CONTRACT MODELS FOR AGILE AND LEAN Susan Atkinson gallenalliance Solicitors CIPS Financial Services Purchasing Forum London Wednesday 20 th April 2011
THE BACKGROUND
A TREND TOWARDS AGILE AND LEAN • US National Defense Authorization Act 2009 • UK Government has changed its IT strategy: ‘System Error: Fixing the Flaws in Government IT’ published by the Institute for Government (IfG), February 2011 ‘Government ICT Strategy’ published by the Cabinet Office, March 2011 • The Project Management Institute (PMI) is currently developing an Agile certification
WHY AGILE AND LEAN? • Traditional waterfall projects: CHAOS Report, 2009 : 44% projects were challenged and 24% projects failed Standish Group Study, 2002 : 64% of software features are typically never or rarely used Schedule over-runs, cost over-runs, inflexibility • Agile and lean projects: VersionOne State of Agile Survey, 2010: An improvement or significant improvement in the ability to manage changing priorities (87% of respondents) and in the time to market (70% of respondents) Shine Survey, 2003: Improved productivity (88% of organisations), improved quality (84% of organisations), and higher business satisfaction (83% of organisations)
THE ISSUE
THE NATURE OF SOFTWARE DEVELOPMENT • Analogies with the construction industry and the manufacturing industry are flawed • A problem-solving exercise, or the codification of knowledge, requiring information flow: Information flow between the customer and the supplier leads to perceived integrity of design Information flow between the various skill sets of the supplier leads to conceptual integrity of design • A vision gradually refined by a process of decision-making
THE CONE OF UNCERTAINTY Entry into contract
SCRUM ACKNOWLEDGES THAT ... IKIWISI Multiple The customer stakeholders DISCOVERS ‘Yes but’ what it wants Codifying knowledge & The vendor Integration with intelligence legacy systems DISCOVERS how to build it Competitive Customer environment expectations Many things Regulatory CHANGE environment Corporate along the way strategy Technology
SCRUM - EMPIRICAL PROCESS CONTROL • Visibility – those aspects of the process that affect the outcome must be visible to those controlling the process • Inspection – frequent inspection to detect unacceptable variances in the process • Adaptation - if the process moves outside acceptable limits, the process must be adapted to bring it back within acceptable limits
HOW TO ACHIEVE EMPIRICAL PROCESS CONTROL • Split the work • Split the time • Split the organisation
ITERATIVE AND INCREMENTAL DEVELOPMENT Solution Backlog ITERATION 3 ITERATION 1 ITERATION 2 R R P P R R R R P E T T T L E E L DESIGN BUILD DESIGN BUILD DESIGN BUILD L V ’ ’ ’ A V V A A I I I I N I I N TEST V E TEST N TEST V V E E E W W E W E INCREMENTAL DEVELOPMENT OF SOFTWARE
THE TEAM • 7 +/- 2 members • Self-organising and cross-functional • Comprises members of the customer and vendor • The product owner – from the customer - responsible for: the solution backlog communicating the wishes of all the stakeholders to the team
BENEFITS OF AGILE AND LEAN Increased feedback Knowledge creation Better design Concurrent software More robust design More value development Flexibility Less risk ITERATIVE Adaptive planning Fewer features Less waste DEVELOPMENT Early testing & validation Less risk Earlier delivery Better ROI More value Greater integration Points of synchronisation Less risk across teams Less bottlenecks Faster delivery Small packages of work Increases flow Faster delivery Fully working product Meets customer’s needs More value INCREMENTAL DEVELOPMENT Continuous integration Bugs identified at outset Less risk Less work in progress Less waste More value Knowledge creation Better design More value SELF-ORGANISING Less waste More value TEAM Fewer hand-offs Less risk Improves quality, More value productivity and morale
THE SOLUTION THE EVOLUTIONARY CONTRACT MODEL (ECM)
Debunking the myths!
EVOLUTIONARY CONTRACT MODEL - INFLUENCES • Agile: Scrum – Agile framework for project management Extreme Programming (XP) – Agile software engineering practices DSDM Atern – Agile project management ‘wrap’ Evolutionary Project Management (Evo) – Agile delivery of defined and measurable value • Lean – the delivery of value more effectively by reducing cycle times and removing waste in the processes • Systems thinking – delivery of an integral system
EVOLUTIONARY CONTRACT MODEL – AN OVERVIEW • Delivery of the solution • The solution evolves No contractual requirements or specifications No change control mechanism No contractual acceptance tests • Empirical process control • Results-focused
COMPARISON OF CONTRACT MODELS The Traditional Contract Model The Evolutionary Contract Model The requirements are specified upfront. The features of the solution evolve. Changes 'controlled' by means of the Changes accommodated as part of the change control mechanism. development process. Analysis, design, development and Concurrent design and development. testing occur sequentially. An all-or-nothing solution. The solution is broken down into features. Constituent 'modules' of software are A continuous working and stable worked on independently until software system. integration takes place. Testing used as a contractual tool. Testing forms an integral part of the development process. Success is measured by reference to Success is measured by reference to conformance with the plans. completed solution increments.
EVOLUTIONARY CONTRACT MODEL - STRUCTURE Solution Backlog Start-Up Calibration Release 1 Release 2 Release 3 Release 4 Phase Phase Iterations Entry into contract Contractual gatepost SOW SOW SOW SOW INITIAL PHASE DELIVERY PHASE Committed Framework
ENTRY INTO CONTRACT - KEY SCHEDULES • Vision Statement – the concept of the solution • The Value Drivers – quantifiable measures of success • The Roadmap – an approximate timetable for delivery of the solution having regard to various constraints
START-UP PHASE – KEY DELIVERABLES • The Business Case – expands upon the Vision Statement: High level objectives of the solution; outline of the solution backlog items (SBIs); details of potential solutions; estimates of costs and timeframes • The High Level Release Plan – expands upon the Roadmap - segments the solution into smaller solution subsets that create value for the stakeholders • The Solution Backlog – an evolving prioritised queue of all items of work which may be relevant to the solution
THE SOLUTION BACKLOG • Includes all items of work relevant to the solution • May not be a document • Solution backlog items (SBIs) are prioritised • Dynamic • Evolves • Must be within the scope of the contract • The solution owner only controls the solution backlog
THE EVOLUTION OF THE PLANS Entry into End of Start- End of Release Iteration Contract Up Phase Calibration Phase Vision Business Case Statement Solution Iteration Backlog Backlog Road Map High Level Release Plan Iteration Plan Release Plan Value Drivers Charging Calibration SOW Model Commitment to Charges
THE DELIVERY PHASE • Framework under which Releases are initiated by SOWs • The SOWs are contractually enforceable • Release planning • Release review – show the solution subset to the stakeholders to validate the solution • Release retrospective – solution team inspects the process
THE ITERATIONS • Timeboxed – of fixed duration throughout the project • Planning – which SBIs; decompose the SBIs into tasks to create the iteration backlog • The SBIs – must not be changed during the iteration • The iteration backlog - evolves and must be kept up-to- date at all times • Review - show the solution increment to the stakeholders to validate the solution • Retrospective - solution team inspects the process – use of metrics • The solution increment – builds upon earlier iterations
CONTINUING CHALLENGES TO THE ADOPTION OF THE EVOLUTIONARY CONTRACT MODEL • The lawyers! • The procurement process • Organisational impact • Securing budgetary approval • Involvement of the business function of the customer • Proper implementation of Agile and Lean
ANY QUESTIONS? • Charging models? • Estimating? • Measures of delivery? • Sequential vs. concurrent design & development • Scaling up?
THANK YOU Susan Atkinson gallenalliance Solicitors 23 Austin Friars London EC2N 2QP United Kingdom Tel: +44 20 7084 6392 Email: satkinson@gallenalliance.com
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