Agile and Fixed Price Projects

I was meeting with some local developers the other night and one of the topics that came up was how to move from traditional fixed price projects to agile ones. The developer I was chatting with works for a firm that submits tenders to projects, where the clients all expect, and want fixed prices for the project so that they can submit their budget. His experience in trying to move to agile projects was that these are hard to tender because their costs look too high, and then they end up being undercut on price by competitors.

There has to be a way to do this: make this transition so that clients know you can do the work and do the work as required to meet their requirements. However, I’ve not found much on the topic on the interweb. Have I just missed the memo, or is it hidden somewhere? Surely others have gone down this road too, and written about it?

What I did find was a few links to useful papers and experiences. Start with the two pieces (part 1 and part 2) by Pascal Van Cauwenberghe under the ‘reading and books‘ page. Vikrama Dhiman also has a few points on fixed price projects on his blog, but argues the counterpoint to Pascal, so maybe that issue about ‘bidding low’ is up for debate.

My own feeling is that agile and evo teams should be able to make a compelling offer as part of their tender on projects, much as Goldratt discusses in ‘It’s not Luck‘. This needs to be a way to get the point across to those submitting RFTs that your offer will deliver something more useful than the spec provided, in a shorter time, and thus for less money in the long run. Maybe I need to find a firm that wants to pursue this further and we can work on it together. There must be a better way.

2 thoughts on “Agile and Fixed Price Projects

Charles Williams
October 13, 2009

Bruce,

I am also interested in finding more information regarding priceing models for evo/agile Projects. atm I am working mostly evo open-source projects but would like to see a few projects take off but am not sure how I should bid them.

As an aside. I wrote a small bit a while back (2007) regarding evo and agile models compared to other models when used in the open source arena. was always wanting to flesh it out a bit more but have not had the chance. lol.

http://www.itadmins.net/index.php?option=com_content&task=view&id=56&Itemid=82

chuck

Bruce
October 14, 2009

Charles,

found the talk by Scott Amber at InfoQ about what’s going on out there? gives some indication that people are making this work. Follow it up with some survey results at his site too.

I’ve not had a chance to dig through them, but intend to as part of a course revision for January. I’ll let you know when I get so far.

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