Each time I attend a conference about agile software development, inevitably, the same question always appears: how to deal with fixed price contracts when working on agile methodologies. Usually, people did not get any satisfactory answers.
Scott Ambler, Practice Leader Agile Development within the IBM Methods group,
invariably gets the same question when working with clients or internal development teams. So he decided to take it one step further and address the question in the Dr. Dobb’s article “Agile on a Fixed Budget: Resources, schedule, and scope“:
The column first summarizes strategies for what you would do when each of these factors is allowed to vary so that you understand what trade-offs you’re making. Then it describes what I consider to be your best approach remaining to you for each combination of constraining the three factors. The main point of the article is that although it isn’t ideal to have one or more of these factors constrained, you can still take an Agile approach even when such constraints exist.
Scott approach is not the panacea, but it’s a worth read.
Another interesting read is the Arnon Rotem-Gal-Oz post “Fixed Bids and Agile Projects”, which shares a few strategies he successfully used and provides two useful links: Agile Fixed Price Projects part 1: “The Price Is Right” and Agile Fixed Price Projects part 2: “Do you want agility with that?”.
And finally, here there are some other opinions I have recollected:
- Fixed Price Contracts and Agile Delivery: Richard suggests to apply agile’s iterative approach to the proposal.
- Successfully Applying Agile to Fixed-Bid Projects: the post suggests that the customer must understand that the fixed-bid is not in their interest if the scope is also fixed.
- Fixed bids, agile projects: Oren points out several options and give some tips on how to win such projects.
- Agile development in a FDA regulated setting: this post explains why agile methodologies have a long way to go before we see them commonly used in regulated environments, in this case, FDA.
- FixedPrice: Martin Fowler points out that you can’t come up with a fixed scope when working on fixed price contracts.
- Fixed-Price Agile Projects: Peter’s approach is to fix price each iteration before it starts.
Do you have any other successful strategy or experience?