Adventures in Agile Contracting: Evolving from Time and Materials to Fixed Price, Fixed Scope, Fixed Schedule Contracts

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For Info Tech, Inc., the transition to Agile practices three years ago lead to a change in the way we collaborate and contract with our long term, mostly government customers. Our evolution covered Time and Materials (T&M) contracts, a Hybrid of T&M and Fixed Price and most recently a Fixed Price, Fixed Scope, Fixed Schedule contract that supports Agile development. Our goal has been to meet our customer’s needs for predictable results while maintaining our commitment to agile practices. Key success factors include developing a responsive contract modification process that allows for quick change management and identifying non-tangible scope deliverables beyond the software components.

Process/Mechanics

Key Benefit for Participants: Gain foresight into the evolving and collaborative processes that lead to successful agile contract development and implementation with one or more fixed constraints (scope, cost, schedule).

Outline The presentation and experience report will take the audience through the following outline:

I.   Introduction  

II. Cultural Shift Transitioning from Waterfall to Agile in Consulting Services  

    A.  Stage Zero: Waterfall, Fixed Constraints – software met
        customer needs for predictable scope, cost and end date 
        but results did not always meet customer requirements for
        usability and high ROI  

    B.  Stage One: Agile, time and materials contracting 

    C.  Stage Two: Agile, time and materials contracting, 
        adding fixed price milestones  

    D.  Stage Three: Agile, with Fixed triple constraints of 
        scope, schedule and cost  

III.    Stages of Evolution in Agile Contracting  

    A.  Agile Contracting in Time and Materials (T&M)  

        1.  Customer Collaboration and Expectations Management –
        with scope and priorities refined each sprint in parallel with ongoing
        design optimization (refactoring) came the perception of variable
        cost and schedule to complete expected scope.   

        2.  Management and Contracting Processes – Payment based
        on effort per sprint with annual assessment and changes to 
        contract based on projected remaining scope  

        3.  Benefits and Lessons Learned from Contract Model – Full 
        commitment to Agile practices produced optimal code design. 
        Scope allowed to change in less time with less management. 
        Learned to improve customer awareness of estimating at 
        complete in Agile.  

    B.  Agile Contracting in T&M/Fixed Constraints Hybrid  

        1.  Customer Collaboration and Expectations Management 
        focused on allowing Agile practices to continue while producing
        agreed upon deliverables.  

        2.  Management and Contracting Processes similar to T&M
        approach with portion of funds allocated to a set number of
        deliverable milestones based on schedule  

        3.  Benefits and Lessons Learned from Contract Model – Improved focus
        on minimal requirements, however, we began reducing design optimization
        per sprint in order to align with fixed schedule milestones  

    C.  Agile Contracting in Fixed Constraints   

        1.  Customer Collaboration and Expectations Management focuses on more
        detailed review of product backlog items and requirements up front to
        develop contract that fits within fixed triple constraints  

        2.  Management and Contracting Processes – Payment based on
        accepted scope deliverables per sprint. Fixed constraints require
        additional time and management resources to address contract
        modification processes throughout the project.  

       3.   Benefits and Lessons Learned from Contract Model – Completing
        functionality faster but less flexibility in Agile practices used
        to optimize code design and infrastructure may lead to more
        maintenance and enhancement effort than envisioned. Learned
        to improve customer awareness of non-tangible deliverables 
        and adherence to minimal requirements.  

    D.  What Lies Ahead  

        1.  Continuing Evolution – ongoing assessment of results and 
        integration of process improvements to address any changes in 
        customer needs related to project administration and contract terms  

        2.  What We Need and No More – keep processes streamlined
        and supportive of the fundamentals of Agile  

IV. Conclusion