Agile mindset in Fixed Price Projects

The title might be controversial as we might think about how Agile can be adopted to Fixed Price Projects and why we need that. The term Fixed Price Projects refer to projects where the funding is fixed regardless of actual delivery cost. Usually, sponsors and stakeholders will expect a defined scope to be delivered within a set schedule as well. That leads us as PM to start a project with the 3 corners of the project management triangle are fixed.

Source: http://lukeangel.co/

Why we might need the Agile mindset in this situation:

  • It’s hard to predict the future when we need to foresee the needed time, effort to deliver the defined scope (sometimes not fully clear in the details). In addition, a variety of risks should also be factored in the estimation.
  • The end results for any projects including fixed price ones are to solve specific problems/ deliver outcomes to relevant stakeholders. The project team and stakeholders need time to validate, align and fully understand the underlying outcomes behind the outputs as defined scope.
  • Changes might be happening on the way, especially for large & complex projects. They might come from new information discovered when executing or from the external business landscape.

How to approach this situation:

  • Influence even before the project started: from the business case stage or before the initiation phase. The defined scope should have priority orders where the highest priority ones directly impact business outcomes.
  • Involve the project team early from the estimation stage: to minimize the gap between expert estimation and actual execution. If the full team is not available, at least we have the estimator to take a leading role in the project to ensure accountability on the estimates.
  • Re-baseline the scope, schedule, scope on a regular basis like fortnightly, monthly. Monitoring the gap between actual delivery versus original plan helps us to identify issues as early as possible. 
  • Even fixed projects, negotiations on scope, schedule, cost are still helpful to reach the highest possible business outcome. For example, lower priority items in the defined scope can be considered to be swapped out or even eliminated by the right reason.

More guidance can be found:

firm-fixed-price-agile-projects, Fewell Jesse, PMI.org

What are your experiences with fixed projects?

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