Sadly, some organizations don't allow you to follow these common sense suggestions. Many organizations, particularly in government, are required to take the lowest bid even when they know the problems associated with doing so. In a desire for fairness, some organizations also choose to set up walls between themselves and service providers and will not ask them to rebid or justify their bid, thereby robbing themselves of an opportunity to increase their own chance of success.
Although it's possible to remove some of the dysfunction surrounding fixed-everything IT projects, the fact is that they prove to be riskiest approach. There are better options for funding and governing IT projects, but to adopt them your customer needs to understand the options available to them and the important trade-offs that they're making. For detailed discussions behind some of the "outrageous" claims that I've made in this article please follow some of the links provided below.
My May 2011 article, Survey Shows Unethical Behavior Rampant Inside IT Development Teams, summarizes data from the December 2010 DDJ State of the IT Union survey.
For a better understanding of the fundamental problems with a fixed-everything approach to IT projects, read the articles The Dire Consequences of Fixed-Price IT Projects, Is Fixed-Price Software Development Unethical?, and Lies, Great Lies, and Software Development Project Plans.
To understand some of the alternatives available to you, read Strategies for Funding Software Development Projects, which describes several variations on the strategies described above. The article Something's Gotta Give argues for a flexible approach to funding, schedule, and/or scope in other words, an elastic triangle over an iron one. The article Governing Agile Development Teams also provides insight into how to better address the risks which fixed-everything approaches struggle to address.
The articles Questioning the value of Earn Value Management (EVM) on IT projects and The Change Prevention Antipattern describe some of the dysfunctions motivated by a fixed-everything strategy to funding and governing IT projects.
The IBM whitepaper Disciplined Agile Delivery: An Introduction overviews the DAD process framework which has effective governance practices built right into it.
The Surveys Exploring the Current State of Information Technology Practices page links to the results of all the DDJ surveys which I've run over the years.
Scott Ambler is the Chief Methodologist for Agile and Lean at IBM Rational. His blog can be found here.