This document discusses how agile software development can go wrong if not implemented properly. It provides an example of a project between an offshore vendor in India and a UK customer that failed due to a lack of understanding of agile methods. Key issues included using a standard development contract with fixed dates and prices instead of a flexible agreement, and limited experience with agile practices by both parties. Potential solutions involve using multi-stage, target cost or target schedule contracts; creative pricing models; and effective governance to formalize regular scope and schedule changes. The conclusion emphasizes that the contract must be dynamic to guide a collaborative relationship rather than just state obligations.

1. 2010 Hunton & Williams
Agile Software Development – How it can go
wrong
Purdey Castle
Associate

2. 1. What is Agile Software Development?
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3. Agile Software Development: Key Concepts
 A reaction to “waterfall” models
 Iterative development
 Collaboration / Team work
 Cross functional teams
 Face-to-face communication
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4. Manifesto for Agile Software Development
We are uncovering better ways of developing
software by doing it and helping others do it.
Through this work we have come to value:
Individuals and interactions over processes and tools
Working software over comprehensive documentation
Customer collaboration over contract negotiation
Responding to change over following a plan
That is, while there is value in the items on
the right, we value the items on the left more.
Kent Beck James Grenning Robert C. Martin
Mike Beedle Jim Highsmith Steve Mellor
Arie van Bennekum Andrew Hunt Ken Schwaber
Alistair Cockburn Ron Jeffries Jeff Sutherland
Ward Cunningham Jon Kern Dave Thomas
Martin Fowler Brian Marick
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5. Agile Adoption
 Benefits:
– Enhance ability to manage changing priorities
– Improve project visibility
– Improve alignment between IT and business objectives
 Experience with Agile Development Practices - 93%
 Organisations that used Agile Development Practices - 84%
 Company Projects that used Agile Development Practices - 50%
 Had not experienced a failed Agile project - 23%
Source: Agile Development Survey, 2009
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6. 2. Agile Software Development – How it
can go wrong
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7. What can go wrong?
“Having stakeholders who think that agile means
changes which do not bring costs..”
“Poor communication channels…”
“Thinking agile means cowboy…”
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8. Case Study: Web Application
 Offshore vendor based in India
 UK customer – replacing existing vendor and looking
to save money
 Original design not provided by incoming vendor
 UK customer seeking to use Agile Development
without detailed understanding of Agile methods
 Offshore vendor with limited experience of Agile
Development
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9. Conflict with Agile Projects
 Use of standard IT development contract
 Fixed dates for delivery
 “Time is of the essence”
 Formal change control processes
 Vendor assumes contractual risk of delivery
 Payments linked to milestones
 Liquidated damages for delay
 Termination rights for poor performance, delays or
non-compliance with specifications
 Fixed price
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10. 3. Possible Solutions
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11. Flexibility
 Multi-stage contracts
– Separate contracts / work orders for each stage of delivery
– Fixed schedule, variable scope
– Progress to a fixed contract
 Target cost contracts
– Middle ground between fixed contract and T&M contract
– Shared risk-reward
– Vendor and customer agree on the total target cost of the project, including
all changes.
 Target schedule contracts
– Fixed resources
– Fixed schedule
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12. Flexibility
 Creative pricing models
– Fixed budget eg., “…we have a budget of £x. We require
release 1 on 31 July – we will work together to deliver the
best set of features to go live on 1 July”
– Separate negotiation for each iteration
 Effective governance model
– Ensure project teams understand Agile Development
practices
– Governance / Change review boards to regularly formalise
scope / schedule changes
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13. Conclusion
 Parties need to acknowledge that scope cannot be
fixed in the contract
 Creativity needed around pricing
 Effective governance is essential
 Contract is still essential, but it must be a dynamic and
flexible document, and used as a guide for a win-win
relationship – not just a statement of obligations
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14. Questions?
Purdey Castle
Associate
Hunton & Williams
+44 (0) 20 7220 5623
pcastle@hunton.com
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