Got a tight budget for next year?

Perhaps a fixed price contract is what you are looking for. Yes? Well, that’s fine with us.

What?

Anyone that has heard my thoughts on fixed-price contracts for software development are going to think I’ve gone mad. I was very against them. However, we are all allowed to change or minds. After all, we let our customers change their minds every two weeks, so why can’t we?

So what changed my mind?

First, we have moved to an Agile contract. This contract lays out how our agile process works, who is responsible for what at each step, how we plan and track requirements, how testing is performed, and finally how the technology transfer is handled. There is also a bunch of legal jargon in there too.

Second, the more Agile we get, the better we get at estimating work, though nothing is perfect.

Third, fixed price does not mean fixed scope. I am sure that everyone reading this has had clients (or product owners, some of which you may call “the business”) that had to have absolutely every feature in the initial release of an application. How many of those features get used? What’s the business value of each of those features? Do you even know? A fixed price contract will, in a way, force the customer to think in terms of value. What has to be in the app? What would be nice to have? What can we leave out for now?

Fourth, it helps our customers budget their development expenses. Sure, a $100K might turn into a $120K project. From what I hear, a $100K project can turn into a $200K project. But do they have to? Can your business afford for that to happen? I doubt it.

Fifth, the results of agile project speak for themselves. In the latest “State of Agile” survey, 89% of respondents said they increased productivity, 83% accelerated time-to-market, and 84% decreased software defects. All from implementing Agile. Visit the Agile Development with Scrum website for more.

The Bottom Line

Fixed-price contracts can allow for flexibility, and win-win scenarios. In today’s market, companies cannot afford large cost overruns, a story heard time and again from countless software projects of the past. Traditional project management will lead to traditional results – failed projects, unnecessary features, and unhappy customers. Expect more. Get more.

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