Wednesday, August 15, 2012

Selling scopeless contracts

The last two blog entries (“Scopeless contracts: the problem” and “Scopeless contracts: the solution”) have been working up to this one. Actually this is the blog entry I set out to write a few weeks ago but felt I had to explain why.

Even if you accept that leaving scope out of a contract for work is the right thing to do you still need to sell it to your customers. This is, perhaps, the real problem. However this is not always the case. Some clients will immediately recognise the problem, or might not wish to sign a big up front deal.

So, faced with a customer who wants to know “How much will it cost to do X ?” what should you say? Or rather, what can you emphasis to persuade them that you have a better idea?

(Note, on anything other than a trivial piece of work X will not be one thing but many, call them X1, X2, X3, … Xn.)

  1. Flexibility: scope less contracts build in flexibility, if the client wants Y instead of, or in addition to X then thats OK. No need to scrap this contract and start again.
  2. Work can go away: Suppose X3 become pointless, then it can just go away without any trouble. As opposed to the UK Government Connecting for Health project [[link]] were actually cancelling the project is more expensive than letting it finish.
  3. Room for innovation: if you sign a big contract and later think of a bright idea then something has to give. Scopeless contracts allow for this because feature negotiation is ongoing.
  4. Bounded by money: Rather than being bounded by scope contracts are bounded by the money available, or sometimes the time available. This forces the creators to work within a very real boundary rather than poorly defined scope and time estimates.
  5. Governance control: bounding the contract in money provides for real governance rather than the governance by proxy that scope, features and line items provide. When the money runs out the work stops. (This of course assumes the team are making regular deliverables, if they aren’t you have even bigger problems.)
  6. Inventive to reduce work: putting 2, 4 and 5 together you get an incentive to reduce the work to be done rather than inflate. In traditional work scope is problem because removing it creates contract problems and loss of face, but more importantly: there is little incentive to remove work until difficulties hit.
  7. Reduce delay & waste, keep options open: All the time spent writing and negotiating scope delays the time when you actually start delivering something. If things change, and the longer you spend writing the scope the more likely things will change, then the more of that work which will be wasted. And the more you think you know what you want the more you constrain the options for producing the optimal solution. Selling without scope reduces this work because scope is derived as you go within the process and only enough is produced as is needed.
You can, and people do, do all these things within traditional scope based contracts but there is additional work to do to change the contract. And, more importantly, it starts the contract with an illusion, a myth: the idea that one day things might be done. Which gives us:

  1. Traditional work relies on a scope myth “scope won’t change”. It does but we pretend it was because something was wrong. The result is we spend time and money managing the myth: managers need to revise contracts, staff change boards, write complex governance reports, etc. etc. In other words: because managing scope is doomed to failure the thing we call “scope” is a chimera which we waste time and money on “managing”.
Despite three blog entries I still don’t feel I’ve said what I wanted to say. This is a topic I need to return to….

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