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What are they talking about? A glossary of Scrum and Agile terminology

What are they talking about? What is the difference between acceptance criteria and the definition of done? Every field has its own special vocabulary and agile software development is no exception.
From acceptance criteria to working agreements, the following guide will help you navigate the waters by understanding the terminology.
Acceptance criteria - tests which must be passed for the Product Owner or customer to consider the story accepted. The Team should verify these before submitting a story for final approval. Acceptance tests help ensure external quality. Most product backlog items can be mapped to one or more acceptance criteria. See Definition of Done and Quality, external.Agile - a movement for finding better ways of developing software. Scrum and Extreme Programming are two leading examples. Others, such as Kanban or Lean Startup do not define themselves in the agile tradition but are based on compatible values and principles.Agreement - the basis for planning and comple…
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Recommendations for an Agile contract

A contract manages some risks but not all of them. More importantly, the contract defines the playing rules, which in turn drive people's behavior.  What would you like to have in a contract? Conditions that encourage behaviors that lead to project success.

The following thoughts are based on my own experience working both as a supplier and as a customer of external development services.

Good Product Ownership is Essential An effective Product Owner can dramatically reduce the risk of a project and increase your chances of success with your new product. A Product Owner is a decision-maker, so this almost always means the Product Owner has to work for the customer, not the supplier.

If you are contracting with an external supplier for software development, Scrum is a good choice for managing the process, if – and this is a big if – the customer supplies an effective Product Owner who engages and collaborates with the rest of the Scrum Team.

Learn to be a good Product Owner. Produc…

Joint Ventures

A marriage made in heaven…? Or hell?!

Contracts are often about one party establishing control over the other party. What if two equal partners are collaborating on something together?
Desired Benefit Join forces to achieve a goal that neither party could achieve alone without defining a hierarchy between the partners.
Structure Two partners invest in a product of joint interest. Money is unlikely to flow directly between the partners in the development phase, but each party must have a ROI, which may come from revenue sharing or just benefits from using the software.
Scope Defined to suit the needs of the partnership.
Risks Two of everything. Decision chains can get long. Rivalries can develop between the teams. Different models for extracting value from the product can lead to different priorities and differing willingness to invest. What happens if one of the partners doesn’t contribute as expected?
Tips Treat the joint venture as a separate entity: One team, co-located, with deve…

Money for Nothing, Changes for Free

“Money for Nothing, Changes for Free” encourages both customers and suppliers to focus on value.

A key advantage of Scrum projects is that at least once per sprint you have something that could be shipped and no work in progress. You can change direction every sprint, and you can reevaluate whether the project is a good investment or if your money could be better spent elsewhere. Abrupt cancellation is risky for the supplier.

While the concept of an early-exit penalty is not new, Jeff Sutherland gave it a unique allure with his allusion to the Dire Straits hit.
Desired Benefit Incentivize both customers and suppliers to focus on functionality that provides genuine value.
Structure This works with Agile software projects because there is little or no work in progress. After each Sprint, functionality is either complete or not started. Work is basically on a Time and Materials basis with a cost target, often with the intention that the project should not use up the entire project budge…

Bonus and Penalty Clauses

Bonus and Penalty Clauses look good on paper but work better with things you can build out of concrete.

If you are building to a critical deadline, delays might not option. This approach assumes that extrinsic motivations work. If you incentivize people to deliver faster or penalize them to if they deliver late, then they will deliver faster, or so the theory goes.

Desired Benefit Incentivize the supplier to deliver faster.
Structure The supplier receives a bonus if the project completes early and pays a penalty if it arrives late. The amount of bonus or penalty is a function of the delay.
Scope Changes Difficult to accept because changes potentially impact the delivery date, which is surely not allowed.
Risk Does the customer have an incentive for early completion? The ROI arguments must be compelling and transparent. Otherwise, the customer could use a delaying strategy to lower the cost and exploit the penalty clauses to their advantage.  Is it more important to figure out the rig…

Phased Development

A Phased Development contract is similar to how venture capitalists work with start-ups. It keeps stakeholders in the loop while delegating most decisions to the product team.

Phased development is essentially a longer-term perspective on Time and Materials with Variable Scope and Cost Ceiling, especially if each phase is kept relatively short, e.g. three months or so.

Desired Benefit Enable decision-making within the project while maintaining control at the governance level over the costs.
Structure Fund quarterly releases and approve additional funds after each successful release.
Scope Changes Not explicitly defined by the model. Releases are in effect time-boxed. The knowledge that there will be another release next quarter makes it easier to accept postponing a feature to achieve the time box.
Risk Customer’s risk is limited to one quarter’s worth of development costs.
Relationship Cooperative. Both the customer and the supplier have an incentive that each release be successful …

Time and Materials with Variable Scope and a Cost Ceiling

For customers that aren't used to working with Scrum, this might feel like a leap of faith, because they don't know exactly what they will get in advance. But I believe this is a fairly pragmatic approach. Enabling the Team and Product Owner to make decisions about the product increases the likelihood of building the right product.

Desired Benefit: Enable decision making within the project while maintaining control over the costs.

Structure: Same as Time and Materials except a cost ceiling limits the financial risk of the customer.

Scope: Same as a Fixed Price, Fixed Scope project.

Decision-Making: Much more likely to be in the Scrum team, because decisions are made during the project about what functionality shall be included.

Risks: The budget will expire without achieving the necessary business value for the customer. Customer won’t get everything they ask for.

Relationship: Cooperative. The combination of limited budget and variable scope focuses both customer and vendor on ach…