", then take it to the garage with fixed price repairs where it's lower than your likely repair cost.. which will push up the price of fixed cost repairs.
1. Involves long lead-times before starting work, while research/investigation is performed in order to quantify the amount of effort required
2. Requires very detailed scope and requirements that are NOT open-ended - it is very rarely "deliver business objective", and usually "deliver X, Y, Z technical items"
3. Turns in to a game of "ah, but that was/was not in this implied term in the specification!"
4. Are either "too cheap to be true" or horrendously expensive due to priced-in risk
5. Doesn't frequently deliver good outcomes for anything remotely complex that isn't planned with such detail and so far in advance it's obsolete by the time of delivery
Time and materials usually works, as:
1. A fair rate for the time of the individuals/teams involved, based on skills/experience required, is established
2. Suppliers are selected based on portfolio, recommendation etc. rather than cheapest price i.e. who underestimated the specification the most
3. Greater flexibility when a change in direction is requested or advised
Now, cars - like software - are complex things. There are tens, sometimes hundreds of potential causes for a particular symptom/fault. For common faults, one could know that the likelihood is that it's 60% cause A, then 20% cause B, then 5% cause C.. then declining returns as you go to cause Z+. A garage could offer fixed priced diagnosis of symptoms and repair of fault based on these likelihoods, as they are reasonably quantifiable, and as regular, the cost to the garage of the extremely difficult to diagnose Z+ cause can be balanced by the 85% of diagnoses ending at C. For rare faults, it's a guess.. a business would need a kind of "repair insurance" policy to mitigate the huge potential financial risk.
The problem comes with the fact that in the parc of 30,000,000 cars in the UK alone, covering tens of thousands of different variants, with thousands of parts each - and in the abscence of any robust data sets giving transparency - it's virtually impossible for all but the most specialised of garages to manage that risk without indemnifying themselves with very high prices. It turns in to a 'socialised' cost of repair. You'd also need to apply such a system universally, or you could pay somebody to diagnose a fault as "really serious", then take it to the garage with fixed price repairs where it's lower than your likely repair cost.. which will push up the price of fixed cost repairs.
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