“Agile-izing” our fixed price projects
When managing projects we can see two clear and well separated streams. On one side there are fixed prices projects. Fixed price projects have commercial advantages such as being able to put a price at a defined scope of work before writing the first line of code. Because of this, fixed price projects are typically prefered by customers since they allow them to budget accurately and keep the risk under control. However they also bring challenges concerning execution considering projects’ health and profitability because the work estimation usually is not that accurate or is maybe you based on a pricing in a scope that will experience several changes. These risks have to be managed in some way and end up consuming a significant amount of time. On the other hand, we have time & material projects, which embrace an open work approach in which changes are always welcome and completely carried out using Agile frameworks. Agile frameworks avoid common problems we face with Traditional ones and there are numerous benefits that validate that they do so successfully. We promote innovation and improve the whole teams’ daily work by mixing both worlds (Agile and Traditional).
This applies not only for software projects and similar ones but also for any kind of projects regardless of their industry. Therefore, leaning on Agile frameworks, looking for improvement in management processes, can be a beneficial practice even when working under the fixed price model. The aim of this article is not making a comparison or detailing methodologies or frameworks, but communicating how, according to our experience, we can improve the management of fixed price projects using different tools.
When a project is running under a fixed scope it is really common that new features are requested as a result of business requirement changes, or simply because the feature wasn’t identified on time. This triggers a change management process that can be time-consuming and imply high administrative costs for both parties to amend the original contract and agree on the changes of the statement of work. The commercial part has to get involved again and the work program that was planned has to be completely modified. Different from this, changes in the project that are communicated mid-project are a lot easier to accommodate with Agile frameworks. These frameworks propose that through those artifacts one can create a tasks’ backlog with the features that need to be implemented throughout the project while focusing on short implementation periods (Sprints) and you can see the advances week by week (or the time the Sprint was planned). Project progress and corrections are visible for you through Scrum events: daily, reviews, and retrospectives meetings. In that sense, traditional projects do not offer a comparable level of visibility throughout the project.
Daily meetings, used with criteria, provide an excellent vision of how the Developing team is working and help to carry out any necessary adjustments when planning the project. For example: one could get quick results and customer satisfaction in each Sprint by delivering an incremental version of the final product or leave out excessive bureaucracy. Having review meetings, in which demos to stakeholders can be done, is an excellent opportunity to detect inconsistencies in initial definitions (what was thought to be fixed scope) and with it change management flows more naturally and the negotiation with the client is much more transparent. What is more, demos allow stakeholders to see that what they requested at the beginning of the project is incomplete in comparison to the real need they aim to satisfy. In many cases, when stakeholders are committed to the cause, it is possible that they visualize what follows in the project and correct certain aspects on time.
To sum up, fixed price projects will continue existing. There are a few advantages to them that simply make them a better choice in some scenarios. In these cases, try to challenge the common belief that fixed price projects require a methodical Waterfall approach. Consider playing around with other tools available from other methodologies or frameworks. In the case of Scrum, these artifacts can improve daily management and avoid usual problems that those fixed price projects have. By way of Agile artifacts, we offer flexibility, transparency while maintaining fixed prices and seeking for success in your projects. This way, you can participate in your project by being part of daily meetings, reviews, and so on, and we carry it out in a collaborative way.
Proven case
In a project for an important worldwide client from the finance area, we used Sprints in order to get an accurate plan for the next two weeks. During these Sprints, we had several refinement instances with the project sponsors and stakeholders as well as with the business analysis team and Developers, in which we focused on discussing the challenges of the Sprint in progress and how to overcome them. At the end of each Sprint, we had review meetings with the client in which, with the use of demos, we could anticipate and mitigate problems. As well as this, we incorporated retrospective meetings that helped detect performance issues and apply quick improvements. For instance: retrospective meetings helped detect a malfunction on a Developer’s computer that caused several delays and issues when coding as well as an overhead on the automated code tests; with quick and simple actions we achieved an improvement of around 45% on the overall performance.
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