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Fixed Price, Fixed Date Contracts

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  • daj@gravityassist.co.uk
    I m new to this group so I m still scouring the message archive for info on fixed price, fixed date contracts (see Agile Project Management with Scrum Appendix
    Message 1 of 4 , Jul 28 6:56 AM

      I’m new to this group so I’m still scouring the message archive for info on fixed price, fixed date contracts (see Agile Project Management with Scrum Appendix D).  Comments or pointers to discussion threads and web resources v. welcome.

       

      The power of the approach as defined in the book and reprised byKen Schwaber on the ScrumMaster course:

       

      -          ability to enter lower (or maybe better structured?) bid pricing

      -          enables the restating of requirements to demonstrate understanding of the business need

      -          enables prioritisation based on perceived value

      -          requirements of equal value can be traded at sprint review

      -          early implementation (obviously!)

      -          ability to terminate contracts early when all required functionality is delivered (with a cancellation penalty)

       

       

       I’m interested in the pro’s and con’s of this approach as it’s a considerable USP for a solutions business/consultancy.

       

      A recent “con” I’ve experienced (there are plenty of pro’s – as above) is that while the ability to cancel early at an agreed penalty works very well, I recently worked with a number of the sub-contractor/third party suppliers on a project who, despite being guided on the principles of Scrum and the nature of the fixed price approach, had planned their workloads around future sprints being “in the bag”.

       

      The price of flexibility is sometimes an unexpected and unwelcome cut in the order book…!

       

      The benefits at the outset which won them the contract were not necessarily balanced with the possibility of lost business – something their commercials needed to take into consideration.

       

      Any comments on other “gotcha’s” to avoid or (especially!) positive experiences very welcome.

       

      Regards

       

      DAJ

       

       

       

      David A. Jones

      Solutions Director

       

      t 0870 444 5898

      m 07795 186998

      edaj@gravityassist.co.uk

      w www.gravityassist.co.uk

       

      gravityassist provides services including project management, customer service outsourcing, call and contact centre design/delivery, solutions sales and technology selection to U.K. and international businesses.  For further information please email solutions@gravityassist.co.uk

       


      This communication is strictly confidential and intended solely for those persons to whom it is addressed or, where prior agreement has been sought, their agent(s) or otherwise designated third parties.  If you are not the intended recipient, you should not copy, distribute or take any action or reliance upon it.  This email may contain privileged and/or confidential information.

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    • Bryan Zarnett
      ... Is this really a con to the Scrum or Agile approach? What where the factors in the additional work not coming through? Was the contact based on a
      Message 2 of 4 , Jul 28 7:21 AM
        >A recent “con” I’ve experienced (there are plenty of pro’s – as above) is that while the ability >to cancel early at an agreed penalty works very well, I recently worked with a number of the sub->contractor/third party suppliers on a project who, despite being guided on the principles of Scrum >and the nature of the fixed price approach, had planned their workloads around future sprints >being “in the bag”.

        Is this really a con to the Scrum or Agile approach?

        What where the factors in the additional work not coming through? Was the contact based on a per-sprint basis? Could you have set the contract for work to be done for 4 assured sprints? Was the client not happy with the work? If you could provide details it would help in providing an answer.

        Scrum will not ensure that you create a proper contract, that your team can write quality code, or that you can implement Scrum correctly.

        Please provide additional information around what occured and then we can better determine if it was something in a Scrum based approach, or some other factor.

        Regards,
        Bryan
      • Steven Gordon
        My experience is that early cancellations are more than offset by the follow-on business gained by having a visible backlog. When a project reaches its end as
        Message 3 of 4 , Jul 28 7:30 AM
          My experience is that early cancellations are more than offset
          by the follow-on business gained by having a visible backlog.

          When a project reaches its end as scheduled (or even before):
          - on-time delivery of software that the customer is very
          happy with, and
          - a backlog that contains all sorts of valuable additional
          features discovered during the project,
          the customer usually finds the money to implement many of
          these backlog items.

          With the traditional approach, even if we eventually got
          follow-on business, it was only after another sales cycle.

          One clue - the objective is not to empty the backlog, but to
          deliver the best software possible with as many future
          extensions (not bugs) on the backlog as possible. A project
          that ends with no backlog is delivering software with no future.

          -----Original Message-----
          From: daj@... [mailto:daj@...]
          Sent: Wed 7/28/2004 6:56 AM
          To: Scrum Group
          Cc:
          Subject: [scrumdevelopment] Fixed Price, Fixed Date Contracts

          I'm new to this group so I'm still scouring the message archive for info on
          fixed price, fixed date contracts (see Agile Project Management with Scrum
          Appendix D). Comments or pointers to discussion threads and web resources
          v. welcome.



          The power of the approach as defined in the book and reprised by Ken
          Schwaber on the ScrumMaster course:



          - ability to enter lower (or maybe better structured?) bid pricing

          - enables the restating of requirements to demonstrate
          understanding of the business need

          - enables prioritisation based on perceived value

          - requirements of equal value can be traded at sprint review

          - early implementation (obviously!)

          - ability to terminate contracts early when all required
          functionality is delivered (with a cancellation penalty)





          I'm interested in the pro's and con's of this approach as it's a
          considerable USP for a solutions business/consultancy.



          A recent "con" I've experienced (there are plenty of pro's - as above) is
          that while the ability to cancel early at an agreed penalty works very well,
          I recently worked with a number of the sub-contractor/third party suppliers
          on a project who, despite being guided on the principles of Scrum and the
          nature of the fixed price approach, had planned their workloads around
          future sprints being "in the bag".



          The price of flexibility is sometimes an unexpected and unwelcome cut in the
          order book.!



          The benefits at the outset which won them the contract were not necessarily
          balanced with the possibility of lost business - something their commercials
          needed to take into consideration.



          Any comments on other "gotcha's" to avoid or (especially!) positive
          experiences very welcome.



          Regards



          DAJ







          David A. Jones

          Solutions Director



          t 0870 444 5898

          m 07795 186998

          e daj@...

          w www.gravityassist.co.uk



          gravityassist provides services including project management, customer
          service outsourcing, call and contact centre design/delivery, solutions
          sales and technology selection to U.K. and international businesses. For
          further information please email solutions@...




          This communication is strictly confidential and intended solely for those
          persons to whom it is addressed or, where prior agreement has been sought,
          their agent(s) or otherwise designated third parties. If you are not the
          intended recipient, you should not copy, distribute or take any action or
          reliance upon it. This email may contain privileged and/or confidential
          information.

          If you have received this in error, please notify us immediately by replying
          to sender or emailing marketing@....

          Your co-operation is appreciated.
        • Ron Jeffries
          ... Nicely put, and worth remembering! Ron Jeffries www.XProgramming.com Think twice, code once. -- Thaddeus L. Olczyk Think all the time. Refactor all the
          Message 4 of 4 , Jul 28 7:46 AM
            On Wednesday, July 28, 2004, at 10:30:38 AM, Steven Gordon wrote:

            > A project
            > that ends with no backlog is delivering software with no future.

            Nicely put, and worth remembering!

            Ron Jeffries
            www.XProgramming.com
            Think twice, code once. -- Thaddeus L. Olczyk
            Think all the time. Refactor all the time. Code forever. -- Y.T.
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