agile contracts ?

Agile Contracts?

AgilePrague 2012Johannes Brodwall, Principal Architect

Steria Norway

@jhannes

Part I

Motivation

Agile ManifestoIndividuals and interactions over processes and toolsWorking software over comprehensive documentation

Customer collaboration over contract negotiationResponding to change over following a plan

Agile ManifestoIndividuals and interactions over processes and toolsWorking software over comprehensive documentation

Customer collaboration over contract negotiationResponding to change over following a plan

Does «contract» make a difference?

Supplier

Customer

Hold on, I expected a much fancier UI

for this.?

Most common contracts:Fixed price

Time and material

Supplier

Customer

Hold on, I expected a much fancier UI

for this.

Crap

Supplier

Customer

Hold on, I expected a much fancier UI

for this. No problem, we’ll work some more

«Time and material» creates the most happiness

«Time and material» creates the most happiness

(Source: My best and worst projects)

«Time and material» creates the most happiness

(Also for customer!)

So why care about the rest?

Do you pay taxes?

How should your government handle:

• We’re running out of money for pensions• We need to change the rules!

• The current system is huge

How should govt spend your money?

• A big, state-run project?• Hire a random company to do it all?

• Just pay consultants until it’s done?• “Just be agile”?

Can Agile help?

Customer collaboration over contract negotiation:

• Contracts hurt• Big tax-funded projects are inevitable

• Agile can help – but insufficient

Part II

PS2000 + Agile

Typical Norwegian public sector project:

«We need to replace huge system X…

Typical Norwegian public sector project:

«We need to replace huge system X…… we’d like to use Scrum»

PS2000:«Target price»

(Target price:Set a budget,

report cost.Supplier & client splits difference)

PS2000 + agile:«Colocated»

«Sprints»«Sprint reviews»«Product owner»

«Product backlog»

… but also«Negotation phase»

«Requirement phase»«Acceptance test phase»

Whence PS2000?

Contract standard from Norwegian Computing

Association

2001: PS2000 with target price

2009: PS2000 + Agile

Norwegian trends:• Active community

• Meetups about contracts• Scrum certifications

• Large and diverse consultancy industry

Some project highlights

In progressLARM: Domain: Electricity reserve powerApplication: Operator UI

Internal IntegrationProject size: 2 scrum teams plus supportOrganization: Supplier + Customer teams

Colocated at customer siteTeam size: 7 per teamDuration: 3 years (1,5 years left)Sprint length: 3 weeks (customer present)Releases: 3 times per yearContract: Target pricing for whole scope

?

Bid

Apr, 2010

Negotiation

Aug, 2010

Mar, 2010

Elaboration

Nov, 2010

Release 1Sprint Sprint Sprint Sprint Sprint

May, 2011

Acceptance Production

Sept, 2011

Elaboration Sprint Sprint Sprint

Sprint Sprint

Sprint

SIGNED

Smart move:Reliable product backlog using

scenarios

Big win:First release in use 1 year after contract, containing most used

screen

Big loss:Feature creep of individual user

stories

CompletedPERFORM: Domain: State pension fundApplication: Case worker UI

External IntegrationProcess flow

Project size: 12-14 scrum teams plus supportOrganization: Three suppliers with 3-6 teams

Colocated at customer siteTeam size: 10 per teamDuration: 3 yearsReleases: 3 times per yearSprint length: 3 weeks, with shared demoContract: First release: Time & materials

Subsequent:Target pricing per release

Smart move:Contract on price per release

First release on T&M«Competing» suppliers

Big win:Delievered what was needed

Government is happyUsers are happy

Big loss:Full time requirement spec

Hostile architecture team

Customer collaboration over contract negotiation

Reality:• We must compete

• We must commit

Part III

Wishful contracts

The source of our troubles

Fabulation

Speculation

Bungling

Yelling

Worrying

2 year - development Use

Fabulation

Speculation

Bungling

Yelling

Worrying

2 years - development Use

ContractPrice

ScopeDeliverableOk?

The problem

Fabulation

Speculation

Bungling

Yelling

Worrying

2 years - development Use

ContractPrice

Scope

A way out?

Pure fabria

ction

IMAGINE: Project size: Some scrum teams with independent

users and product ownersOrganization: Colocated at customer siteTeam size: 6-8 per teamDuration: 3 yearsSprint length: 2 weeks, with shared demoReleases: Every month

Bidding: Performance competitionContract: Target estimate per user story

Pricing: Unit pricing

Menu:• Simple GUI: 20 kNOK• Complex GUI: 50 kNOK• GUI that customer decides

how looks: 100 kNOK

(Or 2, 5, 20 story points)

Supplier

Customer

I need a screen shot for X. We want something simple. Ok. 2

kEURO

Supplier

Customer

Do you have anything to show for it?

We’ve spent half the budget

Nothing that is tested yet

Okay, I’m pulling the

plug

Supplier

Customer

Stop!

We’ve spent the budget

Supplier

Customer

But I wanted rounded corners, and gradients!

No problem, but that means it’s

no longer «simple»

Oh, never mind.

(I hate having this sort of discussions)

Supplier

Customer

But I wanted …!

Oh, I guess we have to do it, thenNo way! Change

order!

Hmm…we didn’t consider that when we gave the price

Bidding: Competitive delivery

Supplier

Supplier

Supplier

Supplier

Supplier

Customer

Project referenceResumesHourly rates

Supplier

Pre-qualification

Supplier

Supplier

Supplier

Supplier

Supplier

Supplier

6-10 weeks

Supplier

Supplier

AnalysisCoding

Delivery

Analysis

Coding

Delivery

Analysis

Coding Coding

AnalysisDelivery

Delivery

Supplier

Supplier

Supplier

AnalysisCoding

Delivery

Analysis

Coding

Delivery

Analysis

Coding Coding

AnalysisDelivery

Delivery

Supplier

Another model

Pure fabria

ction

Supplier Commitment:Δ ☺Δ $

IMAGINE:

Questions and discussions

Conclusion

Customer collaboration over contract negotiation

We need an answer for large investments

Norway’s answer ain’t half bad

Norway’s answer ain’t half bad

But

We can do better

Thank youjohannes@brodwall.com

http://johannesbrodwall.com

http://twitter.com/jhannes