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Agile contracting a real challenge
Picture source: Flickr.com
Agile contracting a real challenge
• Clients believe user, functional and system
requirements are fully known and
documented in a way that enables
efficient development
• And that’s why many features developed
are never used
• Projects finish out of budget
• And mostly too late
Which implies “waterfall” development
assuming:
1. You have completed a thorough,
efficient design phase, and
2. Requirements won’t change during
the development process
Agile contracting a real challenge
• and over processes
and tools
• over comprehensive
documentation
• over
• over following a plan
Source: Agilemanifesto.org
Scope Budget
Quality
Agile contracting a real challenge
• Time & Material
– Protects the supplier (no risk)
– No protection for the customer (full risk)
• Capped Time & Material
– Fixed agreed budget
– Share savings
– Often variable scope projects
– Supplier expenses paid upfront
– Customer’s risk limited
© Goyello - Confidential 10
• Incremental delivery
– Customer can stop project at any “delivery
moment”, “Money for nothing”
– 20% (or more) of remaining budget for provider
• Cost targeted
– Both parties agree on a realistic final price,
although this is rather difficult
– Savings will be shared
– Over budget both parties pay a penalty
© Goyello - Confidential 11
The proof of the pudding
Client
Call Center
Health facility
Sell insurance
Contracting
Appointment
Visit
Invoicing
• Workshops with end-users
• High level estimation for 10 releases
• Agreed fixed budget with cap, cost targeted
• Every release new contract
• Iterations upfront agreed
• Acceptation criteria “known”upfront
• Satisfaction evaluation (with payment
impact) per iteration/release
• Changes as appendix
• New work, additional budget
Picture source: stock.xchng
• Framework agreement
• Agreement per release
• Fixed budget (per release as well)
• Fixed date
• Flexible approach/scope
Planning Realization Evaluation
iteration
2 week iterations
Agreement
about the
planning
Demo showing
the iteration
result
SKOK provided a
mark for the
iteration
Release
definition
(contract)
Release
Acceptation
protocol
Iteration
agreement
Agile contracting a real challenge
Agile contracting a real challenge
• Software Development: How the Traditional Contract Model Increases
the Risk of Failure, Susan Atkinson and Gabrielle Benefield, 28 May
2013, InfoQ, http://www.infoq.com/articles/contract-model-failure
• An overview of Agile Contracts, Kane Mar, http://scrumology.com/an-
overview-of-agile-contracts/
• Why Traditional “Fixed Bid” Software Projects Usually Fail, Paul
Dittmann, 15 December 2009,
http://pathfindersoftware.com/2009/12/fixed-bid-projects-fail/
• Money for nothing and change for free,
http://jeffsutherland.com/Agile2008MoneyforNothing.pdf
• Money for nothing, https://sites.google.com/a/scrumplop.org/published-
patterns/value-stream-pattern-language/product-backlog/money-for-
nothing
• Change for free, https://sites.google.com/a/scrumplop.org/published-
patterns/value-stream-pattern-language/product-backlog/change-for-
free
• Flexible contract template, http://flexiblecontracts.com/
© Goyello - Confidential 19
Contact details:
@ peter.horsten@goyello.com
 http://goyello.com
 http://blog.goyello.com
 http://peterhorsten.com
DEDICATED TO YOU
Feel free to contact and follow!
Goyello Sp. z o.o.
Al. Grunwaldzka 472
80-309 Gdansk

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Agile contracting a real challenge

  • 4. • Clients believe user, functional and system requirements are fully known and documented in a way that enables efficient development • And that’s why many features developed are never used • Projects finish out of budget • And mostly too late
  • 5. Which implies “waterfall” development assuming: 1. You have completed a thorough, efficient design phase, and 2. Requirements won’t change during the development process
  • 7. • and over processes and tools • over comprehensive documentation • over • over following a plan Source: Agilemanifesto.org
  • 10. • Time & Material – Protects the supplier (no risk) – No protection for the customer (full risk) • Capped Time & Material – Fixed agreed budget – Share savings – Often variable scope projects – Supplier expenses paid upfront – Customer’s risk limited © Goyello - Confidential 10
  • 11. • Incremental delivery – Customer can stop project at any “delivery moment”, “Money for nothing” – 20% (or more) of remaining budget for provider • Cost targeted – Both parties agree on a realistic final price, although this is rather difficult – Savings will be shared – Over budget both parties pay a penalty © Goyello - Confidential 11
  • 12. The proof of the pudding
  • 13. Client Call Center Health facility Sell insurance Contracting Appointment Visit Invoicing
  • 14. • Workshops with end-users • High level estimation for 10 releases • Agreed fixed budget with cap, cost targeted • Every release new contract • Iterations upfront agreed • Acceptation criteria “known”upfront • Satisfaction evaluation (with payment impact) per iteration/release • Changes as appendix • New work, additional budget
  • 16. • Framework agreement • Agreement per release • Fixed budget (per release as well) • Fixed date • Flexible approach/scope Planning Realization Evaluation iteration 2 week iterations Agreement about the planning Demo showing the iteration result SKOK provided a mark for the iteration Release definition (contract) Release Acceptation protocol Iteration agreement
  • 19. • Software Development: How the Traditional Contract Model Increases the Risk of Failure, Susan Atkinson and Gabrielle Benefield, 28 May 2013, InfoQ, http://www.infoq.com/articles/contract-model-failure • An overview of Agile Contracts, Kane Mar, http://scrumology.com/an- overview-of-agile-contracts/ • Why Traditional “Fixed Bid” Software Projects Usually Fail, Paul Dittmann, 15 December 2009, http://pathfindersoftware.com/2009/12/fixed-bid-projects-fail/ • Money for nothing and change for free, http://jeffsutherland.com/Agile2008MoneyforNothing.pdf • Money for nothing, https://sites.google.com/a/scrumplop.org/published- patterns/value-stream-pattern-language/product-backlog/money-for- nothing • Change for free, https://sites.google.com/a/scrumplop.org/published- patterns/value-stream-pattern-language/product-backlog/change-for- free • Flexible contract template, http://flexiblecontracts.com/ © Goyello - Confidential 19
  • 20. Contact details: @ peter.horsten@goyello.com  http://goyello.com  http://blog.goyello.com  http://peterhorsten.com DEDICATED TO YOU Feel free to contact and follow! Goyello Sp. z o.o. Al. Grunwaldzka 472 80-309 Gdansk