Susan Atkinson gallenalliance Solicitors

CIPS Financial Services Purchasing Forum

London Wednesday 20th April 2011

CONTRACT MODELS FOR AGILE AND LEAN

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 ...

Regulatory environment

Competitive environment

Technology

Customer expectations

Corporate strategy

IKIWISI

‘Yes but’

Integration with legacy systems

Codifying knowledge & intelligence

The customer

DISCOVERS

what it wants

The vendor

DISCOVERS

how to build it

Many things

CHANGE

along the way

Multiple

stakeholders

• 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

SCRUM - EMPIRICAL PROCESS CONTROL

• Split the work

• Split the time

• Split the organisation

HOW TO ACHIEVE EMPIRICAL PROCESS CONTROL

ITERATIVE AND INCREMENTAL DEVELOPMENT

ITERATION 1

REV I EW

R T’ IVE

DESIGN BUILD

TEST

ITERATION 2

P

L

A

N

REV I EW

RT’ IVE

DESIGN BUILD

TEST

ITERATION 3

P

L

A

N

REV I EW

RT’ IVE

DESIGN BUILD

TEST

PLAN

INCREMENTAL

DEVELOPMENT OF

SOFTWARE

Solution Backlog

• 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

THE TEAM

BENEFITS OF AGILE AND LEAN

ITERATIVE DEVELOPMENT

SELF-ORGANISING TEAM

INCREMENTAL DEVELOPMENT

Increased feedback

Adaptive planning

Earlier delivery

Small packages of work

Fully working product

Continuous integration

Less work in progress

Knowledge creation

Flexibility

Less bottlenecks

Knowledge creation

Increases flow

Meets customer’s needs

Bugs identified at outset

Less waste

Faster delivery

Better design

Better ROI

Fewer features Less waste

Concurrent software development

More robust design

Early testing & validation

Points of synchronisation

Improves quality, productivity and morale

Fewer hand-offs

More value

More value

Less risk

More value

More value

Less risk

Less risk

Greater integration across teams

Faster delivery

Less risk

Better design

Less waste

More value

More value

More value

Less risk

THE SOLUTION THE EVOLUTIONARY CONTRACT MODEL

(ECM)

Debunking

the myths!

• 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 - INFLUENCES

• 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

EVOLUTIONARY CONTRACT MODEL – AN OVERVIEW

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 change control mechanism.

Changes accommodated as part of the development process.

Analysis, design, development and testing occur sequentially.

Concurrent design and development.

An all-or-nothing solution.

The solution is broken down into features.

Constituent 'modules' of software are worked on independently until integration takes place.

A continuous working and stable software system.

Testing used as a contractual tool. Testing forms an integral part of the development process.

Success is measured by reference to conformance with the plans.

Success is measured by reference to completed solution increments.

EVOLUTIONARY CONTRACT MODEL - STRUCTURE

Start-Up Phase

Calibration Phase

Release 1 Release 2 Release 3

DELIVERY PHASE Framework

INITIAL PHASE Committed

Iterations

Co

ntractu

al gatep

ost

SOW SOW SOW

Entry in

to co

ntract

Release 4

Solution Backlog

SOW

• 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

ENTRY INTO CONTRACT - KEY SCHEDULES

• 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

START-UP PHASE – KEY DELIVERABLES

• 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 SOLUTION BACKLOG

THE EVOLUTION OF THE PLANS

Entry into Contract

End of Start-Up Phase

End of Calibration

Phase

Release Iteration

Vision Statement

Business Case

Solution Backlog

Iteration Backlog

Road Map High Level Release Plan

Release Plan Iteration Plan

Value Drivers

Charging Model

Calibration SOW Commitment

to Charges

• 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 DELIVERY PHASE

• 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

THE ITERATIONS

• The lawyers!

• The procurement process

• Organisational impact

• Securing budgetary approval

• Involvement of the business function of the customer

• Proper implementation of Agile and Lean

CONTINUING CHALLENGES TO THE ADOPTION OF

THE EVOLUTIONARY CONTRACT MODEL

ANY QUESTIONS?

• Charging models?

• Estimating?

• Measures of delivery?

• Sequential vs. concurrent design & development

• Scaling up?

Susan Atkinson gallenalliance Solicitors

23 Austin Friars

London EC2N 2QP

United Kingdom

Tel: +44 20 7084 6392

Email: satkinson@gallenalliance.com

THANK YOU