VDD vs Time & Materials
Time & Materials pays for hours spent. VDD pays for Units delivered and independently verified. When AI shortens the hours, hourly billing moves the gain away from the team. VDD keeps the price tied to the result.
At a glance
Dimension
VDD
Time & Materials
What you pay for
A verified Delivery Unit
An hour of a person's time
Price basis
Bricks × Base Unit Rate for their category
Hourly rate × hours logged
Known before work starts
Yes, the price of each Unit. Changes are priced as deltas
No, or just a preliminary estimate. Known exactly only after the hours are spent
Incentive when AI speeds up the work
A faster team keeps its margin
A faster team bills less, or has a reason to slow down
Who verifies
An engineer who did not build the Unit
The same team, often implicitly
Forecast
P50/P85 from weekly throughput
Burn rate against budget
What the Customer can inspect
The Bricks and test cases behind every story
Timesheets
Why it changed
Hourly billing made sense while hours were a fair proxy for work. With AI, the same feature can take one team three hours and another eight, and the faster team is paid less for the same result. Customers respond by asking for “AI discounts”, and the cut usually lands on verification, the one part of the work that does not speed up.
VDD prices the result instead. The same verified Unit costs the same, regardless of who builds it or how long it takes.
How the concepts map
Time & Materials
VDD
Hours logged
Bricks delivered
Hourly rate
Base Unit Rate per category
Timesheet
Brick Ledger
Change request
Re-Bricking delta, priced before approval
Monthly invoice for time
Invoice for verified Units
Questions
Can we move away from T&M without breaking current contracts?
Yes. The Playbook rolls VDD out to new Customers first, then to renewals and new phases, then to active contracts at a natural project boundary, never mid-phase.
How much history do we need to calibrate prices?
We recommend 10 to 15 completed projects with 100 or more user stories, with actual revenue (or development cost) known for each project, covering the Brick categories you use. These are recommendations, not hard limits.
With less history, you can still calibrate: mark the rates preliminary and review them after the first 5 to 8 delivered and independently verified Units in each category. A category with no history starts with an override rate, also marked preliminary.