17 October 2021

Agile vendor management

Agile Vendor management approach

  • The Agile Manifesto values customer collaboration over contract negotiation which sets an important tone for procurement relationships on agile projects.
    • The Agile Manifesto sets forth the idea that a buyer and seller work together to create products and governs the entire procurement process.

Determining need and selecting a vendor the agile management way

  • On agile projects, procurement starts when the Developers decide it needs a tool from or the services of another company in order to create the product.
    • The Developers and the Scrum Master work with the Product Owner to procure any necessary funds.
    • The Developers may need to compare tools and vendors.
    • After you choose what to buy and where to get it, the process is usually straightforward:
      • make the purchase,
      • take delivery,
      • and procurement is then complete.
    • Procuring services is usually longer and more complex than with tools.
    • Some agile-specific considerations for selecting a services vendor include
      • Whether the vendor can work in an agile project environment and, if so, how much experience the vendor has
      • Whether the vendor can work on-site with the Developers
      • Whether the relationship between the vendor and the Scrum Team is likely to be positive and collaborative

Contracts and cost approaches for services the agile management way

  • Evaluating cost structures for an agile project
    • Fixed-price projects:
      • A vendor works on the product and creates releases until the vendor spends all the money in the budget, or until it delivers enough product features, whichever comes first.
    • Fixed-time projects with a specific deadline
      • For example, you may need to launch a product for a specific event or to coincide with the release of another product.
      • With fixed-time projects, you determine costs based on the cost of the vendor’s team for the duration of the project, along with any additional resource costs, such as hardware or software.
    • Time-and-materials projects
      • Work with the vendor lasts until enough product functionality is complete, without regard to total project cost.
      • You know the total project cost at the end of the project, after your stakeholders determine that the product has enough features to call the project complete.
    • Not-to-exceed projects
      • Projects in which time and materials have a fixed-price cap.

Creating a contract for an agile project

  • The Scrum Master is generally responsible for initiating the contract creation, negotiating the contract details, and routing the contract through any necessary internal approvals, including review by a legal or procurement expert.
    • At the very least, most contracts have legal language describing the parties and the work, the budget, the cost approach, and payment terms.
    • A contract for an agile project may also include:
      • A description of the work the vendor will complete
      • The vendor may have its own product vision statement, which can be a good starting point to describe the vendor’s work
    • Agile approaches the vendor may use, including :

Working with a vendor on an agile management project

  • How you work with a vendor on an agile project depends in part upon the vendor team’s structure.
    • In an ideal situation, vendor teams are fully integrated with the buyer’s organization.
      • The vendor’s team members are collocated with the buyer’s Scrum Team.
      • Some Developers include vendor team members in their Daily Scrum meetings.
      • This can be a good way to get an idea of what the vendor team is doing every day and to help the Developers work more closely with the vendor.
    • You can also invite vendors to your Sprint Reviews to keep them informed on your progress.
    • If the vendor can’t work on-site at the buyer’s company, it can still be part of the buyer’s Scrum Team.
    • If a vendor can’t be collocated, or if the vendor is responsible for a discrete, separate part of the product, the vendor may have a separate Scrum Team working on the same Sprint schedule as the buyer’s Scrum Team.
    • If a vendor doesn’t use agile project management processes, the vendor’s team works separately from the buyer’s Scrum Team, outside of the Sprints, and on its own schedule.
      • The vendor’s traditional project manager helps ensure that the vendor can deliver its services when the Developers needs them.
    • The buyer’s Scrum Master may need to step in if the vendor’s processes or timeline becomes a roadblock or disruption for the Developers.

Closing a contract on an agile management project

  • When a vendor completes work on a contract, the buyer’s scrum master usually has some final tasks.
    • If the project finishes according to the contract terms, the Scrum Master may acknowledge the end of the contract in writing.
    • If the project is a time-and-materials project, the Scrum Master should definitely do so to ensure that the vendor doesn’t keep working on lower-priority requirements — and billing for them.
    • The Scrum Master may be responsible for notifying the buyer’s company accounting department to ensure that the vendor is paid properly.
    • If the project finishes before the contract dictates the end, the Scrum Masterr needs to notify the vendor in writing and follow any early termination instructions from the contract.
  • Most large organizations maintain a vendor profiling system to manage the relationships with their vendors.
    • This database contains information about skills, rates, and former projects that have been run with each vendor.
    • A special vendor management database may help large organizations here — as long as the vendor evaluation is based on « soft » criteria, such as collaboration level and software quality, rather than on « hard » facts, such as rates and willingness to subordinate during negotiations.
  • More or less, sophisticated ranking systems categorize the vendors from strategic partners to vendors the company wants to get rid of.
    • Used wisely, these systems can establish both a business and a legal relationship with your vendors in which you don’t have to step on the thin ice of contracting a single agile project.
    • Therefore, rather than focusing on vendor process certifications, size, and rates, the ranking should focus on criteria such as the following :
      • Productivity
      • System quality
      • Flexibility
      • Collaboration level
  • Beyond a single effort, agile development is about building trust.

More informations at PMI-ACP exam

PMI-ACP Tools and Techniques flashcards

PMI-ACP Knowledge and Skills flashcards

PMI-ACP Domains and Tasks flashcards

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