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CH - Agile Contract Types Flipbook PDF
تبدأ الجلسة باستعراض أنواع العقود المختلفة في إدارة المشاريع المعتادة؛ منها ما يعتمد على التكلفة ومنها من يعتمد على السع
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Version 3.0 Copyright © 2022
Delivered by Eng. Mohammed Alarabi, PMP®
2
Agile Contract Types
Contract Types in Traditional Projects 3
Risk spectrum LOW
Seller Risk
HIGH
Buyer Risk HIGH
CPAF
LOW
CPFF
100 0
Cost Plus Award Fee
CPIF
FP-EPA
FPIF
Variable Sharing Ratio
Cost Plus Fixed Fee
Cost Plus Incentive Fee
FFP
0 100
Fixed Price with Economic Price Adjustment
Fixed Price Incentive Fee
Firm Fixed Price
Introduction to Agile Contracting 4
The nature of adaptability and scope flexibility of agile can create problems when a project is done on a contract basis. The cooperation between the project team and customer helps redirect the effort toward delivering value-adding features. An agile approach requires more trust between the parties than the traditional approach. Customer Collaboration vs. Contract Negotiation
Contract Types in Agile Projects /1 Fixed Price, but with Provision for Change in Scope in Future Iterations 5
Time-boxed iteration
Time-boxed iteration
Fixed-price and Fixed-scope delivery
Since Agile teams do not permit changes during the middle of the iteration, the scope can be considered fixed during an iteration making it suitable for a fixed-price, fixed-scope delivery in the time-boxed iteration. Fixed-price and Fixed-scope delivery
The scope of the contract is reviewed before every iteration.
Fixed-price and Fixed-scope delivery
Time-boxed iteration
Contract Types in Agile Projects /2 Contract with Premature Closure Clause 6
The choice might be made to discontinue the project and not carry out the rest of the iterations, when the customer realizes that there is no value or ROI in continuing further as outlined initially in the contract. Premature closure of a contract can cause hardships to the seller.
In order to smoothen the effect, the seller should be paid at the end of every completed iteration, rather than a lump sum figure at the end of the project.
Contract Types in Agile Projects /3 Fixed Fee and Not-to-Exceed Clauses 7
In case of premature closures of reduction in scope, the sellers may be adversely affected.
Contracts could have a fixed-fee clause, which basically means that no matter what, the seller will get a fixed fee to cover their operational costs.
The not-to-exceed clause helps to protect the buyer by limiting the maximum amount that the buyer has to give to the seller.
Contract Types in Agile Projects /4 Fixed Price per Story Point 8
Story points are unit of estimates for user stories.
Once the definition of story points are formalized and agreed between the seller and the buyer, a contract could use a fixed rate per story point. So while the backlog of requirements could vary, the seller gets paid based on the number of completed story points.
Contract Types in Agile Projects /5 Multi-Stage Contracts 9
In this variation, different types of contracts are chosen for different stages of the project, based on the intended outcome of the stage.
Contract Types in Agile Projects /6 Target Cost Contract 10
The buyer and the seller mutually agree on a target cost and schedule of the project, which includes the profit margin of the seller. Two situations may arise: 1.
If the project finishes off at a cost lower than the target cost, then the profit is shared between the buyer and the seller.
2.
If the project finishes off at a cost higher than the target cost, then both the buyer and seller would end up paying more.
Contract Types in Agile Projects /7 Contract Extension and Payment Based on Delivery and Acceptance 11
After each incremental delivery, the buyer pays out to the seller only when the acceptance test cases have been satisfactorily passed.
If the delivery satisfies the buyer and the business value is obtained, the buyer can decide to renew or extend the contract for the next iteration.
If the delivery does not deliver the desired result, they can choose to stop or modify the terms and conditions on the contract for the next iteration.
Contract Types in Agile Projects /8 DSDM Contract 12
DSDM is formally known as Dynamic System Development Method.
DSDM is an Agile method that focuses on the full project lifecycle.
This contract focuses on work being “fit for business purpose” and passing tests, rather than matching a specification.
Contract Types in Agile Projects /9 Money for Nothing and Change for Free /1 13
Change for free
Starting with a standard fixed price contract that includes time & materials for additional work, but then inserts a “change for free” option clause.
Failure to be engaged in such a way voids the clause, and the contract reverts back to time & materials.
Contract Types in Agile Projects /10 Money for Nothing and Change for Free /2 14
Money for nothing
Allows the customer to terminate the project early when they feel there is no longer sufficient ROI.
The seller might allow contract termination at any time for 20% of the remaining contract value.
Contract Types in Agile Projects /11 Graduated Fixed Price Contract 15
Promoted by Thorup and Jensen.
Both parties share some of the risk and reward associated with schedule variance. Project Completion
Graduated Rate
Total Fee
Finish early Finish on time Finish Late
$110/hour $100/hour $90/hour
$92,000 $100,000 $112,000
Contract Types in Agile Projects /12 Fixed Price Work Packages 16
It mitigates the risks of underestimating or overestimating a chunk of work by reducing the scope and costs. As the work progressed, the supplier was allowed to re-estimate the remaining work packages in the statements of work based on new information and new risks. This allows the customer to reprioritize the remaining work based on evolving costs. It also gives the supplier the ability to update their costs as new details emerge.
Contract Types in Agile Projects /13 Customized Contracts 17
These different agile approaches to contracts can be pieced together to create a customized contract. This can create a contract that protects both parties and encourages positive behavior.
Questions & Answers 18
Eng. Mohammed Al-Arabi BSP®, CSSBB®, MPM®, Prince2®, MSP®, MOP®, P3O®, PMOC®, PMP®, PMI-RMP®, PMI-SP®, PMI-PBA®, PMD PRO, ISO 21500TM, ITIL® V3, DTC,
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