In this article, know the major challenges of Fixed Price Agile Projects and how to execute them successfully in a project to bring maximum benefits.

1. How to
Successfully
Execute
Fixed Price
Agile
Projects
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2. Quick Summary:
We all know that Agile Methodology is a
mindset, an approach or a culture. It is more
about individuals and interactions rather than
about the tools and the processes. One of the
twelve principles of the Agile categorically
encourages the developers to welcome
“changing requirements, even late in the
development.”
While an enterprise wants to develop bespoke
software solution through the agile
methodologies, it also wants to have clarity on
all the aspects of the software development.
The very meaning of agile is to be “able to
move quickly and easily.” Agile processes are
all about fluidity while the enterprise
obviously cannot operate in absolute fluidity.
So I am writing this blogpost to discuss about
is Scrum a good choice to successfully execute
fixed price Agile projects.

3. What is fixed
price project
in Agile?

4. Fixed-cost
Fixed-time
Fixed-scope
Fixed price project is a quite self-
explanatory term. In this model of software
development, the enterprises require
planning, strategizing, and inherent control
over the processes that they want to
execute. They want clarity on whats; whys;
whens; wheres, and hows of any software
development project.
A fixed price Agile project involves:
All these are decided at the outset of the
project. Any change in any of these would
invariably affect the entire project and its
fixed price model. The changes in agile
processes would occur inevitably as the
customer needs and market expectations
are always in flux.

5. Enterprises often prefer to choose fixed
price Agile projects to protect themselves
from these deviations, inherent in all agile
methodologies. They often assume that
fixed price model means fixed timeframe
and also fixed scope of work.
However, any sensible enterprise would
also always want to meet customer and
market expectations. They cannot afford to
sacrifice their product at the altar of their
notions of fixed price agile projects.
So, is it possible then that an enterprise’s
budget and time constraints can be
effortlessly managed along with the
inevitable deviations during the course of
the agile projects? Well, the answer to this
question is YES. Let us explore how.

6. Major
challenges in
the seamless
execution of
fixed bid
Agile projects

7. The major challenge in successfully
implementing agile projects with fixed
price model lies in the perception of both
agile methodologies and fixed price model
of the project.
Lack of clarity on Product
Backlog Items (PBIs)
The agile culture believes in no waste.
Therefore, the team is trained to not to
work on anything extra or more. This
approach is fraught with misunderstanding.
When there is only a one-liner backlog item,
“just enough, and elaborate later” mindset
leads to underrating of the items. This
happens because:

8. Requirements set at the beginning of
the fixed bid agile projects are often
unclear or ambiguous one-liners.
Teams interpret these one-liners based
on their experiences or skills. Most
often, these interpretations prove to be
undersized.
This underestimation then results in
teams working overtime.
New changes in the middle
of the project
The world of technology is constantly
changing. Sudden or new changes in the
middle of the software development cycle
are natural and inevitable in the fixed price
contracts in agile processes. When there is
such a change:

9. Requirements set at the beginning of
the fixed bid agile projects are often
unclear or ambiguous one-liners.
Teams interpret these one-liners based
on their experiences or skills. Most
often, these interpretations prove to be
undersized.
This underestimation then results in
teams working overtime.
New changes in the middle
of the project
The world of technology is constantly
changing. Sudden or new changes in the
middle of the software development cycle
are natural and inevitable in the fixed price
contracts in agile processes. When there is
such a change:

10. Enterprises assume that agile
estimation for fixed price projects
already takes into consideration such
changes at no extra cost or time.
Teams often feel constrained in the
implementation of these new changes in
the absence of authority or liberty to
modify cost and time limits.
There is an obvious gap between the
product functionality and the market
expectations and customer
requirements.
Lack of accountability
Large fixed price contracts in agile often
involve more than one team and third-party
vendors. Very often, these teams do not share
the same sense of urgency or belonging to the
agile projects or agile practices. This often
results in lack of accountability or ownership.
And when there is even the slightest of lack of
accountability or ownership in any team or
part of a team, the project suffers inevitably.

11. Lack of enterprise
engagement during the
development process
Enterprises believe that the initial involvement
during the agile estimation for fixed price projects
is enough. It is like a toxic masculinity that
believes that its job is to help only in procreation,
and not in the development or nurturing of a child.
A man driven by this toxic masculinity is often a
proverbial absent father who does not know
anything about his child’s progress or
development.
Similarly, when enterprises assume that their job
is restricted only to the initial talks and
clarifications regarding the agile projects,
communication suffers. When communication
suffers, project gets delayed. The absent
enterprise during the development cycle of the
software, like that of an absent father during the
growing up years of a child, is often disillusioned
with the product as it was not the software that it
ever wanted!

12. Ignorance regarding agile
methodologies
It has been almost over two decades that the
agile practices have captured the imagination
of the IT industry. In spite of its long run, it is
not absorbed thoroughly by the concerned
stakeholders. Both the enterprises and the
developers often make assumptions about its
architecture that ultimately result in
disasters.
When enterprises assume that fixed price
contracts in agile require no more
involvement than the initial requirement
disclosures, it creates communication gap.
When teams are not well-versed with the
agile approach, it often results in faulty
products. It also creates credibility issues in
the market for the concerned enterprise.

13. And, most importantly, it results in terrible
customer experience which is an absolute
violation of the very first principle set forth in
the Agile Manifesto: “highest priority is to
satisfy the customer through early and
continuous delivery of valuable software.”

14. Overcoming
challenges in
the seamless
execution of
fixed price
agile projects

15. As they say, the cure for the pain is in the
pain, the solution for this seeming
contradiction of hybrid methodology of
agile and fixed price model lies in the agile
methodologies themselves. It is therefore
important that all the stakeholders
thoroughly understand the agile practices
and the agile processes.
Let us have a look at major techniques that
help the developers overcome the inherent
challenges in the hybrid methodology of
fixed price projects in agile.

16. When an enterprise explores its options for
software development through agile
practices, it needs to be careful and clear in
its expectations. While entering into fixed
price agile contracts, all the stakeholders
need to have clearly defined sense of time
and budget.
Both the enterprises and the developers can
leverage agile methodology itself while
defining these. Agile methodology
encourages the use of ‘timeboxes’. If the
developers know the correct use of these
timeboxes, half the battle is already won.
Creating clearly defined
fixed price contracts in
agile

17. The correct understanding of timeboxes not
only guarantees completion of the project
on stipulated time and budget but also
helps businesses define the success criteria
of their projects.
This then leads us to explore another factor
that significantly matters in the successful
implementation of fixed price agile projects
— scope.
Openness to redefine the
idea of scope in fixed price
agile projects
When there is total clarity on the use of
timeboxes, it would be important for all the
stakeholders to be flexible on the idea of
scope in the agile triangle.

18. The Project Management Institute (PMI) in
its paper: Fewell, J. (2011). Fixed price agile
projects: making the impossible possible,
presented at PMI® Global Congress 2011—
North America, Dallas, TX, explained this
quite interestingly:
“Project success is much more likely when
we are authorised to modify the project
scope, in order to meet our bottom-line
business goals within the fixed price and
fixed schedule”.
In order to get the best of both worlds that
is the agility of the agile methodologies, and
security of fixed price model, it is important
to determine the size of the fixed price
contracts in agile instead of their scope.

19. We already know that agile processes use
story points to fix the size of the projects.
Bacancy Technology has thoroughly
explored the role of story points in project
estimation in its earlier blog post as well.
Hence, when the developers are given that
liberty to modify the size of the project as
per the emerging market trends, it naturally
alters the scope of the project without
affecting overall budget and time frame.
For example, if a fixed price project with
scrum is sized at 5,000 story points, the
emerging market trends can be
accommodated within this limit of 5,000
story points by replacing the present PBIs
with the new PBIs of the equivalent size.
This technique is often called exchange
model or trade-off model in agile practices.

20. Exploiting MoSCoW method
Agile project cost estimation for fixed price
projects can leverage famous prioritization
technique called MoSCoW. The term is an
acronym wherein the first letter represents
each of four major categories of
prioritization: M= Must have; S= Should
have; C= Could have; W= Won’t have.
Usually, in this technique must have
requirements do not occupy more than 60%
of the project scope. Should-haves take 20%
and the remaining 20% is allotted to could
have that often become contingencies.
This method can help the teams
tremendously in delivering the solution that
has all the “must haves” and “should haves”
The must have and should have features can
be clearly defined in earlier interactions or
the workshops with the clients..

21. When this is clearly defined, there are bright
chances of the team coming up with a
solution that not only has “must haves” and
“should haves”, but also a few “could haves”
too.
Successful implementation of fixed price
contracts in Agile using MoSCoW technique
can deliver not only the solution that
exceeds the expectations of the clients, but
it can also create higher customer
satisfaction and market value.

22. Organizing workshops with
the clients for clear
communication
Workshops are powerful techniques to get
over “just enough, and elaborate later”
mindset. They can be organized at the outset
of the project as well as during the
development of the project periodically.
They may be called initial workshops and
discovery workshops, respectively.
Coming together of the teams and the
client to have a closer look at the backlog
items and the requirements.
The initial workshops or early workshops
involve:

23. Creating a common ground where the
definition of each backlog item is
acceptable to all the stakeholders.
Persuading the clients to have periodical
discovery workshops that would involve
deliberation of issues after the sizing of
the project.
When the clarity on the PBIs is achieved
through the initial workshop, the teams can
go back to their development laboratories
and come up with the clear size of the fixed
price projects in agile.
They can communicate it with the clients
before actually organizing subsequent
discovery workshop that would involve
enough brainstorming, discussions in case
there is a discrepancy in the team’s
evaluation of the project features and the
client expectations.

24. Negotiations with regards to addition or
removal of items based on their
priorities.
Presenting more confident agile
estimation for fixed-price projects after
having discussed the business problem
thoroughly with the clients.
Mutual agreement on the “Definition of
DONE” for individual stories,
increments, and releases.
Selecting vendors based on
requirements and corresponding skills
rather than just costing.
Creating a culture of open and honest
discussions that strives for maximizing
value—one of the basic principles of the
Agile Manifesto.
The discovery workshops can typically
include:

25. Persuading clients to participate in these
workshops requires a sales team with solid
and deep knowledge about agile processes
and agile methodologies. This then lays the
foundation for meaningful collaboration
with the clients.
Encouraging active client
participation
Having defined the product backlog at the
outset of fixed priced agile project is not
enough. It is important for the enterprises to
remain involved in the product
development throughout the agile
processes. This, however, requires client
orientation to real agile methodologies and
agile culture.

26. Clients regularly attending sprint
reviews, and providing important
feedback to the teams early on in the
project.
Teams working on this feedback before
the release; preventing reworks and
delays.
Many a times, clients have traditional
waterfall background in the software
development process. It means they do not
consider it necessary to participate actively
in subsequent developmental collaboration
with the developers.
It is important that the agile teams make the
clients understand the importance of active
involvement in the project development. A
client training at the outset of the project
can be of great help in bringing about this
clarity and understanding. Active client
participation involves:

27. Making product owner own her role
responsibly.
Making clients aware of the efficiency and
skills of the team so as to avoid surprises at
the end of the product development.
Making everyone on the same page at every
phase of fixed price agile projects.
Team training
Making teams deliver according to the sprint
plan.
Making periodical presentations of the
products as they are to the clients.
Encouraging teams to communicate honestly
and openly during the sprint reviews.
Team training primarily involves establishing a
shared sense of urgency and accountability for
the fixed price agile projects. It is very important
that the team consists of members who think in
agile! Team training involves:

28. Team collaboration
Clearly defined frequent milestones
Allocation of ownership of each milestone to
the concerned teams
Identifying common patterns in the
challenges during periodic sprint reviews
across the teams.
Arriving at earlier combined solutions for
each challenge
Steady collaboration with the product owner
to keep her posted about risk factors and
dependencies; allowing her to have an early
clarity of the final product.
Better way of reusing the code to save time
and efforts in the agile processes
It is important that all the teams involved in fixed
price project in agile collaborate consistently and
smoothly. Ideal team collaboration looks like:

29. Conclusion

30. In the light of the discussion, it is
interesting to note that fixed price project
with agile development may seem a great
contradiction or an anomaly on the surface.
But, it is full of possibilities that may inspire
the developers to create newer innovations
and yield better customer experiences.
In the paper mentioned earlier in this post,
the PMI has described the crux of fixed
price agile projects thus:
“It’s not about the features. They are a
means to and (sic) end. Instead, define the
target business criteria. Then, estimate the
cost and schedule associated with meeting
the business criteria. If we incur new
complexities and risks during the project,
we can de-scope features that don’t directly
contribute to those goals.”

31. Thus, Agile Software Development
Company offers the best Agile and fixed
price projects of both the worlds—agile
methodologies and security of fixed price
business model. It is up to the agile teams
and the enterprises as to how to materialize
this promise that can bring maximum
benefits to all the stakeholders associated
with the agile practices, along with the end
users.

32. Thank You
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