Agile and Lean Contracts for Outsourcing

Agile and Lean Contracts for Outsourcing – An evening with Gabrielle Benefield hosted by Adventures with Agile

Last night in London, AWA hosted a great workshop and presentation from Gabrielle Benefield on Agile and Lean Contracts. We started the evening by getting into small groups and discussing the problems that we had seen that were created by contracts in outsourcing solutions. Gabrielle wrote these onto the flip chart at the front.

The list got so long that it was hard to fit it onto one sheet.

We discussed the types of contracts that we see today. It doesn’t take long on the Agile journey to realise fixed scope and time contracts are not going to work and that Time and Materials is a better approach.

However, a T and M contract doesn’t protect you from lack of trust, doesn’t define any deliverables and there is typically no guarantee of any success.

Instead it is possible to define desires outcomes and reward these outcomes in the contract. Gabrielle said that it is common for contracts to be split by T and A and also outcomes. The percentage split being at the highest 40% of the total revenue as a reward for meeting the outcomes.

An outcome at the simplest form could be something like:

‘lower call centre volumes by 25%’ or ‘increase conversion rate on the website by 25%’

There are many things that can effect whether an outcome is met including external forces that may be noting to do with the party under contract. To combat this, and to make the outcome more specific, we can layer outcomes to a more granular detail.

In this way, rewards can be measured against layered criteria which is less likely to be affected in aggregate by external forces.

Another benefit of an outcome driven approach is that it removes the ambiguity and lack of understanding of requirement explanation across different cultures.

I have worked with multi-region teams over the last 15 years and in my experience the difference of culture has a massive effect on how requirements are interpreted. Removing requirements as the focus and replacing it with outcomes, gives a much simpler and more autonomous way to work to deliver business value.

Another factor when creating contracts is the duration for which they run. The longer the contract duration, the less chance for feedback and retrospection of the outcomes and performance in achieving them.

At the end of the contract cycle there is always the option not to renew and try a different approach, or to change the outcomes and try something different.

There was a good discussion about specific points and contextual problems from members of the community.

You can view these in the video of the evening on the Adventures with Agile community website.

After the event, several of the attendees posted reviews of the evening on the website, examples of comments were:

great, interactive, understandable, great examples, clear idea – Anna
… has exceeded expectations, Gabrielle illustrated how it is possible to contract for agile … – Tony

As always, very insightful. It’s nice to have the opportunity to learn best practices from industry experts. – Cosmin

What's wrong with contracts now

Types of contract

Multi-layered contracts

Small contracts