Agile contracts

If you’re negotiating with a customer over a contract for something and you want to be agile I think one of your hardest problems probably is to convince the customer of the value of an agile development process. Because you don’t really want to be negotiating, right? And most customers want a fixed price so they know how much money they’ll spend at most. I think this compilation of contract variants is great since it helps you (and your customer) to compare different types of contracts/collaboration. The most interesting is of cause the “Money for nothing – changes for free” contract (more on it here). What it essentially means is that the supplier estimates the initial work just as if it was a fixed price contract. That price is the target price. Rules for what happens if the target is exceeded may vary but that is not really something new. The interesting part is that if the project is canceled prematurely the supplier gets some percentage of the remaining sum without doing anything. And the customer may change everything and nothing at will (change for free) during the project. The idea is that if enough customer value is delivered early then the project ends early. This is good for the supplier since there is money for nothing. And the customer gets maximum value in shortest time probably also cheaper since the project can be canceled whenever the customer is happy enough. Because we all know that a fixed price or cost ceiling in reality means the same thing. So even if the customer pays “money for nothing” it is still better than paying for things you don’t really want…

Comments (0)

Skip to main content