by Time, budget, and cost estimation
- Time, budget, and cost estimation is an important knowledge and skill area of agile.
- Fixed-budget and fixed-schedule is a good agile contract
- According to Highsmith, the nature of the agile method, whereby it welcomes changing scope, means that it lends itself well to fixed budgets and a fixed schedule because changing scope makes it difficult to estimate a total cost.
- Generally speaking, the budget and schedule constraints are known but before a project will commence there needs to be an agreed upon set of base product functionality defined in an initiation phase; fixing scope reduces an agile team’s innovative tendency to provide improved value.
- Fixed-budget and fixed-schedule is a good agile contract
Agile contracts
- For companies that are familiar with fixed-price contracts, where requirements are agreed upon before contract closing, adopting agile can be a weary initial venture.
- Fixed-price contracts, although typical of traditional projects where scope is defined ahead of time, are not well suited for agile.
- Instead, other contract vehicle types are recommended for agile efforts, these include :
- A general service contract for the initiation phase and separate fixed-price contracts for iterations or user stories;
- Time-and-material contracts;
- Not-to-exceed with fixed-fee contracts;
- Incentive contracts (e.g., fixed price with incentive; cost-reimbursable with award fee).
- Cost-reimbursable with award fee
- Fixed-price with incentive
- [Agile Project Management: Creating Innovative Products – 2nd Edition. Jim Highsmith.]
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