The Cost-Speed-Quality triangle

For us timing is absolute (except if the product quality is affected, we really, really will delay shipping; this is a big, f’ing deal, though). We typically overquote costs so that we have some flexibility. And because we’re big spenders we tend to expect our suppliers (including the line builders) to meet our quality requirements at the quote they’ve delivered.

It seems that we’ve got it all covered.

Except that our Tier 1 suppliers know about the third point, so they overquote what we overquote, giving them the flexibility to meet our timing and quality requirements.

In the end, we all succumb to the OP’s first bullet point, except that costs aren’t exponential, just probably more than necessary.

Contract house all want Time & Materials contracts

Clients all want Fixed Price contracts

If forced to deliver a Fixed Price:

Techies work up best guess as to types of workers/hours expected
Techies’ managers take this number and multiply by three
Client Manager (Salesrep) takes manager’s number and multiply by three
If resulting number is > $X million, Corporate Brass is involved and then doubles the quote.
I saw the result of a “Fixed Price Set to Client Budget”: I was sent to retrieve the original contract to see if we were legally required to do “X”
Where “X” was usually a “well, duh, of course we do it”.
That project did not go well. It was “put into Production” not because it worked, but because “Production” status triggered the big payout.

At least the shop didn’t get sued over that one.
They did get sued over the next one.