Managing variable scope and cost in Scrum projects.

1. “Sprint Contract”: managing scope
and cost in Scrum projects
Carlos Santos da Silva
http://c-santos.blog.com
http://br.linkedin.com/in/silvacarloss
October/2012 (latest review)
Nokia Internal Use Only

2. Bio
 Working in Manaus Industrial Park for +24 years
 Industry: 12 years
 R&D: 12 years
 Experience
 Development embedded software for automated devices,
microwave-ovens, TV sets, DVD payers, telephones;
 Managed Product Engineering, Industrial Engineering and
Quality Assurance;
 Managed SW development projects for LCD/Plasma TVs;
 Managed Operations for Mobile Linux Software area;
 Managing Product Program for mobile devices.
Nokia Internal Use Only

3. Agenda
• Introduction
• Framework (concept)
• Framework (practice)
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4. Introduction
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5. Portfolio Setup
Company Portfolio
Program A
Program B
Project A
Project B Project E
Subproject X
Program C
Subproject Y Project C
External
How to manage scope and cost Project D
of an external Scrum project?
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6. Types of Contracts & Risks
Fixed Cost &
High Fixed Scope Low
1. the "Sprint Contract"
2. Fixed Price / Fixed Scope
3. Time and Materials
4. Time and Materials with Fixed Scope and a Cost Ceiling
5. Time and Materials with Variable Scope and Cost Ceiling
Supplier 6. Phased Development Customer
7. Bonus / Penalty Clauses
8. Fixed Profit
9. “Money for Nothing, Changes for Free”
10. Joint Ventures
Variable Cost &
Low Variable Scope High
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7. Scrum Project Parameters
Cost Quality
• PBL • Sprint
• Sprint • Team Size Length • DoD
Backlog • Sprint
Length
Scope Time
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8. Fixed or Variable
Revenue
$$$
$$$
u e
v en
Revenue is constant,
independently of the
Re
Pr
ofi effort applied or delivery date.
t it
P rof
Effort Effort
Fixed Price/ Fixed Scope Variable Scope/ Variable Cost
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9. Bonus/Penalty Clause
Revenue
$$$
Pro Sprint Review
fit
G
ai
n/
Lo
ss
Effort
Fixed Price / Variable Scope
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10. Framework
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11. Sprint Contract (example)
Project Start
Sprint Work
Sprint Work
no
Payment:
Goal? no
SprintRate * 90%
yes
Payment:
no Pts <90%? yes
SprintRate * 95%
no
Payment:
Payment: SprintRate *
Pts 90~100%? yes ROI? yes
SprintRate MissingSprints *
30%
no
Finish Project
Payment:
Pts > 100% yes
SprintRate * 105%
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12. Sprint Contract (Simulation: Sprint rate $1000)
Sprint #1 Sprint #2 Sprint #3 Sprint #4 Sprint #5
Sprint #6
Sprint #6 Sprint #7
Sprint #7 Sprint #8
Sprint #8 Sprint #9
Sprint #9 Sprint #10
ROI? Goal? Scoring? Payment:
R$1.050
R$1.000
R$900
R$950
<90%
90~100%
>100% R$1.500
Project Overall Cost:
+
R$4.900 R$1.500 = R$6.400
Nokia Internal Use Only

13. In Practice...
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14. First Estimation
• Customer’s PO prepares an initial PBL
• Supplier’s team comes for estimation
• Story points relative (size)
• Planning Poker: 1, 2, 3, 5, 8, 13 and 20 pts
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15. Sprints to Go
• First velocity estimated by the team (sprint length= 15 d)
• First velocity used to calculate remaining sprints
– Backlog = 291 pts; S01 = 34 pts
– 291 pts / 34 pts = 8.5 sprints  9 sprints
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16. Make or Buy?
• Make of Buy decision based on:
– Strategic project
– Competence and resources available to do internally
– Cost comparison: internal vs. external
– Other relevant decision
• What’s the internal cost?
– Team size during estimation meeting?
– Raise effort in Man Month, then:
• MMRate = $10.000
• MHRate = $10.000/176h = $56,82
• MDRate =MH * 8.8h = $500,02
• Project = SprintLen*TeamSize*MDRate* SprintsToGo =
15*5*500*9 = $337.500 (SprintRate = $37.500)
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17. How to validate Goal, %pts e ROI?
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18. Payment Calendar
Sprint Length: 15 days
S01: Aug S04/05: Nov
S02: Sep S06: Dec
S03: Oct S07/08: Jan+
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19. Delivery Results
• Actually run in practice during 1.5 years
• Product Owner (customer)
• Scrum Master (supplier)
• Transparency
Project On Time Delivery per Sprint
120%
Project On Time Delivery per Sprint
100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
120% 100%
100% 100% 100% 100% 100% 100% 100%
100%
80%
Delivery Rate
80%
Delivery Rate
65% 60%
60%
39%
40%
40%
20%
20%
0% 0%
1 2 3 4 5 6 7 8 1 2 3 4 5 6 7 8 9 10 11 12
2010/01 2010/02 2010/03 2010/04 2010/05 2010/06 2010/07 2010/08 2010/09 2010/10
2009/07 2009/08 2009/09 2009/10 2009/11 2009/12
Year/Month, Sprint# Year/Month, Sprint#
Average of OTD Target 90% Average of OTD Actual Average of OTD Target 90% Average of OTD Actual
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20. Thanks 
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21. Recommended Material
• 10 Contracts for your next Agile Software Project
(Peter Stevens)
• Outsourcing & Offshore Agile Delivery with Scrum
(Craig Larman)
• Your Scrum Checklist (Boris Gloger)
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22. Backup Slides
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23. Abordagem Ágil – Scrum
Fonte: Mountain Goat
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24. Sprints inside Project Cycle
P C
D
P A
Início Plano Execução Encerra
SP1 SRV SP1 SRV SP1 SRV SP1 SRV
WIP WIP WIP WIP
SP2 SRT SP2 SRT SP2 SRT SP2 SRT
... ... ... ...
SP1 SRV
SP2 SRT
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25. Contract Example
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