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  • Writer's pictureDan Covey

Fixed deliverable contracts aren’t very Agile

Agile was born out of a frustration with the failure of traditional project planning and execution methodologies to successfully deliver software projects. Plan, Develop, Test, Deliver - these the core components of the Waterfall software delivery method work great when your project deliverable is a house, a bridge, or a battleship, but fail when applied to software. You could be working through the various phases, meeting milestones and phase gates, but when the market changes or the problem your software was going to solve is suddenly not a priority any longer. The result? Months of effort with no return on investment.

That's why we use Agile methodologies for software development and data science projects. However, while the delivery methodologies have changed in the last 20 years, vendor contracting still treats a data science consultancy like an office goods supplier. The conversation isn’t quite “Yeah, can I get a quote on a case of data science? What’s the quantity discount if I buy an entire pallet of data science?” The question can’t be answered. Data science or application development is only the tool a consultancy uses to achieve solutions that solve real world business problems, not the overall program goal.

So, how does Agile delivery work in a fixed fee, deliverable or milestone consulting contract? A fixed fee contract is designed to transfer risk from buyer to seller. To mitigate that risk, the seller tightly constrains the deliverables and places a risk buffer on top of the cost estimate. The result is that both parties spend weeks negotiating the initial contract, then additional weeks negotiating change orders, which adds additional overhead to both parties. That isn’t very Agile. In fact, it directly contradicts one of the four principles of the Agile Manifesto: Customer collaboration over contract negotiation.

If we accept that Agile is the preferred method for delivering data science and software projects, because it is more likely to be successful than other methods, doesn’t it follow that we should incorporate the core principles into the entire business relationship? Shouldn’t we collaborate rather than negotiate? If so, we need a contract framework that provides a win-win solution for customer and consultant.

At Blue Vector, that framework is the Agile delivery team model. We bring a flexible role pallet of resources that can be rotated on or off the project as Sprint objectives dictate, allowing multiple team configurations to address overall program goals, such as data modernization, application development, or data science and analytics. This fixed capacity, fixed fee model, where both parties work together to plan the work and the outputs of the sprint are the value of the engagement.

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