Contracts                                 The Curse of the Change                         Control Mec...                                                                                                      ...
Contractswww.scl.orgchanges in the form of change       change falls within the existing       subjected to the changing (...
Contractswww.scl.orgThe Evolutionary Contract            or regulatory constraints).            at any point in time that ...
Contractswww.scl.orgsmall solution increments and                                        Endnotesby breaking down the time...
Contractswww.scl.orgConclusion                         change within their contracts.      Agile and Lean principles has  ...
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SCL May 2011 The Curse Of The Change Control Mechanism


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\’The curse of the change control mechanism\’ - article featured in the magazine of the Society for Computers & Law (SCL) in May 2011

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SCL May 2011 The Curse Of The Change Control Mechanism

  1. 1. Contracts The Curse of the Change Control Mechanism W e live in fast- The current pace of Such an approach works moving times. innovation doesn’t just affect well for commoditised products The current pace branded products. All aspects and services which can be of innovation is of information technology are defined upfront, and there exciting – but relentless, and affected, and all products and will always be a place for the potentially daunting for anyone services that are underpinned traditional contract models. trying to keep up. by information technology However, many organisations In the technology are affected. And if any of are in the business of sector, for example, those products or services are developing innovative and/or Apple sold 3 million procured from third parties, the complex products (eg software iPads in the first contracts with the third parties development) and services (eg 80 days following are also affected. the transformation of existing its release in April services in business process 2010.1 In less than Traditional contract models outsourcing). The issue here is a year this has Traditional contract models were that the products/services cannot spawned a brand designed for commoditised be precisely defined upfront. new market for tablet products and services. They The ‘Ronseal label’ is essentially computers, and are brittle and do not readily conceptual and only represents changed the face embrace change. This is an approximate estimate of of computing. That because the products and what is required. There is often is great news for services are defined upfront, great uncertainty surrounding consumers and and any change to this definition the definition of these innovativeContract change great news for requires an amendment to and/or complex products and Apple, but it can be the contract, which is usually services, and in the course ofmanagement and challenging for the governed by the change control the supplier trying to deliver what competition. mechanism. Instead of the the customer actually wantsthe limitations of the Nokia’s recent change control mechanism there will inevitably be change. quarter-end results embracing change, it istraditional system for show how quickly a generally regarded as fettering The ‘Cone of Uncertainty’4 company’s market and inhibiting change. Researchers have founddealing with change are share can evaporate In a traditional contract that in software development if it doesn’t keep up. for the supply of products projects estimates are subjectthe topics covered by In just one quarter and/or services, the products/ to predictable amounts ofSusan Atkinson and Nokia’s share of the smartphone market services are described in the contract, the delivered uncertainty at various stages throughout the project. In thisGabrielle Benefield. dropped from 38% to 31%, because products/services are checked for conformance with the context estimates could outline how much a feature set will cost of its failure to contractual description, and and how much effort will beThey advocate a better produce devices that various contractual rights and required to deliver that feature can compete with obligations arise, depending on set, or they could outline howway Apple’s iPhone and whether or not the products/ many features can be delivered smartphones using Google’s services meet the contractual for a particular amount of effort Android operating system.2 description. This approach or schedule. The ‘Cone of In the words of Nokia’s chief is best encapsulated by the Uncertainty’ (see figure overleaf) executive ‘They changed the expression made famous by shows how estimates become game, and today, Apple owns the Ronseal advert ‘It does more accurate as the project the high-end range’.3 exactly what it says on the tin’. progresses.5 VOL. 22 ISSUE 1 APRIL/MAY 2011 COMPUTERS & LAW MAGAZINE OF SCL 1
  2. 2. of products/services, half of those specifications will become obsolete by the end of month 6, half of the remaining half (ie 1/4) will become obsolete by the end of month 12, half of the remaining quarter (ie 1/8) will become obsolete by the end of month 18, and so on. Hence, by the end of month 18, according to the University of Missouri studies, only 1/8 (or 12.5%) of the contractual specifications for the products/services will still possess any inherent value. If the University of Missouri studies are to be relied upon, the implications for commercial Software development is a accuracy that it is possible services, but these projects contracts are enormous.process of gradual refinement. to achieve in estimates at are also increasingly subject to This would mean that if aInitially there is a product different points in a software change from external influences. project is running six monthsconcept (the vision of the development project. This is for The significance of the late, not only will the return onsoftware to be delivered) and two key reasons. First, the Cone impact of change on the investment be reduced, but thethat concept is refined, based of Uncertainty represents the contractual specifications for project is less likely to deliveron the product and project error in estimates created by products and services cannot be what the customer actuallygoals. Software development skilled estimators. Secondly, the understated. Studies undertaken wants. Even if the project runsconsists of making literally Cone of Uncertainty is modelled at the University of Missouri, according to plan, if the projectthousands of decisions about against well controlled projects. Kansas City, demonstrate that is scheduled to run for moreall the feature-related issues So, if a software development not only does the inherent value than a few months the partiesof the software. Uncertainty project is not well controlled or of the specifications for products have to expect a software estimate results the estimators are not skilled, and services decay over time It is therefore essential thatfrom uncertainty in how the the project will not drive out but that the pattern of the commercial contracts are abledecisions will be resolved. As enough variability to support erosion of their value is similar to adapt to the current pacea greater percentage of those more accurate estimates, and to the pattern of decay exhibited of ongoing and continuousdecisions are made, the level of it is likely that at any point in by an unstable radioactive atom. erosion of the inherent value inuncertainty should be reduced, time the estimates will be less Unstable radioactive atoms any defined specifications forand therefore the accuracy accurate than the Cone of decay exponentially. Their products/services. However, inof the estimates should be Uncertainty would suggest. rate of decay is described by the traditional contract modelsincreased. The presence of variability, reference to a ‘half-life’, which the parties generally have to In other words, the accuracy and therefore uncertainty, is not is a measure of the period of rely on an upfront descriptionof a software estimate depends limited to software development time it takes for the substance of the products/services inon the level of refinement of projects. It is also found, undergoing decay to decrease conjunction with the changethe software’s definition.6 The although to a lesser degree, in by half.7 control mechanism to dealmore refined the definition, the any project for the development According to the University with any changes to thatmore accurate the estimate. of innovative and/or complex of Missouri studies, the half- description.The reason why the estimate products and/or services. life of the value of a set ofcontains variability is that the contractual specifications for The limitations of the changesoftware development project The erosion of the value products and/or services has control mechanismitself contains variability. The inherent in contractual been rapidly decreasing. In Unfortunately the change controlonly way to reduce the variability specifications 1980 this was around 10–12 mechanism is being pushedin the estimate is to reduce the Not only is there inherent years, by 2000 it had fallen to to breaking point. When thevariability in the project. variability, and therefore 2–3 years, and it is currently change control mechanism It is important to appreciate uncertainty, in any project for running at about 6 months. was originally devised, itthat the Cone of Uncertainty the development of innovative In other words, if a contract served a useful purpose in thatrepresents the best-case and/or complex products and pre-defines the specifications it identified and segregated2 COMPUTERS & LAW MAGAZINE OF SCL VOL. 22 ISSUE 1 APRIL/MAY 2011
  3. 3. Contractswww.scl.orgchanges in the form of change change falls within the existing subjected to the changing (and continuous cycle of inspectingrequests. These were worked specifications and does not often conflicting) demands of the process for correct operationon separately from the main represent scope creep. a panel of armchair generals, and results, and adapting theproject, so that the status quo The change control was transformed into a hybrid process as needed. There areof the main project could be mechanism serves as a of a troop carrier, a scout three key elements to controllingpreserved until the impact of the distraction to the main project. vehicle and an anti-tank weapon an empirical process:change had been fully analysedand signed off by the parties. In any project, no matter how large the organisation and how platform. Seventeen years later and at a cost of $14 billion • Visibility. Those aspects of the process that affect However, what we are big the project, only a finite the resulting product was ‘a the outcome must be visibleseeing today is that projects are amount of resources will have troop transport that can’t carry to those controlling thesubject to so many changes been allocated to the project. troops, a reconnaissance vehicle process.that the scope of the changerequests is increasingly wide- This is for the simple reason that any project has to be that’s too conspicuous to do reconnaissance, and a quasi- • Inspection.the process must aspects of The variousreaching, there can be multiple justified on a cost-benefit basis. tank that has less armor than a be inspected frequentlychange requests under review When a change is requested, snowblower, but carries enough enough so that unacceptableat any one time, and there a member of the team has to ammo to take out half of D.C.’.8 variances in the process cancan be change requests to the be redeployed to analyse its In terms of software be detected. The frequencychange requests. The process of impact. If more change requests development, multiple of inspection has to take intoanalysing the impact of change are made, the number of team change requests can result consideration the fact thatrequests can take so long and members (or the associated in duplications of code and/ the process is likely to bebe so extensive that it has a number of man hours) taken off or conflicts in the code. This in changed as a result of thedestabilising effect on the main the main project and redeployed turn can mean that the software inspection. The inspectorteam: they are only too aware to change management is more prone to failure, more must possess the skillsthat their current work may be activities increases, leaving the expensive to maintain, and to assess what they arerendered nugatory following the main team less well resourced. that subsequent design and inspecting.approval of the change requests.The bigger the proposed Given the wide-reaching impact of many of the change development of the software will be more expensive. • determines from the Adaptation. If the inspectorchange, the longer the hiatus requests, it is not appropriate inspection that one or morewhile it is being analysed, and for the analysis of the change Empirical process control aspects of the process arethe more damaging the effects to be segregated and analysed In projects for the development outside acceptable limits andcan be. by a small sub-set of the team. of complex and/or innovative that the resulting product Instead of facilitating The impact of the change products and/or services, where will be unacceptable, thechange, the change control should be considered by the the amount of variability – and inspector must adjust themechanism actually serves team as a whole and its impact therefore uncertainty – is process or the material beingto restrict change. The whole considered across all aspects of significant, it is not practical processed. The adjustmentprocess of documenting the solution. to work from defined plans. must be made as quickly aschanges is time-consuming, Too often, the change Instead, Scrum advocates possible to minimise furtherconsumes valuable resources, control mechanism results the use of empirical process deviation.can be expensive to implement, in add-ons without sufficient control, that is, a form of control To achieve empirical processand adds no real value to the consideration of which features driven by experience and control, Scrum establishes anproject. It simply attempts to can be removed and how the experimentation:9 iterative, incremental framework.keep the contract in step with overall build can be rationalised. ‘Laying out a process that It splits:the pace of change. Furthermore, the change This is because there is very little incentive on the part of repeatedly will produce acceptable quality output • small, concrete deliverables, the work: into a list ofcontrol mechanism actually the supplier to carry out this is called defined process sorts the list by priority andfosters ‘bad behaviour’ between exercise. What was once an control. When defined estimates the relative effortthe parties because it polarises elegant solution with integrity process control cannot of each;their interests. In a fixed pricecontract it is not uncommon for may evolve into some kind of ‘Frankenstein build’. be achieved because of the complexity of the • the time: into short fixed- length iterations witha supplier to attempt to improve This is best illustrated by the intermediate activities, potentially shippable codeits profit margin by means of development of the M2 Bradley something called empirical demonstrated after eachinflating the charges for change Infantry Fighting Vehicle (IFV) process control has to be iteration; andrequests. And the customer isput on the defensive, attempting in the US. Originally developed as an armoured personnel employed.’ 10 The basic attribute of empirical • the organisation: into self- small, cross-functionalto justify why a proposed carrier, the Bradley, after being process control constitutes a organising teams. VOL. 22 ISSUE 1 APRIL/MAY 2011 COMPUTERS & LAW MAGAZINE OF SCL 3
  4. 4. Contractswww.scl.orgThe Evolutionary Contract or regulatory constraints). at any point in time that is key There are a number ofModel The concept of the solution is to building flexibility into the different charging modelsA new commercial contract gradually refined, based on solution. available. Each of these hasmodel, known as the the product and project goals The development of the advantages and disadvantages.Evolutionary Contract Model, and within the parameters of solution is conducted in a The optimum charging model is,has been created in conjunction the relevant constraints. As series of time-boxed iterations to a certain extent determined,with some of the leading thinkers the solution evolves, many of work. The iterations are of by the customer’s level ofon Agile and Lean for use in things will change along the fixed duration. They end on a experience of working in anprojects for the development way. Empirical process control specific date whether the work Agile and Lean way and by theof innovative and/or complex is employed to ensure that has been completed or not, level of trust existing betweenproducts and/or services. The the solution evolves within the and must never be extended.11 the customer and supplier.main influences underpinning parameters of the contracted Subsequent iterations build upon Teams that are relatively newthis model originate in Agile, scope. the working solution increment to Agile and Lean often chooseLean Software Development produced in earlier iterations. to use a time and materials(Lean) and systems thinking. The An overview of the At the beginning of each model (which provides morerelevant Agile methodologies are Evolutionary Contract Model iteration the customer selects accountability than in theScrum, Extreme Programming The following overview those SBIs from the solution traditional contract models);(XP), Evolutionary Project focuses on the construct of backlog which are the next most teams that have been workingManagement (Evo) and DSDM the Evolutionary Contract important for the customer. in an Agile and Lean way forAtern. Model. This overview is merely Once the supplier has agreed some time may choose to use Unlike the traditional intended to demonstrate how upon those SBIs which it a charging model based oncontract model, the Evolutionary the principles of Agile and Lean believes it can complete during units of work such as storyContract Model is not based can be reflected in a contract. that iteration, those SBIs are points or function points. Moreon defined process control. In It does not describe how the effectively ‘frozen’. They cannot advanced teams are looking toother words, it does not place Evolutionary Contract Model subsequently be amended by link charges to a quantifiableany reliance upon pre-defined regulates the full life cycle of the anyone during the iteration, measure of value.plans and specifications. For project, nor does it describe how and the acceptance criteria for A team is established by thethis reason, there are no a project which involves multiple those SBIs are agreed to by supplier to develop the solution.specifications or detailed plans and distributed teams should the customer and the supplier The team is both empowered byin the contract. be structured. The Evolutionary before work on the SBIs starts. the customer and accountable The fact that there are no Contract Model caters for these Each SBI is defined, built to the customer to deliver thespecifications for the solution in possibilities, but they are beyond and tested in a fast, concurrent project. On the one hand thethe contract leads to a couple of the scope of this article. loop. An SBI is evaluated for team has full discretion on howsignificant consequences. First, All of the customer’s desired acceptance, and when it passes it conducts each iteration, butthere is no need for a change features of the solution are the test, another SBI is selected on the other hand the teamcontrol mechanism, because captured in a central repository from the solution backlog. If it is expected to self-organise,neither the charging model nor known as the solution backlog. fails, it is re-worked – on the self-manage and self-achievethe supplier’s focus of work The solution backlog does not spot – until it passes the test. the objectives of the linked to any contractual form part of the contract and has The customer assesses whether This means that the team mustspecifications. Secondly, there no contractual status. However, each SBI is ‘done’, and therefore be cross-functional and mustare no contractual acceptance the solution backlog must be completed, by checking whether contain a sufficiently wide skilltests because there is no supply within the scope of the contract. the solution increment that is set for the solution to be fullyof products/services against The items on the solution delivered to the customer at completed by the team withoutcontractual specifications. backlog (the solution backlog the end of the iteration meets external input. There must Instead, the Evolutionary items or SBIs) are prioritised the criteria defined and agreed be representation from theContract Model uses empirical in terms of importance to the by the customer and supplier customer on the team, but theprocess control to manage customer, and may take the form at the start of the iteration. To roles of the supplier and thecomplexity, variability and of products (including software), the extent that the solution customer are quite different.change. The contract sets out deliverables or services. The comprises software, this means Benefits of thethe overall scope of the solution. solution backlog may be, and that the code must be fully Evolutionary Contract ModelThis is expressed in terms of the should be, amended and refined tested, working and potentially The Evolutionary Contractvision statement for the solution, by the customer throughout deployable.12 Warranties could Model reduces the element ofthe product and project goals, the life of the project. It is this be given by the supplier in uncertainty and therefore riskand any relevant constraints ability of the customer to make terms of the solution increment in the project both by breaking(such as schedule constraints changes to the solution backlog meeting the pre-defined criteria. down the solution into many4 COMPUTERS & LAW MAGAZINE OF SCL VOL. 22 ISSUE 1 APRIL/MAY 2011
  5. 5. Contractswww.scl.orgsmall solution increments and Endnotesby breaking down the time into 1 ‘Apple sells three million iPads in 80 days’ press release on the Apple web site fixed-length iterations. At com/uk/pr/library/2010/06/22ipad.html.the end of each iteration the 2 ‘Nokia loses smartphone market share’ by Andrew Parker, published in the FT on 27 January 2011.customer is given visibility of 3 Stephen Elop, Nokia chief executive, as quoted in the Times on 10 February 2011.the fully completed solution 4 With thanks to Steve McConnell whose book ‘Software Estimation: Demystifying the Black Art’increment. This gives the provides the basis for this section.customer the opportunity and 5 The original conceptual basis of the ‘Cone of Uncertainty’ was developed by Barry Boehm in 1981.the power at regular intervals to The model has since been validated, based on data from a set of software projects at the US Airrefocus the work of the supplier, Force, NASA’s Software Engineering Lab and other sources.and potentially to refine the 6 According to research conducted by Luiz Laranjeira in 1990.ultimate solution, based on what 7 Al Goerner at the University of Missouri, Kansas City.the customer has actually seen. 8 The development of the Bradley M2 fighting vehicle was satirised in the movie clip ‘The PentagonThis ability of the customer to Wars’, available on YouTube adaptively throughout the 9 Scrum is the most popular Agile methodology, according to the survey ‘State of Agile Development’term of the project is incredibly commissioned in 2009 and sponsored by VersionOne.powerful. 10 ‘Agile Project Management with Scrum’ by Ken Schwaber. Ken Schwaber and Dr Jeff Sutherland The Evolutionary Contract are the co-founders of Scrum.Model facilitates a fast and 11 There is a variation to this in the Evolutionary Contract Model based upon the principles ofcost-effective development Kanban.process. The solution increment 12 Although the software is capable of being deployed, the customer may choose not to deploy thedelivered at the end of each software until it is at a greater level of maturity.iteration builds upon and is fully 13 The Pareto principle was developed by Vilfredo Pareto, a noted economist and sociologist, in theintegrated with all earlier solution late 1800s.increments. In other words, the 14 Standish Group study reported at XP 2002 by Jim Jonson, Chairman; internal software products.solution starts to take shape 15 The US Department of Defense used to be one of the most frequent users of the traditionalfrom the very first iteration and waterfall methods of development. Throughout the 1980s and into the 1990s most projects run by thecontinues to develop from there. US Department of Defense were mandated to follow a waterfall cycle of development as documentedAt any point in time the partially in the published standard DOD STD 2167. That is no longer the case. Under the 2010 Nationaldeveloped solution will address Defense Authorization Act President Obama gave Defense Department officials a deadline of Julythe customer’s most current 2010 to create new acquisition processes that can deliver IT systems in no more than 18 months byneeds because at the start of incorporating certain Agile principles.each iteration the customer has 16 ‘5th Annual State of Agile Development Survey’ conducted by VersionOne, dated 7 Novemberthe opportunity to refocus the 2010.efforts of the supplier. 17 ‘Agile methodologies: Survey results’ conducted by Shine Technologies, 2003. The customer may in factbe able to achieve its objectivesfor the solution and derive 64% of software features are concluded that 75% of the visibility.16 On all the measures 14value from the completion of typically never or rarely used. projects failed or were never investigated by VersionOne,less than half of the features used.15 at least 94% of respondentsthat it originally thought were Statistics on traditional and Those results can be said the performance wasnecessary to build the solution, Agile projects contrasted with the results no worse and, in mostapplying the Pareto principle. Projects using Agile have been of several major studies to circumstances, was improvedAccording to the Pareto principle found to be more successful and determine the effects of using over the situation before Agile(also known as the 80–20 rule), more likely to be delivered on Agile methods to manage adoption. Similarly, according tofor many events roughly 80% time than traditional projects. the development of software. an international survey of 131of the effects come from 20% According to the Standish For example, according to an respondents conducted by Shineof the causes.13 It has been CHAOS report for 2009 many international survey of 4,770 Technologies in 2003, 93%demonstrated, for example, traditionally developed and respondents conducted by of respondents experiencedin software that 80% of the run projects were less than VersionOne in 2010, 46% of productivity increases, 88% ofbenefits of an application are successful: 44% were described respondents experienced an respondents experienced qualityderived from the use of just 20% as challenged and 24% failed. improvement in their ability to increases, 83% of respondentsof the features. This is borne out Similarly a report on the failure manage changing priorities, experienced improvements inby the results of the Standish rates of the US Department of and 39% of respondents customer satisfaction, and 49%Group study, which reported that Defense projects in one sample experienced improved project experienced cost reductions.17 VOL. 22 ISSUE 1 APRIL/MAY 2011 COMPUTERS & LAW MAGAZINE OF SCL 5
  6. 6. Contractswww.scl.orgConclusion change within their contracts. Agile and Lean principles has Gabrielle Benefield is DirectorUnprecedented levels of change More and more organisations been developed, and legal at the Scrum Training Institute.arising from the increasing pace are adopting Agile and Lean practitioners should consider thisof innovation are stretching principles for the development as a possible solution. ● Susan Atkinson and Gabriellethe traditional contract models of innovative and/or complex Benefield are currently writingto breaking point. Legal products and/or services. A new Susan Atkinson is Legal a book on Evolutionarypractitioners need to find a contract model, the Evolutionary Director at gallenalliance Contract Models, which is duebetter way to accommodate Contract Model, based on Solicitors. to be published later this year.6 COMPUTERS & LAW MAGAZINE OF SCL VOL. 22 ISSUE 1 APRIL/MAY 2011