1.
Picture source: Flickr.com

2.
• Clients believe user, functional and system
requirements are fully known and
documented in a way that enables
efficient development
• And that’s why many features developed
are never used
• Projects finish out of budget
• And mostly too late

3.
Which implies “waterfall” development
assuming:
1. You have completed a thorough,
efficient design phase, and
2. Requirements won’t change during
the development process

4.
• and over processes
and tools
• over comprehensive
documentation
• over
• over following a plan
Source: Agilemanifesto.org

5.
Scope Budget
Quality

6.
• Time & Material
– Protects the supplier (no risk)
– No protection for the customer (full risk)
• Capped Time & Material
– Fixed agreed budget
– Share savings
– Often variable scope projects
– Supplier expenses paid upfront
– Customer’s risk limited
© Goyello - Confidential 10

7.
• Incremental delivery
– Customer can stop project at any “delivery
moment”, “Money for nothing”
– 20% (or more) of remaining budget for provider
• Cost targeted
– Both parties agree on a realistic final price,
although this is rather difficult
– Savings will be shared
– Over budget both parties pay a penalty
© Goyello - Confidential 11

8.
The proof of the pudding

9.
Client
Call Center
Health facility
Sell insurance
Contracting
Appointment
Visit
Invoicing

10.
• Workshops with end-users
• High level estimation for 10 releases
• Agreed fixed budget with cap, cost targeted
• Every release new contract
• Iterations upfront agreed
• Acceptation criteria “known”upfront
• Satisfaction evaluation (with payment
impact) per iteration/release
• Changes as appendix
• New work, additional budget

11.
Picture source: stock.xchng

12.
• Framework agreement
• Agreement per release
• Fixed budget (per release as well)
• Fixed date
• Flexible approach/scope
Planning Realization Evaluation
iteration
2 week iterations
Agreement
about the
planning
Demo showing
the iteration
result
SKOK provided a
mark for the
iteration
Release
definition
(contract)
Release
Acceptation
protocol
Iteration
agreement

13.
• Software Development: How the Traditional Contract Model Increases
the Risk of Failure, Susan Atkinson and Gabrielle Benefield, 28 May
2013, InfoQ, http://www.infoq.com/articles/contract-model-failure
• An overview of Agile Contracts, Kane Mar, http://scrumology.com/an-
overview-of-agile-contracts/
• Why Traditional “Fixed Bid” Software Projects Usually Fail, Paul
Dittmann, 15 December 2009,
http://pathfindersoftware.com/2009/12/fixed-bid-projects-fail/
• Money for nothing and change for free,
http://jeffsutherland.com/Agile2008MoneyforNothing.pdf
• Money for nothing, https://sites.google.com/a/scrumplop.org/published-
patterns/value-stream-pattern-language/product-backlog/money-for-
nothing
• Change for free, https://sites.google.com/a/scrumplop.org/published-
patterns/value-stream-pattern-language/product-backlog/change-for-
free
• Flexible contract template, http://flexiblecontracts.com/
© Goyello - Confidential 19

14.
Contact details:
@ peter.horsten@goyello.com
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 http://blog.goyello.com
 http://peterhorsten.com
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