This question always comes in my CSM class that can a Fixed Bid project be agile? It could be if you run it correctly. Lets understand little bit here what Fixed Bid means? Does fixed bid mean Money is fixed or Scope is fixed or Date is fixed? I generally get an answer that everything is fixed. A Fixed Bid doesn’t mean everything is fixed, that could be just a mis interpretation. Let me share you about an interior design project for my new home we bought two years ago.
When we bought this house, it was like a shell and we needed to get it designed by an Interior Designer. We inquired in our community and we heard that people spent quite a bit of money (like 1 Crore) for interior designs itself. But we don’t want to spend more that 25 Lacks, so our budget is fixed. Then we started looking for a contractor who does this work. We heard many horror stories from our friends on how they got cheated by contractors, like in one case contractor took the money and vanished and in other case, the budget was overshot by 2 times and so on. We spoke to few contractors and finally decided to go with two ladies who live in the same apartment complex. We reviewed their prior work and discussed few ideas. We were fairly confident that they are trust worthy. We shared our budget and they told us that it will take 6 months. We tried to push them to complete it early, but they insisted that they need that much time if we want a quality product. At this point price is fixed and time is tentatively fixed.
Once we hired them, I and my wife sat with them and had a general discussion to understand each other. We shared what our preferences are and the designers shared what adds value to the house from appearance standpoint. Based on this information we allocated budget for each category like false sealing, Lighting fixtures, Designer Painting and other aesthetic artifacts. Designers came up with different themes for each room. We went shopping with designers few times to choose the artifacts and review some catalogs. This gave designers better idea of our likes and dislikes. They came up with very modern theme for our kids room which we initially liked very much. This involves scraping the walls to expose bricks in few places. However, we didn’t like it once we saw it in real and they had to put every thing back. They lost couple of days because of this which is ok since we couldn’t visualise the outcome until we saw it.
Finally what turned out is a beautiful house within the budget and more or less on time. However, the final outcome of the house couldn’t be visualised by our family nor our friends at any point during the implementation. It was totally empirical! We as stakeholders partnered with our vendor and discovered the scope together! But we are in control all the time and our designers kept it all transparent throughout the project. In client-vendor setup, “Time and material (T&M)” probably is the best way with a knowledgeable client driving the project outcomes. However, “Fixed Bid” projects are still possible if they are done correctly.
Here are few suggestions to the customers who are planning to out source the work:
- Choose the trust worthy vendors (NOT the cheapest) and treat them as partners.
- Have a good understanding of Agile practices so that either you can drive the effort or at least understand whats going on.
- Collaborate with vendors regularly and help them understand your vision.
- Review the work regularly and provide feedback so that the delivery teams can deliver most value.
- Choose the Product Owners with good domain expertise and make them available, empowered and accountable for the product being developed.
After all, it’s your money and you want to get best value for it!
Here are few for vendor organisations:
- Invest in true learning (Not just certifications).
- Keep things transparent to the customer to build trust.
- Empower your own teams to self organize.
- Focus on value over cost optimization.
- Discuss with the customer what it means to work in agile.
- Set the right expectation upfront as far as the collaboration etc. is concerned.
- Write contracts that fosters collaboration.