A Square Peg in a Round Hole: Agile and fixed-price contracts

I’m blogging the conference Agile Approaches for Delivering Business Value

A Square Peg in a Round Hole: Agile and fixed-price contracts

Duncan Pierce, Amarinda Consulting Ltd


  • Square peg: Agile processes flex scope freely and have open-ended timescales.
  • Round hole: Fixed-price contracts usually come with a deadline and strict limits on how much scope change can occur – often none at all.

Luckily you don’t have to hit agile particularly hard to make it fit, while being internally agile gives the fixed-price supplier some interesting options.

In this presentation we’ll explore the value of those options and what has to change for agile to work in a fixed-price world.


Lots of questions tend to be about Agile and fixed-price contracts…

Fixed time/scope/cost is HARD.

Agile won’t help you see the future…

So can’t size a project with any greater certainty

But Agile gives you some useful tools as a delivery engine – more options than waterfall…

Assumption – that you can (if you want to) deliver in an Agile way. Need the capability to apply what he’s saying

Project over-run – Agile can overrun just as well a waterfall – no silver bullet!

Misconception that agile is about fixed time and flexible scope – actually only iterations have fixed time, and typically pretty fixed scope… If you have more time, agile can use it, if you are allowed to reduce scope, then agile can do it

Fine-grained estimation can yield more accurate results – breaking requirements down to user stories which are estimated individually. Estimates based on units of delivery can be linked to individual cost, value and risk estimates, aiding decision.

Agile projects can be initiated and ramped-up faster – allows some work to start early?

Agile projects can calibrate estimates against delivery performance. Could do in waterfall if we have experience of doing this in whole projects – in Agile the finer-grained nature can allow us to measure this team on this project.

See overruns earlier because of frequent snapshots.

Agile projects can be lengthened or shortened by any amount at any time. (it’s a choice).

Agile projects can cut or add scope later and more efficiently than waterfall. This because detailed design, implementation, testing and integration of a feature only happens close to agreement to include it. (implies the work to reduce dependencies between lumps of scope)

Agile projects can reach minimum acceptable feature-set earlier. (Prioritisation) Important – not only prioritise requirements, but aim to sub-prioritise the elements of a requirement. Doing the Must’s first controls risk… Iterative development (as opposed to incremental)

You can prove you are making progress on an Agile project. Working software is a better persuader than documents.

Agile can cope better with changing requirements from the client. Cheaper cost of change.Implication is that you can sometimes profit from changing requirements.

Proactive application of technology to business

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