Abstract: Agile has moved far beyond commercial software into the world’s largest enterprises and government agencies. We have scaling methods which can help launch vehicles into the atmosphere and beyond, yet traditional contract mindsets have put a drag on escape velocity. But there’s good news! We have agile explorers discovering the next frontier of contract agility. Join us for this session and enter the new era!
TRADITIONAL MODELS TO LEAN-AGILE APPROACHES Fixed requirements, big up-front design, and gated processes have been the norm. The rationale seemed logical in the past. It would not make sense to award a contract or commit to a major development investment without knowing what the system is supposed to do, how much it costs, and when it will be completed. We assumed that complex systems could be fully defined before they were built, that requirements and solutions would not change, and that we could build it right the first time.
Traditional models exist:
- Fixed Price (also known as Firm Fixed Fee/FFF)
- Time and Materials (also known as Cost Plus Firm Fixed Fee)
But Lean-Agile approaches are gaining momentum:
- Variable cost with price ceilings
- Variable scope driven by vision and backlogs
- Innovation in timeboxes to explore and exploit new opportunities
- Fixed quality based on sound technical practices, with “good enough” defined up front
SYSTEM INTENT IN THREE ZONES We need to balance what is fixed and what is variable to achieve the intent of the system.
- The Zone of False Expectations – Here, we believe we can define up front what is needed and that we can build it right the first time. For complex systems, we live in a zone of false expectations if we choose a pure Fixed Price or Time and Materials contract. Implementations can crash and burn.
- The Zone of Innovation and Exploration – Here, you can use a Time and Materials model which operates within a timebox and high level scope reflecting the intent of the innovation and exploration. Undreamed ideas can soar.
- The Zone of Collaborative Systems Building – This is the zone most enterprises strive for. A hybrid contract based on context can be our launch pad.
ENTERING THE ZONE OF COLLABORATIVE SYSTEMS BUILDING To enter this zone, we need a contracting model which supports realistic outcomes, balances non-negotiables, and builds trusting relationships. An agile guidance system will align procurement officers, lawyers, business sponsors, and project managers for contract agility!
Learning Outcomes: - Identify traditional contract constructs and communicate how they inhibit agility
- Explain emerging Lean-Agile approaches to contracts in the private and public sectors
- Understand and explain the "Three Zones of System Intent" model to provide a conceptual contract framework
- Know how to apply the "Three Zones" model to balance Fixed Priced and Time and Materials terms
- Identify additional contract terms to enable collaborative systems building
- Gather the tools to change traditional mindsets which inhibit Agile Contracts
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