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Re:fixed-price fixed-scope projects

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  • acockburn@aol.com
    My largest reference project was contracted by a large retail company to a large contract house (actually by the time we got there, they were on their third
    Message 1 of 13 , Mar 30, 2005
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      My largest reference project was contracted by a large retail company to a
      large contract house (actually by the time we got there, they were on their
      third attempt at getting this system done).

      Client asked contractor to put in a single bid for the whole shebangy (I'm
      sure that's a technical term). Contractor spent 3 months doing due diligence,
      scratching out about 240 use cases, itemizing interfaces to be researched,
      listing programs and database tables affected, and working out how to hire
      people for the project. At the end of 3 months, contractor put a number on the
      table (approx 15M$), along with the stack of use cases and interfaces and
      programs, and said, "For that much money we'll deliver all the above, in the next
      18 months, with deliveries every 3 months, and you can check against these
      use cases and programs at the end to verify that we did what we're promising."

      Client accepted, contractor delivered, client paid, everyone verified at the
      end (and there were certain contractual negotiations at the end to deal with
      discrepancies).

      That is standard form for a fp/fs contract. Not much different than when I
      ask a contractor to put cabinets in my kitchen.

      We used generic agile on that project just to cut down bureaucracy and speed
      development. Just because "accidentally" all the stories stayed
      approximately the same for 18 months didn't really change anything we were doing.


      In a message dated 3/30/2005 9:10:15 P.M. Mountain Standard Time,
      extremeprogramming@yahoogroups.com writes:

      Subject: Re: Developers Held Accountable for Estimates

      On Wednesday, March 30, 2005, at 8:43:20 PM, Chris Wheeler wrote:

      >> > This sounds like the small-scale equivalent of
      >> > fixed-scope, fixed-cost contracts, which I think we

      >> You and Scott may agree that XP is not well adapted, but if I were
      >> in the fixed-scope -price business, I'd use XP to do the projects. I
      >> think it's better than any of the alternatives I know.

      > I don't understand these types of statements, and the reason I don't
      > understand them is because I don't know what a fixed-price contract
      > is. I should have asked this question a long time ago, but I wanted
      > to look cool :) So, what is a fixed-price contract?

      Sometimes companies want a software project done. They ask for a
      fixed price bid for the software, given a (usually comprehensive)
      list of "requirements". The intent is that you bid a fixed amount of
      dollars and time, and have to deliver at that price.

      Usually these things are competitive bids, so you have opposing
      forces: get the price high enough to be safe and profitable, and
      keep the price low enough to get the business.





      ==============================================
      Alistair Cockburn
      President, Humans and Technology

      801.582.3162
      1814 Ft Douglas Cir,
      Salt Lake City, UT 84103
      _http://alistair.cockburn.us/_ (http://alistair.cockburn.us/)
      acockburn@...
      (fax: 484.970.8954)
      ===============================

      "Surviving Object-Oriented Projects" (1998)
      "Writing Effective Use Cases" (Jolt Productivity Award 2001)
      "Agile Software Development" (Jolt Productivity Award 2002)
      "Crystal Clear: A Human-Powered Methodology for Small Teams" (Jolt Award
      Finalist 2004)

      "La perfection est atteinte non quand il ne reste rien a ajouter,
      mais quand il ne reste rien a enlever." (Saint-Exupery)

      "The first thing to build is trust." (Brad Appleton)
      ==============================================




      [Non-text portions of this message have been removed]
    • Dakshinamurthy Karra
      ... As I understand this is the third attempt by the customer. A 3 month due deligence is done and use cases have been created. How can it be an accident that
      Message 2 of 13 , Mar 30, 2005
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        On Wed, 30 Mar 2005 23:53:48 EST, acockburn@... <acockburn@...> wrote:
        > We used generic agile on that project just to cut down bureaucracy and speed
        > development. Just because "accidentally" all the stories stayed
        > approximately the same for 18 months didn't really change anything we were doing.
        >
        As I understand this is the third attempt by the customer. A 3 month
        due deligence is done and use cases have been created. How can it be
        an accident that stories did not change?

        Thanks and Regards
        KD

        --
        Dakshinamurthy Karra (http://xperiencingagility.blogspot.com)
      • Keith Ray
        ... A commonly-repeated statistic is that on a typical project, 6% of requirements change every month. (new, modified, deleted). -- C. Keith Ray
        Message 3 of 13 , Mar 31, 2005
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          On Mar 30, 2005, at 10:18 PM, Dakshinamurthy Karra wrote:
          >
          > On Wed, 30 Mar 2005 23:53:48 EST, acockburn@...
          > <acockburn@...> wrote:
          >> We used generic agile on that project just to cut down bureaucracy
          >> and speed
          >> development. Just because "accidentally" all the stories stayed
          >> approximately the same for 18 months didn't really change anything we
          >> were doing.
          >>
          > As I understand this is the third attempt by the customer. A 3 month
          > due deligence is done and use cases have been created. How can it be
          > an accident that stories did not change?

          A commonly-repeated statistic is that on a typical project, 6% of
          requirements change every month. (new, modified, deleted).


          --
          C. Keith Ray
          <http://homepage.mac.com/keithray/blog/index.html>
          <http://homepage.mac.com/keithray/xpminifaq.html>
          <http://homepage.mac.com/keithray/resume2.html>
        • Steven Gordon
          If the contract of a fixed-price fixed-scope project made changes expensive enough to the customer (a common result of an under-bidder trying to find a source
          Message 4 of 13 , Mar 31, 2005
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            If the contract of a fixed-price fixed-scope project made changes expensive enough to the customer (a common result of an under-bidder trying to find a source of profit), a customer with a very tight budget might decide to resist all temptations to change requirements. The result would likely be a less useful final deliverable that reflected little that the developers or customers learned about the business problem during the project.

            -----Original Message-----
            From: Keith Ray [mailto:keithray@...]
            Sent: Thu 3/31/2005 6:59 AM
            To: extremeprogramming@yahoogroups.com
            Cc:
            Subject: Re: [XP] Re:fixed-price fixed-scope projects




            On Mar 30, 2005, at 10:18 PM, Dakshinamurthy Karra wrote:
            >
            > On Wed, 30 Mar 2005 23:53:48 EST, acockburn@...
            > <acockburn@...> wrote:
            >> We used generic agile on that project just to cut down bureaucracy
            >> and speed
            >> development. Just because "accidentally" all the stories stayed
            >> approximately the same for 18 months didn't really change anything we
            >> were doing.
            >>
            > As I understand this is the third attempt by the customer. A 3 month
            > due deligence is done and use cases have been created. How can it be
            > an accident that stories did not change?

            A commonly-repeated statistic is that on a typical project, 6% of
            requirements change every month. (new, modified, deleted).


            --
            C. Keith Ray
            <http://homepage.mac.com/keithray/blog/index.html>
            <http://homepage.mac.com/keithray/xpminifaq.html>
            <http://homepage.mac.com/keithray/resume2.html>









            [Non-text portions of this message have been removed]
          • Dakshinamurthy Karra
            ... Does typical projects include projects attempted 3 times? Understanding of a system increases when you work on it and having attempted twice the
            Message 5 of 13 , Mar 31, 2005
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              On Thu, 31 Mar 2005 05:59:41 -0800, Keith Ray <keithray@...> wrote:
              >
              > On Mar 30, 2005, at 10:18 PM, Dakshinamurthy Karra wrote:
              > > As I understand this is the third attempt by the customer. A 3 month
              > > due deligence is done and use cases have been created. How can it be
              > > an accident that stories did not change?
              >
              > A commonly-repeated statistic is that on a typical project, 6% of
              > requirements change every month. (new, modified, deleted).
              >
              Does typical projects include projects attempted 3 times?
              Understanding of a system increases when you work on it and having
              attempted twice the requirements should have been much more clear in
              this project.

              Thanks and Regards
              KD

              --
              Dakshinamurthy Karra (http://xperiencingagility.blogspot.com)
            • Keith Ray
              You say should have . What actually happened? ... -- C. Keith Ray
              Message 6 of 13 , Mar 31, 2005
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                You say "should have". What actually happened?

                On Mar 31, 2005, at 6:28 AM, Dakshinamurthy Karra wrote:

                >
                > On Thu, 31 Mar 2005 05:59:41 -0800, Keith Ray <keithray@...> wrote:
                >>
                >> On Mar 30, 2005, at 10:18 PM, Dakshinamurthy Karra wrote:
                >>> As I understand this is the third attempt by the customer. A 3 month
                >>> due deligence is done and use cases have been created. How can it be
                >>> an accident that stories did not change?
                >>
                >> A commonly-repeated statistic is that on a typical project, 6% of
                >> requirements change every month. (new, modified, deleted).
                >>
                > Does typical projects include projects attempted 3 times?
                > Understanding of a system increases when you work on it and having
                > attempted twice the requirements should have been much more clear in
                > this project.
                >
                > Thanks and Regards
                > KD
                >
                > --
                > Dakshinamurthy Karra (http://xperiencingagility.blogspot.com)
                >
                >
                > To Post a message, send it to: extremeprogramming@...
                >
                > To Unsubscribe, send a blank message to:
                > extremeprogramming-unsubscribe@...
                >
                > ad-free courtesy of objectmentor.com
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                >
                >
                >
                >
                >
                >
                >
                >
                --
                C. Keith Ray
                <http://homepage.mac.com/keithray/blog/index.html>
                <http://homepage.mac.com/keithray/xpminifaq.html>
                <http://homepage.mac.com/keithray/resume2.html>
              • yahoogroups@jhrothjr.com
                I think he already said. This was Alistair s message that kicked off this subthread; Alistair is the one that said the requirements stayed stable for 18
                Message 7 of 13 , Mar 31, 2005
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                  I think he already said. This was Alistair's message that kicked
                  off this subthread; Alistair is the one that said the requirements
                  stayed stable for 18 months.

                  Part of it is that it was the third attempt, so the problems with
                  understanding the domain and what the customer wanted were
                  quite likely already shaken out.

                  However, the external world doesn't stand still for a year and
                  a half. Competitors change, the market changes, executives
                  come and go. Even with perfect domain knowledge and a
                  customer who does know what he wants, 18 months without
                  substantial change is a statistical fluke.

                  John Roth


                  ----- Original Message -----
                  From: "Keith Ray" <keithray.at.mac.com@...>
                  To: "extremeprogramming@yahoogroups.com"
                  <extremeprogramming.at.yahoogroups.com@...>
                  Sent: Thursday, March 31, 2005 8:53 AM
                  Subject: Re: [XP] Re:fixed-price fixed-scope projects


                  >
                  > You say "should have". What actually happened?
                  >
                  > On Mar 31, 2005, at 6:28 AM, Dakshinamurthy Karra wrote:
                  >
                  >>
                  >> On Thu, 31 Mar 2005 05:59:41 -0800, Keith Ray <keithray@...> wrote:
                  >>>
                  >>> On Mar 30, 2005, at 10:18 PM, Dakshinamurthy Karra wrote:
                  >>>> As I understand this is the third attempt by the customer. A 3 month
                  >>>> due deligence is done and use cases have been created. How can it be
                  >>>> an accident that stories did not change?
                  >>>
                  >>> A commonly-repeated statistic is that on a typical project, 6% of
                  >>> requirements change every month. (new, modified, deleted).
                  >>>
                  >> Does typical projects include projects attempted 3 times?
                  >> Understanding of a system increases when you work on it and having
                  >> attempted twice the requirements should have been much more clear in
                  >> this project.
                  >>
                  >> Thanks and Regards
                  >> KD
                  >>
                  >> --
                  >> Dakshinamurthy Karra (http://xperiencingagility.blogspot.com)
                  >>
                  >>
                  >> To Post a message, send it to: extremeprogramming@...
                  >>
                  >> To Unsubscribe, send a blank message to:
                  >> extremeprogramming-unsubscribe@...
                  >>
                  >> ad-free courtesy of objectmentor.com
                  >> Yahoo! Groups Links
                  >>
                  >>
                  >>
                  >>
                  >>
                  >>
                  >>
                  >>
                  > --
                  > C. Keith Ray
                  > <http://homepage.mac.com/keithray/blog/index.html>
                  > <http://homepage.mac.com/keithray/xpminifaq.html>
                  > <http://homepage.mac.com/keithray/resume2.html>
                  >
                  >
                  >
                  > To Post a message, send it to: extremeprogramming@...
                  >
                  > To Unsubscribe, send a blank message to:
                  > extremeprogramming-unsubscribe@...
                  >
                  > ad-free courtesy of objectmentor.com
                  > Yahoo! Groups Links
                  >
                  >
                  >
                  >
                  >
                  >
                  >
                  >
                • SirGilligan
                  ... I agree that if you take into account all software development projects that it would be a statistical fluke. I have worked on software projects in the
                  Message 8 of 13 , Mar 31, 2005
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                    --- In extremeprogramming@yahoogroups.com, yahoogroups@j... wrote:
                    > I think he already said. This was Alistair's message that kicked
                    > off this subthread; Alistair is the one that said the requirements
                    > stayed stable for 18 months.
                    >
                    > Part of it is that it was the third attempt, so the problems with
                    > understanding the domain and what the customer wanted were
                    > quite likely already shaken out.
                    >
                    > However, the external world doesn't stand still for a year and
                    > a half. Competitors change, the market changes, executives
                    > come and go. Even with perfect domain knowledge and a
                    > customer who does know what he wants, 18 months without
                    > substantial change is a statistical fluke.
                    >
                    > John Roth
                    >
                    >

                    I agree that if you take into account all software development
                    projects that it would be a statistical fluke. I have worked on
                    software projects in the "Dept. Of XXXX" (Government stuff) where
                    change over 18 months is extremely small (compared to the world). For
                    example, in the building of a new laboratory facility there is
                    simultaneous development of the physical facility, the acquisition
                    and/or construction of instruments, the hiring of staff, the
                    development of research papers, and many other things including the
                    development of software for the lab (typically data acquisition
                    software and data analysis software in my experience).

                    I don't know which company Allistair is referring to, maybe he will
                    make a post. If I get to go to SL-Agile next week I will ask him (I
                    don't make it very often... shame shame shame)

                    Geoff
                  • Bob.Jarvis@chase.com
                    ... Keith - Do you have a source for that statistic? (It could be helpful.) BJ
                    Message 9 of 13 , Apr 1, 2005
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                      Keith Ray wrote:

                      > A commonly-repeated statistic is that on a typical project, 6% of
                      > requirements change every month. (new, modified, deleted).

                      Keith - Do you have a source for that statistic? (It could be helpful.)

                      BJ
                    • Jeff Grigg
                      ... I thought it was 1% a month. (6% a month would be pretty scary. 6% times 12 months, is 72%!!!) _ _ _ A quote: Creeping Requirements Endemic to the
                      Message 10 of 13 , Apr 1, 2005
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                        > --- Keith Ray wrote:
                        >> A commonly-repeated statistic is that on a typical project, 6% of
                        >> requirements change every month. (new, modified, deleted).

                        --- Bob.Jarvis@c... wrote:
                        > Keith - Do you have a source for that statistic?
                        > (It could be helpful.)

                        I thought it was 1% a month.

                        (6% a month would be pretty scary. 6% times 12 months, is 72%!!!)
                        _ _ _

                        A quote:

                        Creeping Requirements
                        Endemic to the Software Industry
                        - Occurs on more than 70% of all applications over 1000 function
                        points
                        From a 60 project sample
                        - Average creep was 35%
                        - Maximum observed was 200%
                        - Creeping requirements change about 1% per month
                        - - For a 3 year project, 1/3 of the delivered requirements would
                        have been added after requirements were initially defined

                        Rate of Requirements change is higher than for other forms of
                        engineering (electrical, mechanical, civil)

                        Source: Assessment and Control of Software Risks,
                        Capers Jones, 1994
                      • acockburn@aol.com
                        Yep, probably was a statistical fluke. Everyone did understand that the details would change over time, that s partly the reason the client (!) insisted on
                        Message 11 of 13 , Apr 1, 2005
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                          Yep, probably was a statistical fluke. Everyone did understand that the
                          details would change over time, that's partly the reason the client (!) insisted
                          on deliveries every quarter. And we did have in plan, and did, pick up the use
                          cases for each quarter's cycle and recheck and fine tune them in that
                          quarter - and there were some changes, of course, because the world turns. And we
                          had two user viewings within each cycle, so they changed the requirements
                          again, but usually not too violently. And, of course, there was some sort of
                          contractual mechanism in place around this too ...

                          ...but all in all, not much changed. As several people picked up, this was
                          the 3rd try, so they probably knew their business pretty well by then.

                          ... and, as I said, I have come to realize just how spoilt I was, working on
                          this as my first fixed-price, fixed-scope project. The agile approach helped
                          us, of course, but the general management savvy and good natured exchanges
                          between client and supplier were enormous factors.

                          ... It could be a statistical fluke that all those factors came together on
                          one project ...
                          (but if we could peel those apart and try to increase odds on other
                          projects, what factors
                          would we work to replicate?...)

                          Alistair

                          In a message dated 3/31/2005 11:23:39 A.M. Mountain Standard Time,
                          extremeprogramming@yahoogroups.com writes:


                          --- In extremeprogramming@yahoogroups.com, yahoogroups@j... wrote:
                          > I think he already said. This was Alistair's message that kicked
                          > off this subthread; Alistair is the one that said the requirements
                          > stayed stable for 18 months.
                          >
                          > Part of it is that it was the third attempt, so the problems with
                          > understanding the domain and what the customer wanted were
                          > quite likely already shaken out.
                          >
                          > However, the external world doesn't stand still for a year and
                          > a half. Competitors change, the market changes, executives
                          > come and go. Even with perfect domain knowledge and a
                          > customer who does know what he wants, 18 months without
                          > substantial change is a statistical fluke.





                          ==============================================
                          Alistair Cockburn
                          President, Humans and Technology

                          801.582.3162
                          1814 Ft Douglas Cir,
                          Salt Lake City, UT 84103
                          _http://alistair.cockburn.us/_ (http://alistair.cockburn.us/)
                          acockburn@...
                          (fax: 484.970.8954)
                          ===============================

                          "Surviving Object-Oriented Projects" (1998)
                          "Writing Effective Use Cases" (Jolt Productivity Award 2001)
                          "Agile Software Development" (Jolt Productivity Award 2002)
                          "Crystal Clear: A Human-Powered Methodology for Small Teams" (Jolt Award
                          Finalist 2004)

                          "La perfection est atteinte non quand il ne reste rien a ajouter,
                          mais quand il ne reste rien a enlever." (Saint-Exupery)

                          "The first thing to build is trust." (Brad Appleton)
                          ==============================================




                          [Non-text portions of this message have been removed]
                        • Keith Ray
                          That s it. ... -- C. Keith Ray
                          Message 12 of 13 , Apr 1, 2005
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                            That's it.

                            On Apr 1, 2005, at 9:35 AM, Jeff Grigg wrote:

                            >
                            >
                            >> --- Keith Ray wrote:
                            >>> A commonly-repeated statistic is that on a typical project, 6% of
                            >>> requirements change every month. (new, modified, deleted).
                            >
                            > --- Bob.Jarvis@c... wrote:
                            >> Keith - Do you have a source for that statistic?
                            >> (It could be helpful.)
                            >
                            > I thought it was 1% a month.
                            >
                            > (6% a month would be pretty scary. 6% times 12 months, is 72%!!!)
                            > _ _ _
                            >
                            > A quote:
                            >
                            > Creeping Requirements
                            > Endemic to the Software Industry
                            > - Occurs on more than 70% of all applications over 1000 function
                            > points
                            > From a 60 project sample
                            > - Average creep was 35%
                            > - Maximum observed was 200%
                            > - Creeping requirements change about 1% per month
                            > - - For a 3 year project, 1/3 of the delivered requirements would
                            > have been added after requirements were initially defined
                            >
                            > Rate of Requirements change is higher than for other forms of
                            > engineering (electrical, mechanical, civil)
                            >
                            > Source: Assessment and Control of Software Risks,
                            > Capers Jones, 1994
                            >
                            >
                            >
                            >
                            >
                            > To Post a message, send it to: extremeprogramming@...
                            >
                            > To Unsubscribe, send a blank message to:
                            > extremeprogramming-unsubscribe@...
                            >
                            > ad-free courtesy of objectmentor.com
                            > Yahoo! Groups Links
                            >
                            >
                            >
                            >
                            >
                            >
                            >
                            >
                            --
                            C. Keith Ray
                            <http://homepage.mac.com/keithray/blog/index.html>
                            <http://homepage.mac.com/keithray/xpminifaq.html>
                            <http://homepage.mac.com/keithray/resume2.html>
                          • Adrian Howard
                            On 1 Apr 2005, at 18:35, Jeff Grigg wrote: [snip] ... I don t know. I ve seen worse :-) I did some work for a .com startup where we had monthly meetings with
                            Message 13 of 13 , Apr 5, 2005
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                              On 1 Apr 2005, at 18:35, Jeff Grigg wrote:
                              [snip]
                              > I thought it was 1% a month.
                              >
                              > (6% a month would be pretty scary. 6% times 12 months, is 72%!!!)

                              I don't know. I've seen worse :-)

                              I did some work for a .com startup where we had monthly meetings with
                              the CEOs. There entire business plan seemed to change every time we say
                              them which, to there seemingly unceasing surprise, caused us to throw
                              away most of what we'd done the previous month.

                              Needless to say they're not around anymore.

                              I wish I'd known more about agile methods then - it would have made
                              life easier.

                              Cheers,

                              Adrian
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