As previously reported here we are establishing a new kind of contract for developing software solutions, currently dubbed the "Collaborative Agile Contract". In short this contract introduces fairness to ensure that both risks and gains are shared between customer and supplier. This ensures incentives for both parties to reach the right solution as fast as possible.

On the front page of todays Wall Street Journal is an article 'Billable Hour' Under Attack. This article focus on the trend in relationships between clients and law firms to find better kinds of contract than "payed by the hour", exemplified with the following quote:

"Pfizer could have demanded a discount from firm's hourly rates, Ms. Schulman said, but she hopes for a shift to a system that encourages firms to work more collaboratively with Pfizer."

It seems that the collaborative agile contract might be useful also outside the software business.
agile kontrakter

By Lars Thorup

Recently peterstev reported on, 10 Contracts for your next Agile Software Project.

In BestBrains we now have experience from two commercial projects using a new kind of agile contract.

We want to create contracts where risk is shared fairly between customer and supplier and where likewise benefit is shared fairly. Based on our experiences we have arrived at a contract model that has proven to achieve this result. We call this the collaborative agile contract.

The main mechanism of the contract is to delay some of the payment until a certain criteria has been reached. We do not use a date as this criteria which otherwise seems to be common. Rather we want a criteria that tells when we have a situation where the customer is getting value from the software. There is generally a mutual interest of arriving at this situation as quickly as possible. Effectiveness and creativity from the supplier will be rewarded. And the customer will be careful when deciding what features are needed in order to reach that goal.

The contract defines the following elements:

• Scope described loosely in a few paragraphs, a kind of vision statement
• An hourly price, that is 10-50% below what is normal for pure time-and-material
• A set of milestones, which will lead to payment of a fixed amount. The simple criteria that tells that a given milestone has been reached, is whether the software is deployed in production.
• A development process following agile practices
• A suggested time frame for the overall project and for each milestone

We are going to report on our experiences at Agile 2009, but don't hestitate to comment on this blog entry or contact Lars Thorup to learn more about agile contracting.
agile kontrakter

By Lars Thorup