Fixed Price: Is it Agile?

This content is syndicated from Agile Development Blog: Scaling Software Agility by [email protected]. To view the original post in full, click here.

If I am remodeling a house, I need to know how much to budget. I also need to know when the drywall contractor will be complete so I can schedule the painter.   Similarly with product development, I need to budget and I need to know when features will be complete so that stakeholders can prepare.

So, it’s natural to want to know up front what is coming, how much will it cost, and when will it get here.  Where we often run into problems is with the degree of detail.  

As anyone who’s been down the path can attest, it’s difficult to know everything up front when you’re remodeling a house.  It is exponentially more difficult when you’re doing product development.  Product development is, by its very nature, unique every time.  If it weren’t unique we wouldn’t need to build it, we could just buy it.  

So does this mean we can’t set any expectations up front?  No, but we need to set expectations at the appropriate level of detail deferring commitment on some details until the maximum amount of information is available.

Successful Agile organizations teams plan continuously and at different levels of detail.  
Five Steps of Agile Planning

It is in our Roadmap where we see the healthy tension between setting expectations upfront and deferring commitment.  Rolling wave planning creates a roadmap that communicates what high-level features will be delivered to the market and when.  The level of detail is also key.  We find the best roadmaps fit on one slide.  This is effective because it encourages two healthy habits.  Firstly communication is enhanced by having a simple representation of the future.  Secondly we can’t put a lot of detail on one slide and this encourages us to defer commitment.

But what about those who are in a situation where your customer/business/boss says they “want it all”.  Again, level of detail is key.  Usually when stakeholders say they want it all they’re not talking about minutiae they are talking about their minimum viable product.  When differentiating between minimum viable product and the nice-to-haves I find Jeff Patton’s story mapping technique immensely useful.

Jeff Patton's Story Mapping Technique

Above graphic used with kind permission of Jeff Patton

Jeff explains it best:

When it comes time to prioritize stories, I don't prioritize the backbone. It just "is." I do prioritize the ribs - the stories hanging down from the backbone. Place them high to indicate they're absolutely necessary, lower to indicate they're less necessary. When you do this, you'll find that all the stories placed high on the story map describe the smallest possible system you could build that would give you end to end functionality. This is what Alistair Cockburn refers to as the "walking skeleton". I always try to build this first.

Successful Agile organizations know that the most important learning experience occurs not from detailed  upfront planning, but during development itself and so they implement short feedback loops so that they can adjust as they go.  

Is a fixed-price, fixed-delivery approach incompatible with such an empirical approach?  Perhaps, but only if you are fixing price at the wrong level of detail. Remember though, if you get it wrong you are not taking away your ability to be Agile, you are doing something far more dangerous -- you are reducing your options.

To learn more about planning, check out The Five Levels of Agile Planning presentation.


Ken Clyne

Leave a Reply

What is 3 + 7 ?
Please leave these two fields as-is:
Please do this simple sum so I know you are human:)

There are 101 ways to approach anything.
To find the best way, sometimes you need expert help

What People Say

“Kelly revolutionised the way our digital department operated. A true advocate of agile principles, he quickly improved internal communication within our teams and our internal clients by aligning our business and creating a much enhanced sense of transparency in the decisions the business was making. Kelly also introduced a higher sense of empowerment to the development teams...”


“Kelly’s a leading program director with the ability to take charge from day one and keep strong momentum at both a program and project level driving prioritisation, resourcing and budgeting agendas. Kelly operates with an easy-going style and possesses a strong facilitation skill set. From my 5 months experience working with Kelly, I would recommend Kelly to program manage large scale, complex, cross company change programs both from a business and IT perspective.”


“Kelly is an extremely talented and visionary leader. As such he manages to inspire all around him to achieve their best. He is passionate about agile and has a wealth of experience to bring to bear in this area. If you're 'lucky' he might even tell you all about his agile blog. Above all this, Kelly is great fun to work with. He is always relaxed and never gets stressed - and trust me, he had plenty of opportunity here! If you get the chance to work with Kelly, don't pass it up.”


“Kelly is an Agile heavy-weight. He came in to assess my multi-million $ Agile development program which wasn’t delivering the right throughput. He interviewed most of the team and made some key recommendations that, when implemented, showed immediate results. I couldn’t ask for more than that except he’s a really nice guy as well.”


“Kelly and I worked together on a very large project trying to secure a new Insurer client. Kelly had fantastic commercial awareness as well as his technical expertise. Without him I would never had secured this client so I owe a lot to him. He is also a really great guy!”


“Kelly came to the department and has really made a huge impact on how the department communicates, collaborates and generally gets things done. We were already developing in an agile way, but Kelly has brought us even more into alignment with agile and scrum best practices, being eager to share information and willing to work with us to change our processes rather than dictate how things must be done. He is highly knowledgable about agile development (as his active blog proves) but his blog won't show what a friendly and knowledgeable guy he is. I highly recommend Kelly to anyone looking for a CTO or a seminar on agile/scrum practices - you won't be disappointed!”


“Kelly was a great colleague to work with - highly competent, trustworthy and generally a nice bloke.”


“Kelly was engaged as a Program Director on a complex business and technology transformation program for Suncorp Commercial Insurance. Kelly drew on his key capabilities and depth of experience to bring together disparate parties in a harmonised way, ensuring the initiate and concept phases of the program were understood and well formulated. Excellent outcome in a very short time frame. ”


“I worked with Kelly on many projects at IPC and I was always impressed with his approach to all of them, always ensuring the most commercially viable route was taken. He is great at managing relationships and it was always a pleasure working with him.”


“I worked with Kelly whilst at Thoughtworks and found him to be a most inspiring individual, his common-sense approach coupled with a deep understanding of Agile and business makes him an invaluable asset to any organisation. I can't recommend Kelly enough.”


“Kelly was a brilliant CTO and a great support to me in the time we worked together. I owe Kelly a great deal in terms of direction and how to get things done under sometimes difficult circumstances. Thanks Kelly.”