Using Agile Approach with Fixed Budget Projects

www.synerzip.com
Using Agile Approach with
Fixed Budget Projects
April 15, 2009

Confidential www.synerzip.com 2
The Challenge
Business Benefit
of Agile
Approach
Mgmt Need For
Fixed/Known $
Budget

Our Experience
Synerzip Project
1 Neofirma
2 Gimmal Workshare
3 Gimmal PRM
4 Broadlane
5 FD2S
6 Maximus NY
7 Maximus Indiana
8 Fellowship Technologies
9 FedEx Kinkos CRDB
10 Datacert Oracle Migration
11 SevaYatra
12 Award Solutions
13 Arc One
14 Fundraiser
15 CAPS
• 15 Client projects delivered in
Fixed-budget Agile
• Numerous discussions with
Agile practitioners
• Research into published work
of industry experts

1. Software development partner for small/mid-sized
technology companies
• Focus: small/mid-sized technology companies
• Deep experience in product development, testing, & deployment
• Handles full software development life cycle
• Technology and industry domain agnostic
2. Actually reduces risk of development/delivery
• Experienced software management team
• Brings in appropriate level of engineering discipline
• Practices Agile development – responsive, yet disciplined
3. Reduces cost – dual-shore team, 50% cost advantage
4. Offers long term flexibility – allows (facilitates) taking
offshore team captive
Synerzip in a Nut-shell

Our Clients - Examples

Confidential www.synerzip.com 6Confidential
Discussion Topics For Today
• Highlight characteristics of projects that are good
candidates for fixed-budget Agile delivery
• Share empirical data from over a dozen fixed-
budget Agile projects
• Discuss the common DOs and DONTs
• Recommend alternative approaches for effectively
using Agile in fixed budget situations

Key Characteristics
1. How baked are the requirements
2. Level of trust between the dev team and
the product owner
3. Timing of (fixed) budget estimate
commitment
4. Maturity and caliber of team

1. Requirements Baked?
• Is the vision and the idea that drives the product evolving from hazy to
well defined ?
• Is the scope of the market that the product is trying to address
becoming more and more accurately defined ?
• Is the revenue model thought through as an integral part of the idea ?
• Have any real end users started using the product? Is it a startup
building out a product idea from scratch or an extension to an existing
product?
• Is it an existing technology being applied to a new domain or a new
technology being applied to an existing domain?
• Is it a case of a simple re-write where you are porting an existing
product to a new database or a different operating system?
Confidential
New/Innovative Known/”ReWrite”

2. Level of Mutual Trust
• Mutual trust is a two-way street
• Client/product owner apprehensive about
– Receiving good quality software
– Not getting “ripped-off” (willing to pay only fair/competitive market
price)
– Don’t want dev team spinning wheels with “$ meter running”
• Vendor/dev team apprehensive about
– Continued client commitment and involvement
– Likelihood of collecting the payment and not being unfairly
penalized for over-runs
• Are the two sides seeing each other as competing or collaborating? If
there are developers on both sides are the experience levels
matching? Do they have professional respect for each other?
No Trust Complete Trust

3. Timing of the estimate
• Early estimates are inaccurate because
– Customer has not yet thought through the requirements
– Developers have not yet thought through the design.
• Estimates after “iteration zero” are more accurate.
• Estimates go on improving as iterations progress.
Hence do re-plan and re estimate
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Upfront After iteration 0 or 1

Do Re-Estimate and Re-plan
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Fixed Bid with waterfall vs DSDM
Confidential
Requirements
Time
Converging requirements
Estim
ate
Fixed bid with Waterfall Model
Overestimate-
Customer’s loss
Requirements
Time
Diverging requirements
Estimate
Underestimate-
Developer’s loss
Estimation before
project kick off
Estimation before
project kick off
Requirements
Time
Converging requirements
Estim
ate
Fixed bid with Agile Model
Overestimate-
Customer’s loss
Requirements
Time
Diverging requirements
Estimate
Underestimate-
Developer’s loss
Iteration Zero
Iteration Zero
Improved
Accuracy and
lower risk due to
agile
Improved
Accuracy and
lower risk due to
agile
Estimation after
iteration zero
Estimation after
iteration zero

4. Maturity & Caliber of Team
• Domain knowledge- is the customer and
established player in the domain? Does the
development team have domain experience?
• Technical Expertise – Is the customer aware of
technical challenges? Does the development team
have the technical expertise to address the
technical challenges?
• Experience level – Are the developers and the
product managers well experienced?
Confidential
Inexperienced/
Junior
Highly seasoned

Fixed Budget Projects at Synerzip
Confidential
Key Characteristics
Synerzip Project
Baked
Requiremts?
Mutual Trust
Level
Timing of
Estimate
Team Maturity
& Caliber
Project
Successful*?
1 Documentum add-on product
2 Vendor portal for hospitals
3 Oil & gas well monitoring tool
4 Sharepoint add-on product
5 Kiosk display using Flash
6 NY State health care svc app
7 IN State health care svc app
8 Reporting module for SaaS
9 Retail service center mgmt app
10 Database porting MS to Oracle
11 Voluntourism platform
12 Cell tower data analyses app
13 BI/reporting for comm distributor
14 Charity campaign mgmt app
15 Common college app platform
*Project considered successful, if both the client and the vendor (Synerzip) are happy with the results

When Fixed Budget Agile Works?
Confidential

Common DOs
• Wait for at least one iteration before you submit the
bid
• Keep re prioritizing and re-estimating after each
iteration
• Listen to the end users’ pain points
• Question the product-market definition and the
revenue model if its not clear to you.
• Add a time buffer, requirements buffer and/or price
buffer
• Above all, stick with sound design and coding
practices. Move some stories out but don’t reduce
the story points by compromising quality
Confidential

Common DONTs
• Don’t go for a fixed budget if there is lack of
maturity in terms of technical or domain knowledge.
• Don’t commit to a price until you have at least one
iteration completed.
• Don’t work in a fixed price for a startup who are still
unclear about their product/market or business
model.
• Don’t sign up if a project has no flexibility on price,
requirements, time or resources
• Above all, don’t compromise on quality of software
delivered or coding standards to fit within the
budget
Confidential

Alternative approaches
Confidential

Story Points Based Agile
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4

Approaches Used
Key Characteristics
Synerzip
Project
Baked
Requiremts?
Mutual Trust
Level
Timing of
Estimate
Team Maturity
& Caliber
Project
Successful*? Approach Used
1 Documentum add-on product 2. Agile/DSDM
2 Vendor portal for hospitals 1. RUP
3 Oil & gas well monitoring tool 2. Agile/DSDM
4 Sharepoint add-on product 2. Agile/DSDM
5 Kiosk display using Flash 1. RUP
6 NY State health care svc app 3. Incremental Agile
7 IN State health care svc app 3. Incremental Agile
8 Reporting module for SaaS 2. Agile/DSDM
9 Retail service center mgmt app 1. RUP
10 Database porting MS to Oracle 1. RUP
11 Voluntourism platform 4. Story Point Based Agile
12 Cell tower data analyses app 1. RUP
13 BI/reporting for comm distributor 2. Agile/DSDM
14 Charity campaign mgmt app 2. Agile/DSDM
15 Common college app platform 1. RUP
*Project considered successful, if both the client and the vendor (Synerzip) are happy with the results

Recommended Approaches
Confidential
Key Characteristics
Baked
Requiremts?
Mutual Trust
Level
Timing of
Estimate
Team Maturity
& Caliber
Recommended
Approach
1. RUP
2. Agile/DSDM
3. Incremental Agile
4. Story Point Based Agile

Questions?
www.synerzip.com
Hemant Elhence, hemant@synerzip.com
469.322.0349
Agile Software Product Development Partner
Call us for a free consultation

Using Agile Approach with Fixed Budget Projects

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