How much will this cost?
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This document discusses various contract models for software development projects, including time and materials, outcome-based, fixed cost, fixed scope, and fixed time and scope contracts. It provides examples of each contract type and discusses how to plan, estimate, deliver, and measure when using different contract models. The key message is that different contract types provide different levels of predictability for cost and schedule while balancing flexibility, and that customer collaboration is more important than contracts alone.
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How much will this cost?
- 2. Evan Leybourn lean / agile business leader and author Singapore @eleybourn http://theagiledirector.com CLICK TO DISCOVER MORE
- 3. “There are so many men who can figure costs, and so few who can measure value.” - Anonymous
- 4. “how much is this going to cost?”
- 5. “how long is this going to take?”
- 6. “what am I going to get?”
- 7. predictability the fundamental flaw in software contracts
- 8. customer collaboration over contract negotiationwhile there is value in the items on the right ...
- 9. understand your workflow A Z option 1: increase capacity option 3: drop requirement option 3: increase duration
- 11. time and materials most “agile” contract model, but linear growth
- 12. outcome-based contracts “power by the hour”
- 13. scope
- 14. scope fixed cost a fixed price quote prior to any work commencing
- 15. scope an example provide operational support and maintenance services
- 16. scope quoting identify, and estimate, the approximate user stories in iteration 0
- 17. scope delivering reduce effort on technical debt and use short (1-2 week) iterations
- 18. scope measuring velocity and burn rate are your key indicators of cost
- 19. scope fixed time delivery is expected by a specific date
- 20. scope an example design and print new marketing material for a product launch
- 21. scope estimating use historical velocity data to estimate the expected duration
- 23. scope measuring tracking team and project velocity and/or cycle time
- 24. fixed scopefixed scope a fixed set of requirements – sometimes know and heavy agile
- 25. fixed scopean example deliver financial reports prior to the end of the financial year
- 26. fixed scopeplanning focus on backlog definition and estimation during iteration 0
- 27. fixed scopedelivering work in predefined, and agreed, backlog order
- 28. fixed scopemeasuring acceptance of user stories
- 29. fixed scopefixed cost & scopea fixed price quote for a pre-defined set of requirements
- 30. fixed scopean example build and deliver a product to architectural specifications
- 31. fixed scopequoting & planning during planning, increase contingency (% or $) for the unexpected
- 32. fixed scopedelivering adjust delivery date in addition to fixed cost and fixed scope
- 33. fixed scopemeasuring as per fixed cost and fixed scope
- 34. fixed scopefixed time & scope a fixed set of requirements with final delivery due by an agreed date
- 35. fixed scopean example recruitment of staff prior to a new project commencing
- 36. fixed scopeplanning & estimating pre-assign stories into iterations and allocate time to technical debt
- 37. fixed scopedelivering if required, increase the team size prior to completion
- 38. fixed scopemeasuring as per fixed time and fixed scope
- 39. scope fixed time & cost a fixed price quote with an agreed delivery date – known as capped t&m
- 40. scope an example work on an agreed product until the end of the financial year
- 41. scope quoting & estimatingcalculate total cost as cost per cost per iteration
- 42. scope delivering update backlog as required in addition to fixed time and fixed cost
- 43. scope measuring as per fixed time and fixed cost
- 44. fixed scopefixed time, cost & scopeno flexibility in the project budget, schedule, or requirements
- 46. fixed scope but...If you start with t&m...
- 47. release the lawyers managing exposure and risk
- 48. “What am I going to get?”
- 49. “Whatever you tell us you want.”
- 50. “How long is this going to take?”
- 51. “As long as is necessary.”
- 52. “How much is this going to cost?”
- 53. “As much as you’re willing to spend”
- 54. http://agilebusinessmanagement.o rg - Case Studies - Articles - Community Join our Agile Journey
- 55. To learn more, check out Directing the Agile Organisationby Evan Leybourn available at Amazon and all good book stores CLICK TO DISCOVER MORE
- 56. PS: #noprojects consistent and continuous, outcomes focused, change
- 58. Do Defer Limit Avoid Low Effort (5 minutes)High Effort (Ongoing) HighValueLowValue Status Quo
- 59. To learn more, check out Directing the Agile Organisationby Evan Leybourn available at Amazon and all good book stores CLICK TO DISCOVER MORE
Notas del editor
- Legal vs non-legal contracts
- Blank cheque
- By project, release or project
- Performance based contracting But how do you define an outcome SaaS, pay per use, & partnerships Business Case - a document which reviews potential risks, benefits and other potential impacts of a PBC, usually presented to senior managers to aid in their decision making Outcomes - a short statement reflecting the desired result or final deliverable of the contract Measures - define a set of performance measures that collectively measure the organisations performance against the outcome statement Levels - set performance levels for the performance measures, i.e. how well the contractor needs to perform Payment - develop a set of payment curves which set out the pay for performance regime i.e. how much the contractor gets paid for their performance level Incentives - set out a group of incentives that encourage positive behaviours and discourage negative behaviours Contract - draft, review, workshop and finalise a contract which covers all aspects of the performance, payment and terms and conditions of the relationship Review - conduct an analysis of the outcomes of the PBC, taking into account the differing definitions of success from the different groups involved in the contract.
- Fixed price doesn’t neccersarily mean fixed time, cost and scope Also misleading
- Misleading; 30% extra cost
- Lever: hourly rate
- work in absolute Customer priority order. Reducing the time spent on technical support Tasks will help meet short-term budget constraints, at the cost of long-term efficiency. For Incremental Delivery, release in short (one-two week) Iterations. Longer Iterations have a tendency to cost overruns, similar to waterfall projects
- Why can’t we use story points
- • For Requirements with equivalent priorities, work in Story Point order (from smallest to largest). This increases the total number of Requirements the Team can complete by the due date. • Enforce Iteration duration for Incremental Delivery. The duration is defined by a fixed number of Iterations, and extending an Iteration will push out your final date.
- How to deliver: Work in predefined, and agreed, Requirements Backlog priority order.
- Increase the estimate risk during planning, to ensure your quote allows for unexpected delays that would affect your cost to deliver.
- Not change request – exchange request
- Pre-assign Requirements by week, or Iteration, during planning, to define the scope delivery timetable. Pad the schedule with extra time, to cater for unexpected defects, or technical debt.
- Increase the size of the Team prior to completing all the Requirements (e.g. three-four Iterations for Incremental Delivery), if required, to ensure the scope is completed on time
- Collaborate with them early
- Let’s finish off by looking at our original definition of business growth; Business growth comes from applying profitability to customer growth. Profitability comes from delivering services to your customers, accurately and efficiently. Over the last 15 minutes we have looked at some of the mechanisms from the lean and agile traditions that we can apply for adaptable businesses and sustainable business growth. And I’ll leave you on that note. Any questions.
- Blank cheque