Is Scrum a Good Choice for Fixed Price Projects?

Fixed price contracts can be rather tricky in a Scrum environment. Classic software development and Agile software development are very different from one another, and things that work in one environment don’t necessarily work in another. However, a lot of clients prefer fixed pricing, especially in public sectors such as government agencies.

So what does a Scrum team do when it is presented with a fixed price project that they simply can’t afford to refuse? Well, it’s very difficult for a team to simply drop their Agile principles and switch to Waterfall overnight. Scrum offers a lot of benefits such as quick feedback, flexibility, transparency, and stability. A group used to those values and methodologies will not change easily.

Fixed pricing means that clients only have one shot at getting the product they requested. This makes it critical for a team to determine requirements upfront, and set a budget that will take risks into account, which doesn’t necessarily align with the flexible principles of Scrum. These contracts are difficult to navigate in a Scrum environment; however, with the right team and proper strategy it is possible to create a great product, on time, and within budget.

Working with Fixed Price Contracts in Agile

Fixe priced contracts limit the number of mistakes a team can make. Agile groups are somewhat encouraged to make mistakes and to learn from their errors, but this can place a project out of budget if the capital is limited. This is why it is crucial to have the best people in an organization involved in fixed price contracts. And to have a strategy set in place that will minimize unwanted efforts and potential errors.

This ensures that you have a group of talented and dedicated people working on a clear project with a clear vision.

Communicate Clearly with your Customer

Requirements can continually change in an Agile environment. A team can get different instructions from different stakeholders, which can be quite confusing and waste a lot of efforts.

In fixed priced projects it is important for a team to have one product owner, and communicate clearly with that person. The product owner should represent the entire stakeholder group, so that the team only has to speak and receive directions from one person. This removes any chance for doubt or miscommunication.

Make a Preparation Sprint

Before the Scrum team writes a single line of code, they need to make sure that all the aspects of the project are in order.

A preparation spring can help a team define user stories, track issues, get boards ready, gain source repositories, etc. It is often difficult for stakeholders to keep up with the Scrum process, so a good preparation sprint can act as training course on what the process entails.

Under-Promise and Over-Deliver

It is important to keep releases and sprints realistic, and not to over promise on the functionality of the final product. It’s smarter to begin with an achievable sprint, and then add some extra efforts if the goal is reached. It is better than telling the customer that your team couldn’t reach a specific sprint goal.

Teams should start with the most basic version of the functionality. There’s no need to over-impress in the first sprint. Product owners and stakeholders usually have high expectations at the beginning, so it is up to the team to educate them on what to expect. They must explain that improvements can be made in future sprints.

Keep your Team Motivated

When the group does something good, it’s essential to praise their efforts along with the product owner and stakeholders. The celebration can be simple, for example, a few drinks at a bar or a small cake. This will strengthen the team and keep their efforts strong.

Dealing with Changes

Customers often have a hard time understanding the functions of a project, especially in the beginning. Even in fixed price projects requirements often change. A team needs to be ready to deal with those changes ahead of time.

If a product owner changes a requirement, it can throw off the workflow of an Agile team. It is important to work with the client and find the best way to implement those changes. A good approach is not to change user stories, but instead exchange them for ones that fit similar sizes based on estimations made by the team.

Conclusion

Working on a Scrum environment with fixed pricing is not easy, but with the right team success can be achieved. Groups need to make sure that they educate customers and have a clear understanding of the project before proceeding to construction.

Companies can always fight back and ask for different types of contracts, but that approach is risky as the project can always land in the competitor’s hands.