Agile contracts

Agile Contracts -
Doomed from the
Start
By Fadi Stephan
@FADISTEPHAN @EXCELLACO

Agile Contracts – Doomed from the Start @fadistephan | @excellaco | excella.com
MEET YOUR NEIGHBOR
While we wait for the session to start:
• Chat with your neighbor
• Share your experience working on a
Firm Fixed Price project
• How long was the contract for?
• How much was it for?
• Did it finish on time? On Budget?
• What was the outcome/end result?

• Software Development
Practice Lead at Excella
Consulting
• Certified Scrum Trainer and
Agile Coach
• Founder of the DC Software
Craftsmanship User Group
• Co-organizer of the DC
Scrum User Group
Fadi Stephan

Agile Manifesto
Individuals and interactions over Process and tools
Working software over Comprehensive documentation
Customer collaboration over Contract negotiation
Responding to change over Following a plan

Does a well written
contract guarantee
success?

Does a poorly
written contract
guarantee project
failure?

I am not a lawyer
But I did stay at a Holiday
Inn Express

Contracts

1. Set playing rules
2. Apportion risk
3. Help establish trust

If you are regularly
referencing the contact,
the project is already in
deep deep #$%*

Iron Triangle
Plan
Driven
Scope
Cost Schedule

Agile Triangle
Value
Driven
Value
Quality Constraints (Scope, Cost, Schedule)
http://jimhighsmith.com/beyond-scope-schedule-and-cost-the-agile-triangle/

Agile Value Proposition
Risk
Visibility Adaptability
Business Value
Agile Development Traditional Development
https://www.versionone.com/agile-101/agile-software-development-benefits/

Not Just About Development
Reqs
Design
Dev
QA
Release
Years!
Waterfall

Not Just About Development
Reqs
Design
Dev
QA
Release
Years!
Agile Masquerade
Design
Dev
Design
Dev

- First and third of the Twelve Principles behind the Agile Manifesto
“Our highest priority is to satisfy the
customer through early and continuous
delivery of valuable software.”
“Deliver working software
frequently, from a couple of weeks to
a couple of months, with a preference
to the shorter timescale.”

Days
Not
Months or years
REQUIREMENTS
DESIGN
DEVELOPMENTTEST
DEPLOY

Contract Parts

Purpose

Delivery Cycle

Price and Payment
Per story point
Per Hour
Per Iteration
Per Release
Per Month

Acceptance

Change Control

Warranty and Liability

Contact Types

Firm Fixed Price
• Fixed scope
• Fixed price
• Fixed date
• Changes for an extra fee
• Risk to the supplier
• Relationship is competitive

Time and Material
• Undetermined initial scope
• Price based on rate
• End date as determined by the client
• Changes to scope at anytime
• Risk to the client
• Relationship is indifferent or suspicious

Capped T&M
• Same as Time and Material
• Cost ceiling limits client financial risk
• Relationship is cooperative

Target Price
• Fixed scope
• Fixed date
• Target price
• Bonus (profit) paid to supplier if finished early

Money for Nothing
Change for Free
• Initial scope determined but reprioritized frequently
• Money for nothing refers to profit paid to supplier if enough
value is achieved before anticipated end date
• Changes for free as long as equal sized items are removed

Rolling Contracts
• Short term phased development
• Shippable product at the end of each phase
• Decision to continue or not at the end of each phase
• Changes incorporated into next phase

Paired Discussion

Discuss
• What are the intentions
behind the clauses?
• What are some possible
unintended
consequences that may
have resulted from the
clauses?

Scope Clause
Supplier will deliver
500 story point per
release for a total of
4000 story points

Delivery Clause
Project consists of
6 releases of 8
sprints each

Change Control
New or updates to completed
stories may be introduced as
long as existing stories of the
same size are removed or other
stories are reduced in size

Impact of the
story sizing
clause?

Pricing Clause
Invoiced monthly at
$500/story point for stories
delivered by supplier and
accepted by client product
owner

Acceptance
Product owner will provide feedback
or acceptance on completed user
stories within 72 hours of the sprint
review at the end of each Sprint
based on story/acceptance criteria as
agreed upon in Sprint Planning

Retrospective
Product Owner will
attend the team
retrospective at the
end of every Sprint

Definition of Done
Code checked-in to version control
80% unit test code coverage
Deployed to dev environment
Other detailed DoD here….

A Different Contract

Rolling Contracts
• 3 month contract with options for 6 3 months extensions
• Ceiling cap per release
• Short duration, capped price, variable scope
• Vision and high level goals
• No detailed requirements

Results?

FAILURE!

On Time
Within Budget
Met Scope

Did Not Meet
User Needs

Fast and Early
Feedback

TRUST

Updated
roadmap

First Example

Recommendation
1. Don’t get fancy with the pricing unless you are dealing with a mature
organizations and an experienced vendor.
2. Vet the supplier. Try a day long coding challenge.
3. Vet the client. Do they truly have an Agile mindset.
4. Avoid long term firm fixed price contracts.
5. Transition to rolling contracts with early test periods.
6. Ensure that each phase ends with working software in production or
production like environment.
7. Include the ability to continue/end at the completion of each rolling phase.
8. Start small. Build transparency and trust and grow from there.
9. Specify vision instead of detailed scope.
10. Keep day to day management activities out of the contract.

Questions?

References
http://www.agilecontracts.com/
https://www.infoq.com/articles/agile-contracts
http://www.scruminc.com/wp-content/uploads/2014/06/Agile-Contracts.pdf
https://www.scrumalliance.org/resources/1119
https://github.com/usds/playbook/blob/gh-pages/_includes/techfar-online.md

Agile contracts

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to Agile contracts

Similar to Agile contracts (20)

More from Fadi Stephan

More from Fadi Stephan (20)

Recently uploaded

Recently uploaded (20)

Agile contracts