Agility & Project Management at Fixed-Cost

Hashedin

Priyanka Upadhyay

15 Sep 2020

Agility is one of the most innovative and effective project management methods that is widely used by companies right now. But when it comes to implementing this methodology, we are always at a cross path while balancing fixed-cost projects and also managing them in the agile environment. Many aspects have to be considered, from cost overrun to scope derailed, quality getting impacted, the team’s workload, lack of motivation, etc. Let’s go through some practices that can help us take fixed-cost projects in sync with the Agile way of development and come out as a success.
 

  1. Move from Fixed-Cost to Fixed Budget
     
    The central conflict between applying an agile mindset and a fixed-cost contract lies in the fixed scope. So, what could be an effective solution? The revised scope can be converted into a fixed budget to work smoothly with the value of agile. This involves a few key steps – understand and complete your requirements, create user stories, convert them into product backlogs followed by estimations and so on. The aim should be to convert these estimations to actual cost that will help get a quantifiable cost for each feature or phase as seen appropriate as per project requirements. In case of a change in business requirements or a shift in priorities, exchanging the scope of equitable size is the best solution.
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  3. Resource Planning
     
    We all aim towards getting maximal or optimal profit when working on a project. Keeping your cost in control is an essential requirement in all projects, especially in the fixed-cost ones that thrive in an agile environment. The primary cost driver in a project is the team that is working on it. Hence, how you go ahead with your resourcing plan affects the success and profitability of the project. This includes enhancing productivity and the establishment of expertise that complement the demand of the project. Here are some key features:
     

    1. Form: Instead of going for a full-grown team at the kick-off phase, it is a better idea to get going by forming a core-team of Project Owners at that phase. This step can be undertaken to get the initial understanding of the project requirements, analyzing critical project decisions and processes, and deciding on a framework.
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    3. Expand: Add in Module Owners.
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    5. Full Grown: Get the complete team set up.
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    7. Right Size: For a smooth and hassle-free movement of the project, the right size of the team based on the skill set is required, and the complexity of work is of paramount importance. Let go of the others to the resource pool to plan the whole project wisely.

     

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  5. Rebaseline Estimates
     
    The unavoidable gap between project estimates and actuals have been a significant hurdle in fixed-cost projects. Though estimates must be influenced solely by the resources proposed, things don’t happen this way in reality. Thus, once the project begins, it is crucial to re-baseline the cost. We have one example to explain this point vividly.
     
    Scenario:
     
    Proposal Team Estimates (Presales): Cumulative estimates of 160 story points. The team forecasts an average velocity of 20 story points for a monthly iteration. The proposal assumed the team to be fixed for the duration and came up with an estimated eight months.1
     
    Delivery Team Estimates: Actual implementation team came up with entirely different baseline estimates. Their estimation was 180 story points. With the staffed resources, the team predicted a 15 point velocity per iteration, estimating completion in 12 months.
     

    Iteration2

     
    In the above scenario, at the start of the project itself, we got a fair idea of the gap, and that helped us take measures that would ensure a reduction of the gap. Some of them could be in terms of training and upskilling to guarantee velocity, looking for ways to optimize the team’s productivity – reusable codes and getting things right the first time. The gap could be reduced even with a correct blend of developer mix in terms of experience and expertise – having two juniors and right performing individuals rather than a senior high experience individual. Evaluating the scenario with the client and trying to get their buy-in could also be a possible option.

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  7. Follow the Flexibility Matrix
     
    A flexibility matrix is a useful tool that facilitates conversations around project trade-offs and helps analyze the client’s priorities across the various project constraints, namely scope, schedule, cost, quality, etc. This makes understanding each knowledge area’s importance in a project more accessible and facilitates assessing the room for flexibility in playing around with them during decision-making. While choosing between GTM versus 80% code coverage, project objectives according to the client’s business needs should be prioritized.
     

    Use of a flexibility matrix3

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  9. Communication & Visual Workspace
     
    We can use communication mediums like storyboards and release walls to communicate the overall project. Communication is one of the critical elements in agile, and when a fixed-cost project is discussed, a healthy communication plan is crucial to its success. Interaction with stakeholders and clients should be smooth, and regular updates are a must during meetings. Product backlogs must be prioritized, and the project manager must clarify every doubt of the team. Here are some key features of an exemplary communication model.
     

    1. Storyboard: This provides information on the current sprint, the tasks and features at hand. It also guides to evaluate progress, rendering visibility at sprint level to all stakeholders. This should be updated everyday to maintain transparency in the team.
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      The Storyboard4

       

    3. Release Wall: The Release wall gives the whole perspective of the project at a glimpse. With its support, we can determine the project’s present status and its scope in the near future.
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      The Release Wall5

       
      Maintaining agility in fixed-cost projects can be a daunting task, but with concrete planning and strong project management skills, tackling the challenges is possible. Identifying the risks and handling them upfront is one of the most compelling and feasible ways to maintain smooth operations while working with fixed-cost projects in an agile environment.

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References:

  1. https://www.pmi.org/learning/library/firm-fixed-price-agile-projects-6231
  2. https://www.pmi.org/learning/library/firm-fixed-price-agile-projects-6231
  3. https://www.pmi.org/learning/library/firm-fixed-price-agile-projects-6231
  4. https://www.cs.colorado.edu/~kena/classes/5828/s12/lectures/21-agileprojectexecution.pdf
  5. https://www.cs.colorado.edu/~kena/classes/5828/s12/lectures/21-agileprojectexecution.pdf

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