Agile Fixed Price Contracting

Posted by Deborah Hartmann on Jul 03, 2006 05:50 AM

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Contracts & Negotiation,

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Agile Fixed Price Contracting - surely this is an oxymoron?

On the high-traffic ScrumDevelopment newsgroup, where some of the industry's most senior Agile managers and developers dialogue, an interesting question has appeared: "Is it possible to run SCRUM with fixed price contracts, especially custom projects?"  This topic has appeared periodically in the last few years: interestingly, for such a busy list, there is often little response to questions on this topic.  In this case, the heavyweights (no pun intended :-) have weighed in:

Mike Beedle, co-author of the original Scrum book recognizes the problem:

"I understand your frustration. The "big fixed price project" situation happens in most large companies, and in many small and medium ones is not uncommon."

Beedle went on to offer a series of suggestions in three categories:

1. Estimate for the Overhead Upfront (Bloat Upfront)
2. Use the "Fixed Bid" to your advantage aka stong Change Management
3. Do "Fix Bid" as "Fixed Number of Hours"

And in response to this more detailed question:


Ron Jeffries replied with his usual candour:

"You certain can ... you can do the estimates the same way you would were you not doing Agile. I would imagine that that didn't work very well in the past, and that it would continue not to work very well in the future."

Note that recently Mike Dwyer posted a useful link on this list to an article in Crosstalk, Journal of Defense Software Engineering., entitled "Lessons Learned Using Agile Methods on Large Defense Contracts" by Paul E. McMahon, Certified ScrumMaster (CSM).

Some Scrum Trainers do include an optional module in the CSM training on contracting.

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   Fixed Price? Don't get stung.

   Jul 4, 2006 5:11 AM by paul browne

   Blogpost on doing Fixed Price Projects. Paul

   Reply

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