Ideas2IT is primarily a high-end IT development outsourcing firm. We have been used to take up projects on fixed bid for clients who have a definite set of requirements. Even then, there is almost always scope changes due to changing requirements or due to requirements being elaborated in a way which was not originally envisioned while estimating. This leads to us raising change requests and having a tough time convincing the client.
If this is so, how can we do a fixed bid contract for projects following the agile process? Agile, by definition, has to be flexible to accommodate changes as the project progresses. And how would a fixed bid work? Isn’t it an oxymoron?
If you have done any fixed bid outsourcing before you would have realized the following:
In the traditional sense, yes. Agile fixed bid doesn’t make any sense. But Agile is anything but traditional!! Agile has brought in a sea change how software used to be developed. Huge systems that took a couple of years in development normally ended up being totally not useable or addressing the requirements of the user community sub-optimally. With Agile, constant feed backs from the user community and more frequent production pushes have made sure the end product better addresses the user’s need.
But Agile has also brought in more complexity in terms of being able to budget for a project. If the requirements keep changing, how do you even estimate? If you are not able to estimate, how do you out source in a fixed price mode? Isn’t time and material (T&M) the best model to execute an out sourced agile project then?
Well, it is a known fact that time and material model works best for project where there are constant changes in the requirements. Again, the outsourcers are a wary of time and material engagements as they are constantly pushed to evaluate the value they are getting through the outsourcing engagement. In a fixed price model, you exactly know what you are getting. But the challenge is what you get may not be what the users want. So, is there a viable alternative?
What?? Agile fixed bid again? Didn’t we slay that monster in the preceding paras?
At Ideas2IT, we are constantly approached by customers who want us to follow the agile process. In fact, we advocate the agile process for all our projects so that the customers can continuously provide feedback and make course corrections as and when required. But they also want more control over their budgets than what a traditional T&M engagement would provide them with. After a lot of experimentation, we have now come up with a couple of options which enable customers to work on a fixed bid model within the Agile process.
While we scope out the project requirements, we are fairly clear on the requirement details for at least the first few sprints while the rest would get progressively elaborated as we proceed. The idea is to estimate the work for the first few sprints and treat them as a fixed bid. As we progress into the project and requirement backlogs get flushed out with granular items, the subsequent sprints also get estimated and costs fixed. This way we are able to address both the concerns of flexibility and control.
Another variation to the above model is to arrive at the costing per story point as the mechanism for the project budget. Each sprint, we pick up a few of the backlog items with pre agreed story points. The costing is now based on the cumulative story points of the chosen backlog items. The focus now shifts to the story point evaluation which any way is part of the Agile Process.
Now that we have found a way to do agile in a fixed bid way, is it time to shout Eureka and run naked?? Not so soon. You will still have to consider a few things to make sure your outsourcing expectations are right.
We are not claiming that we have figured out everything. But we do have come a long way in this journey. Our customer’s satisfaction stands testimony to the success of the Agile Fixed Bid Model. At Ideas2IT, we are committed to travel further on this journey to fine tune the outsourcing models and create a win-win for both the outsourcer and the service provider. Still intrigued by the Agile Fixed Bid Oxymoron?? Drop us a mail at firstname.lastname@example.org and we will show you how!!