The Essentials for Successfully Managing Your Agile Contracts

L'essentiel pour mettre en place un contrat agile

In the first part of our series on agile contracts, we emphasized the importance of contractual practices that foster agility, collaboration, and mutual engagement. The second article explored in detail the implementation of an agile contract using the Investment Contract with SAFe, outlining each step of the process. This third and final article concludes our reflections by offering recommendations to strengthen collaboration, the sharing of responsibilities and risks, while ensuring the adaptability necessary to thrive in a constantly evolving environment.

Collaboration with clients over contract negotiation

The Agile Manifesto emphasizes collaboration with the client rather than contract negotiation. This does not mean that contracts are unnecessary, but rather that collaboration should always take precedence. This principle applies to both external suppliers and internal teams. For example, is the IT department perceived as a supplier or as a strategic partner in the creation of innovative solutions? Are client representatives integrated into the processes of writing and prioritizing features, or are they sidelined? Actively involving clients in development processes is a key condition for success. In SAFe, this responsibility falls to the Business Owner, whose active involvement is crucial for the success of the train.

Evolving contractual approaches is an important lever to improve organizational agility. It allows Lean and Agile values, principles, and practices to be disseminated throughout the organization across the entire value stream, including procurement, human resources, and legal services.

Promoting smooth collaboration for better adaptation

Focusing on smooth collaboration with clients rather than concentrating on contract negotiation allows for delivering solutions that not only meet current needs but are also capable of adapting to market changes. The agile contract represents a significant advancement in managing relationships between clients and suppliers, as well as in conducting large projects. It promotes the engagement of all teams while maintaining essential flexibility.

Four key elements of the agile contract

1. Sharing responsibilities and collaboration

The agile contract is based on a balanced sharing of responsibilities between the client and the supplier, each playing a crucial role in the success of the project. This division of tasks requires close collaboration, fostering mutual trust, which is essential to navigating the uncertainties inherent to agile projects.

The goal is not to entirely replace contract negotiation but to prioritize healthy collaboration over contractual disputes. This dynamic encourages a relationship of trust, essential for navigating the uncertainty and changes inherent to agile projects.

2. Risk sharing and transparency

Transparency is at the heart of the agile contract, ensuring that all relevant information is openly shared between the client and the supplier. This openness is essential for risk sharing, a central aspect of the agile contract. By jointly acknowledging and accepting project uncertainties, stakeholders commit to collaborating to overcome challenges and adjust the project plan as needed.

3. Adaptability and flexibility

One of the major strengths of the agile contract is its ability to adapt to unforeseen events. Unlike traditional contracts, which are rigid and often outdated before the project’s completion, the agile contract allows for renegotiation of commitments at each planning interval, which lasts about three months with SAFe. This flexibility ensures that the project remains aligned with current business objectives and can effectively respond to market changes or the needs of the end user.

4. Focus on outcomes rather than deliverables

The evaluation of the supplier’s performance is based on outcome commitments, on PI Objectives, rather than on simple deliverables or story point commitments. Within the SAFe framework, this helps direct efforts toward creating real value for the business. This approach improves customer satisfaction, encourages innovation, facilitates data-driven decision-making, aligns work with strategic objectives, and optimizes resource use.

Four tips for facilitating the implementation of agile contracts

1. Pre-training teams in lean and agile practices

Ensure that teams, whether internal or from the supplier side, are trained or even certified in Lean and Agile practices. These teams can become ambassadors of agility within their respective organizations, thus facilitating the adoption of agile contractual practices. This foundation of agile knowledge also accelerates the post-contractual launch and adjustment phases, allowing teams to quickly embrace the contract’s conditions and perceive its benefits early on.

2. Opening dialogue with procurement and legal departments

Procurement and legal departments are often the most reluctant to adopt agile contracts, fearing a loss of control. It is therefore essential to take the time to explain the methodology in detail and to identify processes, sometimes already existing, that are better suited to this type of contract but rarely used due to fear of losing contractual control. The competitive dialogue workshop, which is part of public contract processes, is an example. An open and constructive dialogue with these departments is crucial to establishing agile contracts in a calm and sustainable manner.

3. Launch a pilot project to test and validate the agile contract approach

Starting with a smaller-scale project allows you to test the implementation of an agile contract in a controlled environment, identify potential obstacles, and make adjustments before rolling it out across the organization. A successful pilot project also provides concrete evidence of the benefits of agile contracts, facilitating their broader adoption.

4. Initially, get support from experts

These professionals have practical experience and in-depth knowledge of the challenges and opportunities related to adopting agile contracts. Their support will accelerate your teams’ learning curve, help avoid costly mistakes, and ensure a smoother transition to these new practices. They can also play a key role in training teams, establishing appropriate processes, and facilitating dialogue between different departments.

In conclusion

While we have covered several crucial aspects of agile contracts, it is important to note that this series of articles is not intended to be exhaustive. The adoption of agile contracts is a complex process that requires adaptation to the specificities of each organization. Other elements, such as the evolution of practices over time, managing unforeseen events, and adjusting expectations and risks with stakeholders, also deserve exploration. Nevertheless, by integrating these principles and recommendations, companies can begin to lay a solid foundation for effective, flexible, and success-oriented collaboration in a constantly evolving environment.

Want to know more about establishing an agile contract in your company? Contact us at [email protected]

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Written by Hélène Malo Wittemberg and Etienne Laverdière