Embedding Agile Principles as Contract Rules

Agile management is recognized as a methodology that helps us to guide software development projects towards the most valuable outcome possible. The methodology well accommodates inevitable unpredictability of the project that adversely affects the expected results and workload assessment. It is, therefore, a good candidate to be applied to high risk innovative research projects based on a contract. Methodology extension and tools based on the business processes modeling are proposed with the aim of harmonizing and embedding agile principles as contract rules.

This proposal is based on the experience gained while managing variety of innovative process control and business management projects. For these and similar projects, their scope definition and budget estimation in advance have always been the most challenging task. Typically, if the estimated budget of any project is higher than the other ones, the solution provider is recognized as inefficient in one way or another. But there might be another reason if innovative projects are concerned, i.e. the provider’s know-how and extraordinary experience make a better assessment possible. Better always means higher in this context and, in a typical bid where budget is the most important factor, it puts the solution provider in an underprivileged position and leads to the “more stupid the better” syndrome.
For an innovative project, the main reason why its critical parameters are hardly predictable is its innovative nature. From the definition, an innovation as a translation of an idea or invention into a product or service that creates value is an exploration into unexplored areas. The leader of the team must, therefore, face up to a high level of uncertainty.

The main aim of any invention result application is to further satisfy the needs and improve selected processes. But in all cases it is a business process involving at least two organizations: a customer and a solution provider that must cooperate under a contractual relationship, i.e. a voluntary, deliberate, and legally binding agreement between them. The contractual relationship is evidenced by an offer, an acceptance thereof, and a valid (legal and valuable) consideration.

To make the procurement process transparent, fix-price and fix-term offers are usually expected to simplify the comparison and selection of a bid for contract award. As a consequence, the quantitative nature of the comparison relaxes the responsibility of the target company (customer) management involved in the selection process, which makes the selection process offer centric and neglects uncertainty of the proposed terms. In some circumstances it could cause an assessment of just a “wish list”, but not a realistic proposal and leads to circular impossibilities:

•  It is impossible for the customer to prepare the specifications because it is unaware of the necessity of exploration.
• It is impossible for the solution provider to prepare the offer as the specifications are inadequate and the unanswered questions can be addressed and worked out as project goals only.

The procurement issues described above could be partially solved using direct negotiations or the single-source acquisition method. Unfortunately, both “suffer from” the qualitative nature of the selection process and usually are an exception to the typical procedure. Nevertheless, as the quantitative assessment is difficult or even impossible, they might be a better choice.
The discussion about the procurement process is out of this post scope. However, in spite of the selected procurement method, the question how to limit the budget, determine the time frame and define the expected scope and quality in the contract is still open.

A new methodology is required to address this question. Its implementation should be non-invasive and effortless but, if strictly observed, it must control the development process to minimize the price-to-performance factor and assure meeting of the customer basic requirements.

For the problem described above, I propose a methodology framework that tightly couples:

• Agile management to dynamically control the work scope and time framework.
• Workload tracking to precisely control the value for money.

This method is also proposed to be deployed using supporting tools developed on the process model basis to make the deployment straightforward.

To read the full text visit the link: Agile Management of Research Projects in the Contract Context

Tagged: Agile Management, Contract, Innovation, Research Deployment, Scrum