Agile projects require a very different approach, necessitating much closer working relationships between clients and their suppliers. One of the key purposes is to keep very frequent lines of communication permanently open. This coincides with a much more detailed initial planning phase, focusing on business outcomes to be supported rather than getting into the ‘weeds’ of specific functions, to help manage identifiable risks.
An example to present the benefits of this management methodology can be represented in a project to develop a new complex IT solution for servicing a general public need. Over the time that the new system is being developed, there will be significant potential for changes in business outcomes, tastes, trends and technology. More rigid traditional project management methods could end up delivering what was requested, but not what is needed. Agile project management has been designed to adapt to a project that remains aligned to its changing environment, to provide what’s required at the point of delivery, albeit, this may not necessarily be what was perceived to be contracted for at the outset.
Traditional contract management can be quite prescriptive, with processes, systems and KPIs set out in detail at the very start and often strictly stuck to throughout. Fortunately, an increasing number of strategic relationships have come to adopt the sensible strategy of regularly reviewing their business outcomes, requirements and contractual agreements against the realities of their relationships regularly throughout a project, allowing for delivery realignment and KPI alterations to take place if necessary.
But agile contract management can offer more flexibility, subject to how it is structured. At its core are more regular reviews to determine the strengths and weaknesses of both the project deliverables themselves and the relationship, helping all parties to focus, on driving innovation and added value throughout the project. However, this is only possible in a working relationship where there is a good degree of commercial trust and collaboration in the first place.
Mitigating the Risks of Agile Project Management
There are of course many risks associated with this approach to contract management, so here are four tips to remember when considering the Agile contract management methodology for your project.
- Is agile project management right for your needs?
Whether or not agile project management is appropriate for your needs will be determined by a number of factors – primarily, how defined your view of the business outcome of your project is, the clarity with which you can visualise your route to achieving this result, and the size and complexity of the project you are to undertake.
Agile project management comes into its own where there are unknowns that could limit your ability to contract for a fixed solution or process, or where the outcomes are subject to changes outside of your control or predictive ability.
For example, if you wanted to fly to Mars, you’d know the outcome you were looking to achieve, but as the technology to achieve it has yet to be finalised, you cannot say with certainty how may factors will come together to result in you getting there. Such a project would be a good candidate for agile management.
- Resourcing with foresight
The flexible nature of agile project management has a downside, and that is most evident in the unpredictability of the demand for resources – including personnel, budget and technology. Estimations are essential, but it will be your supplier’s experience and the solidarity of your collaborative relationship that will determine how well these estimates mirror reality.
From early on, your supplier should be able to provide you with fairly accurate immediate cost estimates for each stage, before each stage begins providing they are operating an appropriate level of due diligence on how the project will achieve your end-business expectations. Then it will be down to everyone’s foresight and experience to determine the accuracy of future costs and needs.
It is important that both sides adapt their working relationship and communication style to the demands of an agile project. Surprises are likely, and budgetary issues are inevitable. Recognising that this is the road you have chosen to take and making every effort to mitigate risks is crucial. Take the time to talk to your solutions partner as soon as an issue is recognised so that a solution can be designed.
Unpredictability leads to risk, and risk increases the chances of relationship friction. If you are considering using an agile management style you should recognise that the only way to prevent your project from spinning out of control when you are faced with fundamental changes within your project is if you,
(a) ensure your supplier undertakes appropriate due diligence at each stage, on how their proposed solution at each stage will help you visualise the solution meeting your business outcomes, at each stage, and
(b) you have both an excellent relationship, and communication, with your supplier. Anything less could lead to higher costs and longer timelines than expected.
- Agile project specific contract formation
Choosing this form of project management necessitates a deliberately different approach to contracting for it. Agile project management involves an iterative work process, with each iteration often involving a section of the project that needs to be completed before the next can be started. At each new step, the validity of the previously assumed plan of action for the entire project should be assessed and the outcome re-reviewed to ensure that the relationship is heading in the right direction.
This ‘trigger’ for the review between iterations ought to be built into any contractual agreement the parties sign. Given the dynamic nature of the agile approach to project management, it is vital that the agreement is regularly reviewed to ensure everything is aligned and that everyone has what they need to reach their intended outcomes.
A lack of clarity on ‘how’ a task will be achieved should not be mistaken for a lack of clarity on the outcome of that task. Agile project management contracts should be clear on the detail they are able to define, and clear on the process of definition where, by their very nature, the detail is currently lacking.
Clarity over responsibility is all the more important on agile managed projects. You are likely to need your supplier’s guidance throughout which will mean they have a ‘Duty to Warn’ you should it become clear to them that your aspirations are flawed or their capacity to satisfy those aspirations is in any way lacking.
- Contract administration is as important as its makeup
Spending time developing a fit-for-purpose contractual agreement with an appropriate provider adds little value if it’s not administered correctly. There will be times when a supplier should be offered praise and financial bonuses to incentivise their best performance, and there will be times when you will be let down because of poor advice from them. In those situations, they should be reminded of their “Expert Responsibilities” and their “Duty to Warn” to undertake appropriate due diligence before each development stage under their agreement. Those rewards and change in direction when you have been let down should be applied appropriately to direct the right behaviours for a more successful project outcome.
It is just as important that both parties know and understand their roles and responsibilities in the relationship and that those roles and responsibilities are maintained throughout. Deviation – for instance, the client team getting too involved in ‘how’ the project is being delivered – can affect the integrity of a contractual agreement, the trust of a supplier partner and the stability of a working relationship.
There will be times where going down the agile project management route will be the best option for your project, but there will also be times when to do so will endanger its chances of success. So, before you do, consider thoroughly whether it truly is the best form of project management for your needs. Conduct all the due diligence you can to estimate the resources you may need despite the inherent unpredictability of this strategy; work hard to build strong, collaborative relationships with your providers and to keep lines of communication wide open. Finally, form and manage relevant and clear contracts that offer clear lines of delineation for all parties.