Agile Contract -- How ToBy Pi-Hsing Chung

A Little Bit About Pi

A Little Bit About

u 15 Years I.T experience. 10 years in Canada.

u Practiced and led Agile Style projects starting from 2003.

u For the past 5 years in Taiwan as

u Business Analyst / I.T Business Analyst

u Information Systems and Information Security Auditor.

u Internal Auditor

u Participated in projects with names -- CMMI, ISMS, BPM,CRM, HRIS, and other I.T / Management Systems.

u M.S MIS from University Of Illinois

u My name can be linked to CISA , CISM, ITIL, CSM, CSPO.

A Little Bit About This Sharing

uIt doesn’t matter whether you areDoing Agile or Being Agile !

u“Agile approaches” are For The Future

uAND WE ARE ALL BENEFITED !

DOING AGILE AND BEING AGILE

Agile Is A Mindset

u“AGILE” IS NO SILVER BULLET !u“AGILE” IS NO PANACEA !

MAKE PROPER DECISIONS

“AGILE” ALLOWS “SELF-ORGANIZATION”

uBUT …..uThe nature of self-organization

happens in a clearly defined framework.

“Agile” ALLOWS Creative Freedom.

uONLY within A CLEARLY DEFINED FRAMEWORK

uCreative freedom is allowed and that this is IN FACT the only way in which creative freedom can happen.

Enough !

Let’s Begin !

BUSINESS ARE FULL OFRisks ! Risks ! Risks !

u HOW MUCH DO YOU UNDERSTAND / TRUST YOUR CUSTOMERS ?

u HOW MUCH DO YOUR CUSTOMERS KNOW ABOUT / TRUST YOU ?

u HOW MUCH DO WE UNDERSTAND OURSELVES ?

u WRITTEN DOCUMENTS AND CONTRACTS ARE FOR PROTECTION !

THE WARRIORS (THE LEGAL STAFF)

THE WARRIORS IN LEGAL PRACTICEusually …..

u Are trained to think the UNTHINKABLE.

u Think Software Projects as “A series of planned activities.”

u Don't like surprises and expect everything is relatively predictable.

u The WARS THEY ARE FIGHTING are “Trench by Trench”, “Word by Word.”

So, when do “Legal Warriors” know they are doing a good job ?

u QUOTE :WHEN YOU HAVE A CONTRACT NO ONE IS HAPPY SIGNING IT !!! YOU KNOW YOUR JOB IS DONE.

u Contract is the Product under “Lose-Lose” Mindset.

Under the mindsets, here comes the Traditional Contract !

uAND CONTRACTS TEND TO DISTORT BEHAVIOURS AND RESULTS.

What the TRADITIONAL CONTRACT usually looks like ?

u “Fortune-Teller” Style.

u All requirements and features under requests, are specified in details in the contract. Usually from imagination.

u To Development Team, it means “Long, Mysterious, and Painful journey”, for usually what’s written in contract is always different from the reality.

What the TRADITIONAL CONTRACT usually looks like ? (Fixed Price)

u Fixed Schedule

u Fixed Price

u Fixed Scope

u Changes : RFC, CCB.

u Collaborations don’t exist.

u Chance of failure is high

u Even all deliverables are fulfilled.

u Quality is usually a variable.

What the TRADITIONAL CONTRACT usually looks like ? (Time and Material)

u Project will go as long as possible, till customer think the goal is reached.

u Move Risk from suppliers to customers. For the uncertainty is high.

u Does not incentivize supplier to be efficient (actually, quite the reverse).

u Can be utilized as the contractual basis for agile development with a little bit twist.

Under the TRADITIONAL CONTRACT

u AS THE PROJECT GOES….

u WE ALL KNOW BOSSES change their minds often, and HiPPOsare always weighted.

u (HiPPO == Highest Paid Person's Opinion)

u The CCB usually is not established and is not functioned.

Turns Out … In Taiwan, most of the time,WE ALL PRACTICE

u Individuals and interactions over processes and tools.

uWorking software over comprehensive documentation.

uCustomer collaboration over contract negotiation.

uResponding to change over following a plan

Turns Out … In Taiwan, most of the time

u MONEY FOR NOTHING !u (PROJECT JUST CREATES THINGS THAT NO

ONE WANTS TO USE)

u CHANGE FOR FREE ! IF YOU STILL WANT TO DO BUSINESS !

u (OVERTIME WORKS AND USUALLY WITHOUT PAY)

To change the situation, Agile Contract comes to rescue !

u Goal : Building Trust from within the company to customers.

u A “Win-Win” Style Contract.

u A TRULY WORKABLE CONTRACT.

CROSS-FUNTIONAL TEAM FOR THE CREATION OF AGILE CONTRACT

u BEFORE YOU CAN HAVE AN AGILE CONTRACT, YOU NEED TO HAVE A CROSS-FUNCTINOAL TEAM.

u LEGAL STAFF ARE DEFINITLY INCLUDED !

u DON’T FORGET YOUR ACCOUNT MANAGER !

Points to emphasize on Agile to Legal Staff and Account Manager

u How Agile can reduce risk (Interactions , Iterations)

u The Agile Manifesto and the Principles behind it.u (Our highest priority is to satisfy the customer

through early and continuous deliveryof valuable software, etc.) in the RIGHT WAY.

u Iterative schedules and the delivery as well as the payment cycle

Points to emphasize on Agile to Legal Staff and Account Manager

u Adaptive planning is not traditional change management. It’s a true PDCA cycle.

u Customer defined goal is the true driver of the project, eliminating prescriptive lists of deliverables is a must.

u Early termination of project can be positive!

AGILE CONTRACT(OPTIONAL SCOPE CONTRACT)

Optional Scope Contract –By Kent Beck and Dave Cleal

u Optional Scope Contract IS WITH

u Fixed Timeu Fixed Cost u Fixed Qualityu The only variable is Scope.

Optional Scope Contract –By Kent Beck and Dave Cleal

u Customers can change their mindsu Suppliers aren’t encouraged to sacrifice quality

as soon as something goes wrongu Customers’ and suppliers’ interests are

contractually alignedu The knowledge that both parties gain during the

project can influence the finished product.

Optional Scope Contract Incremental delivery, regular payment.

u SET UP Fixed Price per iteration.

u Incremental delivery, regular payment.

Optional Scope Contract Incremental delivery, regular payment.

HENCE

u Frequent opportunities for either party to abandon.

u Customer risk mitigated if highest priority features are delivered first.

u Supplier risk mitigated by proving their value, building relationship.

Optional Scope Contract If with “TARGET COST”

u Set up “Target Cost” will make total cost a joint responsibility.

u Since target cost is defined, so is the target price.

u Any costs above target shared fairly.

u Any savings under target also shared.

Set up price per story point or per use-case

u NOT RECOMMENDED.

u Mismeasurements and possible abuse can easily destroy THE TRUST FROM BOTH SIDES.

In the Contract (On customer)

u Specify Customer’s obligations

uPrioritize backlogs/items by Business Value.

uMutually agreed estimates for all work items.

uParticipate in each Sprint planning meeting (Scrum)

uParticipate in writing the conditions of satisfaction.(Scrum)

uParticipate in each Sprint review meeting, and provide timely feedbacks.(Scrum)

The TRUE “Money for Nothing” and “Change for Free.”

In the Contract (On Customer)Money FOR NOTHING

u Customers HAVE the option to terminate contract at the end of ANY SPRINT. IF THEY THINK THE PROJECT IS NO LONGER VALUABLE.

u CUSTOMER MIGHT HAVE TO PAY 20% OF THE REMAINING CONTRACT.

u Customer should follow the agreed upon protocols on project participation.

In the Contract (On customer)CHANGE FOR FREE

u As long as the high level goal is not changed, Customer can ask for changes on features as desired.

Suggestions In the Contract(On Supplier)

u Supplier should specify the “Total Value of the contract”.

u Rates for time and materials billings.

u Scope of the contract. ( Master Service Provided)

u Supplier is required to deliver at least 80% of the scope with the "High Quality" Deliverables before the agreed date.

u Accept that “High Quality” is “THE DEFINITION OF DONE MADE BY CUSTOMER”.

Transparency is the KEY for success.

u Make Certain that all your team members know the major part of the contract AND work together.

u BUILDING TRUST IS A PROGRESSIVE PROCESS.

u TRUST IS EASILY DESTROYED.

LIVE LONG AND PROSPER !