Agile contract : negotiate a contract in Agility for your digital projects
The subject of the style of contract to adopt in agile method is not new and has sparked many reflections from digital providers and not always productive negotiations between actors. But we have to keep in mind that contracting is a fundamental point for project success.
Contracting : fixed-price
In the traditional method, customers who are used to defining carefully detailed specifications and submitting them to their service provider know how much they are locked into this process of defining a fixed perimeter.
In terms of fixed-price contracts, at the slightest definition error or simply a minor oversight, they know that they will have to negotiate again with their service provider to try to bring the specifications modifications into the negotiated budget.
The provider, on its side fully endorses the risk of being blamed for any deviation from the specifications, a situation that can lead to disputes with his customer and financial problems to go.
He has to protect himself by translating Requirements of his customer into very detailed functional specifications that will lock up him even more within a rigid scope.
This classic contractual situation is often uncomfortable on both sides especially when the client / provider relationship is recent and they are both observing of the other party.
The contractual clauses
The usual clauses guaranteeing delay, penalties and duties for the result are normal to frame the relationship and define the commitments of the parties. They prevent the risk but become themselves risk factors!
All my colleagues with whom I spoke and who have had for years contractual relationship as customer or service provider know it: it works badly.
Clients who are familiar with their provider and who are used to working with them understand better the situation and a mutual agreement to ensure the success of projects often leads to a contractual arrangement.
This type of contract is ideal. However, the provider must be completely transparent regarding his services produced for the customer and his rates are generally revised downward in the negotiation.
In terms of agility, contracting with a customer should systematically be carried out based on time and materials in order to ensure a balanced relationship on both sides.
Contracting: time and material
Under a time and material contract, a part of the risk is however partly transferred to the customer and there is no guarantee that the goal he wishes to reach will be achieved and deadline respected.
This is exactly what Agility proposes.
We only commit to a financial budget and a deadline, the scope is not fixed.
The goal of producing the maximum value for the allocated budget is often misunderstood by customers who are in a recent relationship with their provider.
Customers not mastering Agility are often disconcerted, even hostile to the abandonment of a fixed scope that reassures them.
Agile contract ?
Attempts to frame this contracting process have led to the production of and bloated contracts, imposing so many constraints and safeguards clauses that end up offering the client such a level of complexity that he can only be reluctant to contract.
The typical example is contrat Agile proposed in Open Source by the site contrat-agile.org. This contract is an interesting initiative but it is heavy of more than 40 pages ...
For a customer, it is a major obstacle to Agility.
Contracting : how to proceed?
In my opinion, an agile service contract must be simple or must not be signed.
The very principle of agility is to simplify procedures and stay light with the development team.
Why not adopt this principle in the contractual relationship between customer and service provider?
I started from this principle to develop the Agile service contract that my company proposes to its clients. It is a very simple contract, where each party has the greatest freedom while respecting the essential rules.
The development of this contract took a lot of time. Keeping it simple is often a difficult exercise.
Software and Agile Contract
I have to admit, however, that without the help of our Agile project management software, I would have been embarrassed to translate the procedures into a contract.
Fortunately, the software frames the procedures by allowing the client to define his own needs and define his priorities.
Each of his needs is translated into development tasks and is estimated in the cost of related resources.
The customer decides at any time to start the development of the functionalities which he estimates to represent the most value for his project and is perfectly informed of the related cost.
In fact, he orders progressively, small amounts of development that increase his project. Each order represents the required quantity of resources previously estimated.
The iteration rule is respected, the deliveries taking place as each feature is added to the project.
The software automates the relationship with the customers and the contractual part is very lightened because the stakes are reduced to small amounts and the risk lowered on both sides.
Negotiating a digital application development in Agility is a real headache if you adopt a classic methodology. The solution developed by ZAPPIK allows an ideal contracting process:
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The orchestration of external resources is the key.
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No need to recruit, go hunting providers, write specifications.
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It's all about risk
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