Loading ...
Sorry, an error occurred while loading the content.

How do you charge a customer on XP projects?

Expand Messages
  • Joshua Partogi
    Dear all, As I have read on many XP books, with XP we actually charge customer based on scope. But how does this differ from traditional project management?
    Message 1 of 4 , Nov 1, 2009
    • 0 Attachment
      Dear all,

      As I have read on many XP books, with XP we actually charge customer
      based on scope. But how does this differ from traditional project
      management? With traditional/waterfall project management we charge
      customer based on fixed price, because everything is calculated and
      estimated upfront. So if we miss the deadline, it is the consultant's
      responsibility. Does this mean we can't or don't charge customer with
      fixed price on XP? Does that mean we charge them with man/hours?

      Is there any detailed resources on how we charge the customer on
      XP/Agile projects? Any guidance and insights on this topic would be
      very helpful.

      Kind regards.

      --
      Certified Scrum Master
      http://blog.scrum8.com | http://jobs.scrum8.com | http://twitter.com/scrum8
    • Ron Jeffries
      Hello, Joshua. On Sunday, November 1, 2009, at 7:06:49 AM, you ... I m not sure what books actually say how to charge customers but certainly in every
      Message 2 of 4 , Nov 1, 2009
      • 0 Attachment
        Hello, Joshua. On Sunday, November 1, 2009, at 7:06:49 AM, you
        wrote:

        > As I have read on many XP books, with XP we actually charge customer
        > based on scope.

        I'm not sure what books actually say how to charge customers but
        certainly in every project, actual cost (if not charges) is
        proportional to scope.

        > But how does this differ from traditional project
        > management?

        As far as I can see, it differs in just about every possible way.
        Traditional project management generally seems to suggest up front
        planning and setting of price, date, and scope. XP does none of
        those things.

        > With traditional/waterfall project management we charge
        > customer based on fixed price, because everything is calculated and
        > estimated upfront.

        ... incorrectly calculated, generally. If you have the ability to
        calculate those things correctly, I'd say go ahead and do it and
        teach the rest of us. :)

        > So if we miss the deadline, it is the consultant's
        > responsibility.

        Traditional fixed price contracts do try to set up this
        relationship. It's not actually accurate, as the results of a
        contract belong to everyone involved.

        > Does this mean we can't or don't charge customer with
        > fixed price on XP? Does that mean we charge them with man/hours?

        It would be possible to charge a fixed price: We'll do what we can
        do for $50,000, and you the customer get to choose the stories.

        It would be possible to do the same with a fixed date: We'll work
        from now till New Years, at $50,000 a month, and you get to choose
        the stories.

        It is possible, certainly, to charge in terms of person hours, and
        let the customer decide when to stop.

        > Is there any detailed resources on how we charge the customer on
        > XP/Agile projects? Any guidance and insights on this topic would be
        > very helpful.

        I can't think offhand of anything substantial written on the subject
        ... perhaps others will have some pointers.

        Ron Jeffries
        www.XProgramming.com
        www.xprogramming.com/blog
        To follow the path:
        Look to the master; Follow the master; Walk with the master;
        See through the master; Become the master. -- Modern Zen Poem
      • Steven Gordon
        No matter what process is being used, what it ultimately comes down to is that there is /always/ a cost to the customer for transferring the risk of a project
        Message 3 of 4 , Nov 1, 2009
        • 0 Attachment
          No matter what process is being used, what it ultimately comes down to is
          that there is /always/ a cost to the customer for transferring the risk of a
          project to somebody else. No free lunch.

          A contractor who has to eat all cost overruns has to compensate themselves
          for taking that extra risk by various tactics, including:
          - charging more,
          - charging exorbitantly for changes,
          - cutting on quality in ways that the customer will only discover after
          accepting delivery,

          Even if a contractor is naive or desperate enough to not take extra
          compensation to be able to cover any costs overruns and litigation out of
          their own profits, then they risk going out of business during the project,
          which transfers the risk right back to customer.

          Where the difference between processes does factor in is that the customer
          cannot really know if they are getting their money's worth until software is
          being delivered. Processes that deliver working software every 2 weeks
          provides the time-and-material customer a much better idea of whether they
          are getting what they paid for than a process that first delivers working
          software after several months.


          On Sun, Nov 1, 2009 at 5:06 AM, Joshua Partogi <joshua.partogi@...>wrote:

          >
          >
          > Dear all,
          >
          > As I have read on many XP books, with XP we actually charge customer
          > based on scope. But how does this differ from traditional project
          > management? With traditional/waterfall project management we charge
          > customer based on fixed price, because everything is calculated and
          > estimated upfront. So if we miss the deadline, it is the consultant's
          > responsibility. Does this mean we can't or don't charge customer with
          > fixed price on XP? Does that mean we charge them with man/hours?
          >
          > Is there any detailed resources on how we charge the customer on
          > XP/Agile projects? Any guidance and insights on this topic would be
          > very helpful.
          >
          > Kind regards.
          >
          > --
          > Certified Scrum Master
          > http://blog.scrum8.com | http://jobs.scrum8.com |
          > http://twitter.com/scrum8
          >
          >
          >


          [Non-text portions of this message have been removed]
        • Niklas Bjornerstedt
          There is a lot of interesting stuff about contracts for agile projects on the net. The problem is that it is fragmented, no one has collected this into a more
          Message 4 of 4 , Nov 2, 2009
          • 0 Attachment
            There is a lot of interesting stuff about contracts for agile projects on the net. The problem is that it is fragmented, no one has collected this into a more comprehensive overview. Here is one interesting paper and slide set from this years Agile2009 conference:

            http://www.bestbrains.dk/dansk.aspx/Artikler

            /Niklas
            www.leanway.no

            --- In extremeprogramming@yahoogroups.com, Ron Jeffries <ronjeffries@...> wrote:
            >
            > Hello, Joshua. On Sunday, November 1, 2009, at 7:06:49 AM, you
            > wrote:
            >
            > > As I have read on many XP books, with XP we actually charge customer
            > > based on scope.
            >
            > I'm not sure what books actually say how to charge customers but
            > certainly in every project, actual cost (if not charges) is
            > proportional to scope.
            >
            > > But how does this differ from traditional project
            > > management?
            >
            > As far as I can see, it differs in just about every possible way.
            > Traditional project management generally seems to suggest up front
            > planning and setting of price, date, and scope. XP does none of
            > those things.
            >
            > > With traditional/waterfall project management we charge
            > > customer based on fixed price, because everything is calculated and
            > > estimated upfront.
            >
            > ... incorrectly calculated, generally. If you have the ability to
            > calculate those things correctly, I'd say go ahead and do it and
            > teach the rest of us. :)
            >
            > > So if we miss the deadline, it is the consultant's
            > > responsibility.
            >
            > Traditional fixed price contracts do try to set up this
            > relationship. It's not actually accurate, as the results of a
            > contract belong to everyone involved.
            >
            > > Does this mean we can't or don't charge customer with
            > > fixed price on XP? Does that mean we charge them with man/hours?
            >
            > It would be possible to charge a fixed price: We'll do what we can
            > do for $50,000, and you the customer get to choose the stories.
            >
            > It would be possible to do the same with a fixed date: We'll work
            > from now till New Years, at $50,000 a month, and you get to choose
            > the stories.
            >
            > It is possible, certainly, to charge in terms of person hours, and
            > let the customer decide when to stop.
            >
            > > Is there any detailed resources on how we charge the customer on
            > > XP/Agile projects? Any guidance and insights on this topic would be
            > > very helpful.
            >
            > I can't think offhand of anything substantial written on the subject
            > ... perhaps others will have some pointers.
            >
            > Ron Jeffries
            > www.XProgramming.com
            > www.xprogramming.com/blog
            > To follow the path:
            > Look to the master; Follow the master; Walk with the master;
            > See through the master; Become the master. -- Modern Zen Poem
            >
          Your message has been successfully submitted and would be delivered to recipients shortly.