AA88 - Contracts in Agile Software Development

we're about to talk about contracts now , for most of my career, I didn't have to deal with that until I intersected with the government space. You're lucky that way that you didn't have to deal with it before. All my life I've had to deal with it, you've got two entities that are agreeing on here's what I'm giving you, here's what you're getting, here's what I'm paying you. I'm not paying any more than that. Ultimately it's around, that the foundations of a commercial agreement. Yes. That's really what this is all around they are a necessary evil that we all have to deal with at some point. So today we're gonna explore different contract types, contract forms, how you deal with those, , and maybe even touch on a few tips on in an agile way, how should you deal with them, right? We may be able to get there today as well. A huge hole in all of the training that you go through. in, Scrum or Scrum Alliance or , even the professional scrum, people, , the scrum.org, yeah, yeah. Even them, huge hole in the training of dealing with contracts. Cuz, , the Agile people will say, well just talk to people, but then the same side of that organization, the business side will say it's contract. I mean it's legally binding. So, if you look at it from that perspective, like, it, it's not really something as scary as purported by the trainings and stuff about like, well, we're not gonna do contracts. We're just gonna all talk to each other and be cool, man. Well, that's, yeah, that's, Hey man, Nirvana think right there. But pretty much every contract guarantee has gone through the organizational legal entity where they look at it, they they may recommend changes to the language they're in, and then they sign off on it. And that happens on both the provider and the consumer side. Right? Every single contract. Sometimes when you have a provider that is quote unquote a trusted provider, right? In that they've proved themselves, they say what they do, they do what they say. Mm-hmm., what, what you might do there is to come up with. More like a, a, an umbrella understanding, but this is still a legal instrument, don't get me wrong. So this instrument is called the MSA or the Master Services Agreement. And all that's simply saying is, this company that we're dealing with,, we know the general terms and conditions so-called T&Cs Yeah. That we can agree with them on. And every time we have some, we have a need for something from that providing organization. We're not gonna create a new contract. What we'll do is we'll just create a, a new, statement of work, which then says, Okay, this is standalone. It's specifically fulfilling this need that's here and now short term possibly, but it abides by, and it generally nests under that umbrella of the MSA, the master services agreement. So in both the MSA and in the statement of work, this language that says one supersedes the other and one supplants the other. Right? That is very, very common, for trusted providers where you are having them provide services on more than one effort. Right? If it's a one off, you may just do one thing and be done with it. And you don't need an MSA because there's nothing to be considered here as, as like a master agreement. It's just an agreement. Yeah. A statement of work. We will pay you if you shall deliver these things. That's it. Right? that is a general skeleton of, what exists out there. There are a lot of different types and every single one has three things in common. First thing is every version of a contract or variant, or whatever you like to say is legally binding and enforceable. Mm-hmm. in a court of law, Right? So you don't sign a contract and they say, Yeah, we said that, but you know, it really didn't mean that we kind of meant this. Even if you're earnest about it. Yeah. Sorry. It is a contract. That's the term. Mm-hmm.. Right. So the, the word contract means that it's something that you agree to provide in return for a certain measurable, quantified, agreed upon upfront return. Yeah. so the simplest one is a one off where company A contracts with company B for something and it something varies. Right? So this something could be. Give us an injection of expertise in the form of developers, Scrum, masters, whatever it might be for a period of time. Mm-hmm., and that's all you're on the hook to deliver if you are the provider. Right. That's all you're doing. Mm-hmm., you're not saying the scrum master will do these things. There could be nuances here, which, which can be detailed out., and then both parties would agree or disagree on those. So there's some negotiation, but for the most part, anytime there's an injection of expertise, it is literally very general. Yeah., and it's based around the skill sets.. , so a scrum master coming in on a contract as a scrum master and just that would, would simply, , entail a listing of the kinds of duties that they would provide. Mm-hmm. They would, , help facilitate A, B, C D E. They would help, , with mitigating. Impediments on the teams, all of the stuff that we know they should be doing. Same thing happens with any role really. Product owner dev, whatever the role is, that's one type of contract. The other type of contract is more on a tangible deliverable basis, right? Like, so they, the company says, We are contracting you to, to provide to us the following functionality. And there's a bullet list, quite, quite detailed and just says, You will do this, you'll do this, you will do this, you will do this. And those are deliverables. Now that's not an injection of expertise. It's really a provision of capability and that may be, typically it is, , u i, UX people, dev people, testers, et cetera., but at the end of that finite defined period, the obligation is over as long as you be. Those deliverables. And this is where things get tricky, because if the contract is thorough and it has, what the deliverables are in terms of acceptance, like it just lays out it will do this, it will do this, it will do this. Yeah. Then you're good because you have criteria to measure up against. But if it's general, then you have room for argument. Right? Then that's where things could get potentially tricky. Mm-hmm.. So that's the second type of contract. A third type of contract is more of a hybrid of those two things where they say we're gonna contract a company that basically is gonna do whatever it takes, whether it, it requires, expertise, , intellectual capital, whatever you wanna call it, right? That versus, developers and producing a product for us. Mm-hmm., they will give us this result. So it's result oriented and it's usually. If it's a good contract, it should be a singular result. Meaning this is what we need out of this. How you get that, that's up to the providing organization when there's multiples of those things get tricky, right? In the contract. Cuz you could meet one, you could meet another, you could meet another maybe 80% and the third one, maybe 60%. Now have you met the contract? That's where things get tricky. Yeah., so if you are a providing organization, my first tip is one deliverable, right? Mm-hmm.. If it's not just an injection of, , of human capital, it's gonna be one deliverable that's gonna be your friend. You can measure against it, it's binary, you delivered or you didn't. Right? And make sure you put the acceptance of those, like what defines acceptance by the client in the contract. So these are base level contracts, A and B working with one another. I think there are plenty of variations on this as. Especially with, , time and materials... and also fixed costs for that matter. Right. So let's just roll back a bit. Yeah. Types of contracts, we have time and materials, which is literally, we're gonna tell you to do something and whatever time it takes, and usually there is, there is a cap, right? But whatever time it takes, we will give you a certain amount of money per unit time, per week, per hour, whatever it is. Oh, and by the way, should you earn any expenses? If they're in the contract, we will give you those as well. Whatever they may be, travel and so on. These are pretty common, right? Yeah. But, but there could be more, There could be more. So in the contract, there could be, provisions for the providing company, incurring expenses on not only tools that they have to buy, which. are, are needed to do the job. Sure. But also expertise they have to acquire, even though if it's on a, on a consulting basis, right. This needs to be in the contract. If it's not in the contract. Now again, you have ambiguity and you've gotta go into a court of law and argue this up. So imagine this, if, if a providing company says, We will provide this capability on a time and materials basis, here's our condition, for this role, we charge this amount per hour but then on top of that, under the materials section, right, it would say things like any travel would be billed to the client. Yeah. But then that's the easy bit. The hard bit is what if that providing organization needed to go acquire tools or go acquire expertise or both. That should also be delineated in the contract that says if we need to go acquire a tool to provide this solution, then that is billable to the the company that is requiring the solution. But at the same time, they would wanna make sure the tool is owned by them at the end of it and the providing company doesn't end up owning it. If you have a time and materials contracts, Versus a fixed cost contract, right? That's the easiest barrier to entry for me to understand this is, , I'm either gonna pay for all the expenses along the way for you to hit my, , success criteria, or I've just given you a lump of money and you alert me when you've hit the success criteria there is no more money in that un unless I change my idea, or, Right. Like, this is where I'm, interpreting the Agile manifesto now, but I expect that when they wrote it, they were doing a lot of fixed cost contracts when they wrote it, when they were like, Oh, we're gonna instead of contract negotiation, we're just gonna work with people and be cool and everything's cool. Cuz the idea of fixed cost is,, I'm gonna take a million dollars to deliver this software module and then I'm only gonna hire two developers because I can pay them a hundred, this is whatever the nineties. Yeah, yeah, yeah. It wasn't a hundred thousand dollars, but, I can pay them $60,000 Right. And then I can just pocket $750,000 apart from my part-time project manager. Yeah. Like I can pocket the rest of it. Yeah. And then only if my team absolutely throws a fit, will I, under protest, bring on another developer, a third developer, , only when all my deliverables are in the red like that, I feel, Yeah. I feel the fixed cost project management method. It's probably a, a , a big reason for the Agile manifesto.? Well, yeah, I think, I think you have something there. Yeah. The fixed cost, type of contract was really propagated by the government, right? Yeah. Because they were fixed budgets decided way up front. Mm-hmm. and there were ideation, , outputs here's what we'll do, we'll improve our infrastructure by whatever. Mm-hmm., very high level, like really, really high level. and they probably ran politically on those things, but we'll leave that aside. So what happens with that is you have, the government has no choice but to say, Look, this is all the money we've got, right? Right. And we need these things. Now they put it out to what's known as the tender process. So everybody goes out and. Let's see if we can bid for this work. Right? Let's understand it. So each individual company, the providing companies will look at that and they'll say, We think we can meet that. Now the government as the contracting company, their agency would look at all of that and say, We trust this company. We're gonna go with them. Yeah. That's the selection process largely. But what happens from there is it, It started off that way for sure. Right? It started off really simple, like fixed price. This is it. Here's what we want, here's what we pay you. Right. But experience showed us that that didn't work out all that well, right? Yeah. Right. You never reached parity where people say, Well, that terms up and we deliver everything and you paid us everything. Everybody goes off happy and it never worked that way. Never. So what happened instead primarily is, Oh, the time's up, we haven't delivered everything and we've sucked dry all that money. Right? So now what? Right. Even before the nineties, this wasn't, this was classically the pattern. Mm-hmm., and it was, well, things are running over time, over budget. That's what used to happen., so there, there were some moves afoot to try and kind of course correct along the way. and the way that was done initially was almost like a threat model, right? So you said your organization said you would do this much by this date. However, if you can't come up with the goods by that date, Right. We would penalize you. So now the onus is on the providing organization to come up and deliver the goods, right? Yeah., and the penalty was time based. So every, for every month, whatever, every you did a time, , you are over. Meaning delayed past the original date that was agreed upon by everybody, all the parties, it's in the contract. the providing company got penalized a certain amount. Yeah. And it soon came about historically that unfortunately, that's where most of them lied is. Yeah. We were late and, and yeah, you can penalize us and we're gonna hurry up. We still couldn't deliver. All right. Let me pause in the middle of the fixed cost discussion to, to stop for a second. And I'm gonna roll the clocks back to our podcast. On, , Taylor. Taylor, Yeah. Yeah. Here, the mega podcast. I'll, I'll link our Taylor podcast in this one Every Child in Kindergarten knows that podcast. Let me roll the year, , back to 1913, and we're all working in factories and we all walk to work and we can't afford a pair of boots . And, , the reason for rolling the clocks back is to move to a simpler world where if I tell you, Om, I want your, I want your Om's shoe company to build me, , boots for my, , army soldiers. And, , I need, , a million boots a year so in the a million boots a year. Okay. I wanna put a contract out there. Fixed cost contract., I don't care how many people you have working in your boot factory, , whether you have one or two people working in your boot factory producing a million boots, or whether you have a million people producing one pair, boots each. Yeah., like I, doesn't matter to me, I'm gonna pay you for a million boots. So, , how much is it for a pair of boots? Multiply that by a million. I'll pay that much as it. That assumes that, first of all, within the time period, you know that you can deliver that many boots. Second.. It assumes that you have all the skill and talent you need to make boots. I'm assuming that you are not coming from, I don't you're a shrimp boat captain just sailing around Mississippi, and I just tap you and I'm like, You're, you're a boot manufacturer now. And here's a million dollars to make me a million boots.$1 per pair of boots. That sound good. I mean, coming from a shrimp boat captain, you're like, Oh, a million dollars sounds great. I love million dollars. Sure. And you never made a boot in your life. In this example with the fixed cost, if I'm the government and I'm offering fixed cost contracts Yep. How do I know that you have no experience making boots for my from, to basically make boots for like, I need them. It's a very important reason. I need boots and I need a million pairs of them. Yep it's very important. Do I have a whole division that just does nothing but evaluates? Your ability to fulfill the contract and vets you. And like I've got now, now, if I I, I've, I've hired basically as many people as you have working in your boot factory. I hired that many people just to check that all the people working in your boot factory can build boots is that, is that what we're doing? Hey, unfortunately, in reality, you're not far wrong. So in, especially given the government scenario, you do have people that go out and vet companies, vet their past performance, et cetera. They do all of that before the contracting stage though, so that they narrow down the field Right. To those that they believe can deliver the goods. And then it's those people that get the invitation to tender is what it's called. Right? So here's what we need. Go ahead and tell us that you can do it. Yeah. Right. And what, what your charges are gonna be. and this is also an opportunity for the presenter of the tender to kind of say, Yeah, we can do this. We can do this by this date, however, right. And then putting all those clauses in the contract that are it's so binding, right? Mm-hmm., but they are in the contract not as addend or add addendums, addendum, addendum, addend, whatever. Multiple addendums yourself. Yeah. Addendums. Anyway. They're not separate because the, in this example, they're identified up front. Mm-hmm., Right? So in the initial contract, here are things that we're gonna do, plus here are the conditions that kinda underpin. Our contract. Right. Right. But yet, to, to your question though, Yes, yes. There is a significant portion of effort spent on whittling down the field to those that we believe are , feasible, viable contenders. Right. That can give us what we're looking for. Cause anyone can say, I can do this. Right. but obviously they can't. Yeah. Well that, that's kind of my point with the. fixed cost. Anybody can say, Just gimme the money. I dunno why we're, we're boot manufacturers now if the contract is million pairs of boots and I give you a million dollars Yep. That's the contract. Yep. I give you a million pairs of boots and like, they're, they're all the wrong size. 10% are a size eight., 10% are size nine, 10% yeah, I, I, I, I'm, I'm having a tough time with this contracting thing. Again, coming from mostly working in agile shops in my career. If you don't specify down to the detail in the contract like what's to keep the customer from moving the goal post So it can happen, but it doesn't typically because in the contract you specify those as requirements. You give us a million pairs of boots in this case, right? Where it gets tricky is when we look at things like quality, which is often, especially in these kinds of scenarios, it, it is often qualitative, not quantitative. Yeah and then it gets worse even in we talking about boots, which is a tangible product, but even in, intangibles, services, Right. It can get really tricky in terms of like, You're gonna provide services where, how do you have quality on those services that is quantifiable. Mm-hmm.. And so there is this idea And the grade of service simply says, we're gonna lay out in an ideal utopian world, if you provide me these services, Brian, it will look like this. Yeah. But let's say, let's say, Hey, you couldn't, for whatever, so you had supply issues or whatever it was, right? you couldn't get enough people, we're not going through the reasons why. But if you couldn't, the next tier is this. So this is what we want. This is the next tier, this is the next year. And there's no, there's, there's no legal reason why you should only have two or three. You can have as many. This is just between the parties to negotiate but here's the important thing. The contract isn't binding at the, the top level. Meaning if I'm hiring , you and your company to give me services that meet these qualities, and then if you can't do that, then it meets these and you can't do that. It meets these, I'm not undertaking to pay you a fixed amount. Mm-hmm.. Right? Since we're talking about fixed contracts here, fixed term, what I'm saying is if you do these top level things and you meet them all, I will pay you what I say. I will pay you. Yeah. If you meet this second level things, I will pay you this other thing I'm saying I'll pay you, which is lower than before and so on. so there's like a scale, like a Yeah. Tiered, a tiered repayment or payment structure. Yeah. Based on the quality received. I like that. So let's weave this into the agile world for a second if. Let, let's say for example, I'm on a fixed, I'm on a fixed cost contract. And , let's say you are a government client and I'm an agile delivery firm of some sort maybe using that framework, break down the features in the contract to be like, we'll deliver you these features. Yeah. And maybe you have different classes of features like ABC class of features but the idea is , we're not delivering all the features, but I'm trying to figure out a way to, to weave fixed cost contracting into the world of we will keep working on your top priorities as long as you want, and if you wanna burn the whole fixed cost. just on your class one features. We'll just keep the whole team on those, the whole contract. the contract at that point becomes less of a list of deliverable A, B, C, D and more of a, you will do feature work in the order we specify and then we'll, we'll basically pick 'em off a menu. I, I don't, I don't know. I'm trying to consolidate the two worlds that don't seem able to be consolidated yeah, it is a, it is a tricky ground. It's sort of like quick sand almost, right, because you know, you can navigate it. Yeah. So you can run really fast across the field. Quicksand, you might make it you dwell on it and you would sing. So I, I think some of these areas dovetail into defining the requirements and the expectations up front. Right. And, and thus far we've only talked about fixed price contracts. Mm-hmm. But there are variations of fixed price contracts that I think this is probably an opportune time to Okay. delve into one easy variation, I alluded to this earlier, is the penalty clauses. Right? So you put penalty clause in and say you will deliver x, y, Z by this date. Mm-hmm., and for every month, wherever you need a time it is delayed by then. There is a penalty imposed to the providing organization of X dollar. It's usually percentage based based on the SOW. So know it, there's a penalty of let's say 5%, whatever the percent is. Again, that's between the parties. So the impetus is on the providing organization to deliver things as quickly as possible. In my example, thus far. Right so they don't incur penalty. that might sound okay, but think about this. If you were a providing organization, what would you do if you were falling behind, behind. You would hurry the heck up and provide things so you don't incur the penalty. Right? What happens to the quality of what you provide as a result of that? Remember, there's nothing in the contract about that, right? So now you can stand up in a court of law and say, We met our obligations by this date. Right? Pay us. And the judge would have to be on your site. That the downside is yeah. The people paying for it didn't get the quality they wanted, right? The grade of service is not something you can just put out in a contract and say, thou shall provide this level of performance, quality, et cetera. Mm-hmm. that the five dimensions, right? you cannot do that as a standalone. I think you have to do that in conjunction with multiple variations, variables, rather of those five. Yeah. Plus whatever fits your. Market need at the time. and what I mean by that is if you are soliciting a vendor to build you a bridge, you can say to the vendor, Hey, listen, I only have this amount of money. You need to build me a bridge, right? And the vendor says, Sure, we can do that. Great. They start doing this. Yeah. And then they run into some headwinds because why? There's supply chain issues they can't find raw materials or there's a delay, right? Or there's an issue. They face an issue a recruiting people, construction people, let's say. So all of that, all of that means that the providing organization is delayed in their delivery, not because they want to. Yeah. They're fully focused on your issues, right? Your needs, but they're not able to because of market conditions. Which are of course outside of their control. Um, logistics is a good example of this is like, no, you can't predict that fuel is gonna go up, 75% in a course of like three months. And now things that you agreed to, two months ago suddenly are not profitable anymore because Exactly. The cost of your, That's a great example. Yeah, exactly. So now what happens? Do they take the hit because of that? Right. So again, going back to fixed price contracts or fixed term contracts, if they're simple fixed term. This can land you in some pickles like this, like we talked about. Yeah. And the, and the company that is the consuming company is probably gonna have the upper hand in this case because it says so in the contract. However, these days we've moved on from that simplistic fixed price contract kind of model. Yeah. We're now in fixed price... so we should unpack a few of those. Right? So first variation of fixed price contract is fixed price with penalties, which I talked about. You know, you're late, you pay, right? Yep. And that's fine the second variation is the opposite way. What if you really do well as a providing org, right? Is, oh, it's the first time we ever had a contract with the government. We wanna do well so we can get more in the future. Mm-hmm., we wanna impress. Or there's the, the other issues that I mentioned with the other model, which is the, the delays in getting supplies, there's not a lot they can do there. So they can offer to pay more or. Delays with acquiring talent. Again, same thing. They can often pay more. Sure. So they take the hit in general terms, but they still deliver, But over deliver. So don't deliver by the day they, It says in the contract you deliver before, what's your reward? Yeah. Right. So variation of fixed price is a fixed, it's called, This is a real thing. It's called fixed price with incentives. Mm. And the incentives are spelled out in detail in the contract. So it says for every month you need a time of your choosing, that you deliver early. There will be an incentive. And again, it's percentage based. It's the same as the penalty, It's just the other way. Yeah and, and so that's great because if you are providing org, you have to weigh that up and say, Yeah, we're spending more, but we're gonna get some back. Where does the equation give us? Right. Like where, what do we do? Right so there, those are two big variations of fixed price contracts. And then there are others. Right. The others are, when you have a fixed price contract, you could put a stipulation in place that says, Look, we're gonna give you these things that you ask for. Right. Without any kind of this, I guess this goes back to the first, the very first raw kind of simplistic approach. Mm-hmm. without any , any indication of, of time when we'll do that, which is highly dangerous of course, or quality. Right. We're not guaranteeing any grade of service or any quality levels here. We're just saying, we'll give you that, and then you suffer the consequences. That's exactly what happened with the underground tunnel that was dug up in, in Boston. Right called the Big Dig, where they put the highway underneath. Mm-hmm. The city. And the, the big, the big dig, it took years and it was worth millions. But it went over budget. It went over budget. Now, putting aside the fact that there were some underlying issues there, like the crime and the element of the, the mafia and all of that, put that aside. Regardless, all if that didn't happen, it, there'd still be over budget and it would still be delayed. Right. And that's because when they started digging, they found certain circumstances. Mm-hmm., they ran into real issues like water tables. They didn't anticipate mm-hmm.. Right. And like, Oh, we have to pivot now. Same thing happened with the channel tunnel. Except there was a bigger snafu there. And, and that's just comical because they started digging from both sides. How on earth do you think you're gonna meet in the middle? And they didn't. Mm-hmm., right? So both parties, France and the United Kingdom, they dug their bit and they we're here. We're here, but we're not where we need to be. So there's a little bit of a jig there. If you ever drive through the tunnel mm-hmm. or on on the rail or whatever, you'll see that you actually feel it where, where it suddenly pivots and it's not long enough for you to not feel it scary but real. Right. It costs a lot of, a lot of money, I'm sure to make the pivot so that's another type of contract is there's no regard to greater service quality, timely delivery with dates, none. Simple. Right. So fixed price is something that people think of as a simple thing and it's not, It, it's a little bit more complex because even a fixed price contract will have clauses. Right? Yeah. And it will have addenda, addenda, addendums it will have all these things that say, in this situation, we do this. And it's not simply a fixed price. Mm-hmm. for X over this time, or just x or whatever. It's a little bit more nuanced. And if you're doing a fixed price contract, if you are a contracting company that is giving the fixed price contract to others, bear in mind we live in different times these days. Right? E even building simple things like simple, okay, A bridge, right? It could land into trouble. The company that is providing that, and you could say, Well, that's their problem, right? Mm-hmm., yeah, it is because they you got them on a contract. But what happens if they go under? You can't sue 'em. They're gone. Yeah. Right. So now you lost the money anyway because you did pay your deposit down. Right? It's fixed price doesn't mean you pay everything at the end. Mm-hmm., you have to pay on a tiered scale. Right? So you pay a certain amount of money and if they started and you paid a little more and then suddenly they're in, ran into trouble financially, and they're gone. Mm-hmm., now what do you do? So that money is gone. So if you tier the contract accordingly, where you can never foresee the future, everybody agrees with that, I think. Right. So, but you can minimize your losses by tiering the contract in a way where you're getting value and paying for that value in smaller chunks. Yeah. Which brings us back to agile. Yeah. Well, I mean, the agile equivalent here is like at the start of the sprint. I give you whatever, $80,000, whatever, whatever it costs. Yeah. I'll fund the sprint for you. Yeah. Whatever, whatever it costs to pay everyone's salary on the team and to keep your servers running and stuff like that. Like I'll pay that much at the beginning of the two week increment. At the end of the increment. You show me what you. And then I'll give you another $80,000 for the next I don't know how much is, I probably should calculate how much the sprint costs, but you know, I, whatever it is, $30,000. I don't know how much a sprint cost. Yeah, yeah, yeah. And, that's the window. It's just like the larger of the project, project. Air quotes. I'm doing super air quotes. The big difference though is this, with a sprint, the time is only two weeks. Right. You can pivot right. Very quickly. Potentially you could pivot as soon as every two weeks. Mm-hmm., if you had to, you say, Well, okay, that didn't work. Let's change here with a typical, typical contract mm-hmm. it is, it is months and sometimes years. Yeah. Right. And pivoting is outta the question because it's not a new contract. Mm-hmm.. So here's something for people to think about. Right. Listen up everybody. This is something that's worth it's weight in gold. Yes. You have a., but what about building into the contract some points where you could pivot and agreed upon points with the other party? How about that contract doesn't have to mean you're locked into something for a year, two years, right? Typically has in the past. But how about building those in and say, at this point the contingency is this. Mm-hmm. the next point. And n plus one only happens if we all agree at n that n plus one should happen. Yeah. So you all get together and kind of do a re-eval. Should this contract continue or not? If you did two week sprint for example, would you put the two week windows into the contract to say like, Hey, basically what I'm saying is if you were dealing with an entity like the government, some, somebody who you would not typically think of as agile. That's what I'm trying to say. Yeah. Yeah, yeah. Not, not someone who. openly is hostile to even the concept, but someone who you that you're gonna have to sort of train them and bring them along and help them understand, would you put in the contract, the cadence that you're working on, you must bring you must have a rep who is available to the team. Cuz the idea is at the end of every sprint, we need feedback from the customer. So, I mean, if, if the customer is used to basically not lifting a finger until something contractually obligates them to lift fingers, then it makes me think that, that, that availability of that customer, whoever you're working for, it needs to be written down in the same. That the customers speak. So this is sort of a little bit of like meet you where you are type of stuff. Yeah, Yeah. I, yeah. But I think you bring up a really good point, which is really what are the intervals you put in there firstly, and then secondly, how do you ensure that you get the feedback, not that you, you should get it right. Right. So first, first things first is two weeks is probably too short of a timeframe to put into a contract. I might put in something a little bit more akin to having, having the customers on board with it, like maybe every month or two months or three months, depending on the size of the contract. If it's a multiyear contract you put in every quarter, right? Sure. If it's a yearly contrast, she'll go and put in every, every quarter, every month. That's fine too. Yeah, but to your point that this is, I think is key, right? Hard cuz you as a, as a providing org. You're at the mercy really of getting the customer's feedback. Yeah. How do you make sure you get it? You can definitely weave that into a contract and not just fixed term, any contract to say, Here's what we will provide, here's what you will provide. And it, and one of the ones under that you will provide is a person who is a stakeholder must be present at every review and provide their feedback. And not only feedback, provide explicit acceptance or not, Right? Yeah. Of every feature that is demoed to them. Unless that is in there, they will either not show up or, or just say, Hey, you, you have some time. Go over there. And that persons are empowered, right? So they're gonna go and not up and down. You say, Do you like it? The accept. I don't know. Yeah. Well that, I mean, that gets you out of the game that we, like I was pointing out earlier of the whole, you're not delivering like if, Yeah, again, we're going back to fixed costs. If you have something in your fixed cost contract that says, Hey, listen, like I know that you you do your contracts this way, and that's fine. We can work with you but in order for us to do our best job, we have to have we have to have someone there when we do our reviews. We have to have somebody on demand when we do our refinements or whatever, whatever, whatever the event is whatever the cadence is, doesn't really matter. Yeah. The point being they have to commit to somebody to be the customer interface. And even, even if that person is not empowered, like why, why is someone who's not empowered being. Serve to the team as the rep it would be difficult to say that you're contractually meeting your obligation if you're just sending some random person to give the teams a thumbs up, but you're not happy with what the team is doing. at that point. Now you have a little, I mean, you don't have a little, you have all the, the firepower you need Yeah. To hold 'em accountable as far as the contract goes. Again, the amount that this is in line with, like the principles of Agile and whatnot, like are questionable at this point of like, we're not gonna fight each other and use the contract to, to beat each other over the head. Right, Right that's not the point. we've been talking about projects at this point, the juicy part that I wanna jump into is in a fixed cost. If I'm working in a software delivery firm, right? Software development firm, and someone is agreeing to deliver features on a contract, and they don't have the team who going to be delivering the features in that conversation? That is usually what I've seen with fixed cost contracts. The, the salesperson, whoever that signs a contract, they don't talk to the development team who's gonna be implementing. They go to the development team and say, Hey, I have sold X and Y and Z. You have to deliver it by the end of this contract. Yeah, here you go. Figure it. I'm gonna go back to my yacht. Yeah. Go make it happen. Yeah, yeah, yeah. That, that unfortunately is true. And, and you know, I'm willing to bet that that theme that they're addressing in this way is already fully occupied with other things. Mm-hmm. that they've already put on their plate in the past. Right. So, as a contracting organization that is really, you, you're doomed to fail basically. It's a risk of a disaster, I think long term. Cuz you're gonna come up short a b, you're gonna lose good people cuz you're just now piling on them. Yeah but I wanted to I wanna talk about something that you touched on, which is the obligations of the consuming party here, Right. Providing stakeholders with decision making powers, whatnot. Mm-hmm., these need to be spelled out in the contract. They, they have to be spelled out no matter what type of contract you have. Yeah and of the two types that we talked about thus far, there is a. 2.1. There's a little morph on that. Mm-hmm. on that one that says, Okay, it's tnm, right? So we'll do what you tell us for as long as you have money. We'll keep doing this and we'll bill are expenses. That's basically tnm. But even within that, a savvy provider would talk to the customer and say, What are we trying to do here? How can we help you really get there instead of just be a body shop for you where we can just put bodies in place that we'll bill you by the hour for. Right so the, the slight variation is even in a TNM contract, it is possible to put in some deliverables that you, as the providing org is committing to provide. The tricky part is don't weave those into above the line. What I mean by above the line,, that's not your contract that says we'll provide these roles at this hourly rate, et cetera, et cetera. And we, and we'll also have these deliverables that we'll commit to providing, right? That's above the line. Don't do that because guess what? Those deliverables could that, that the requirements could change, right? You're not in control of those. So don't do that cuz that's never gonna work out. Well, especially for a project that's more than six months in duration, Rather put 'em below the line, meaning we'll get paid no matter what. Right? It's truly a tn m Yeah. And then down here, below the line, we will also strive to provide you these things by these states, assuming, and there's the list of assumptions. You don't change your mind. If you do, we have to renegotiate, right? And so on and so forth. So assuming that we, in a utopian world, nobody changes their mind, and this company delivers to, let's say three out of those six, that's not a good ratio. Let's just say three outta eight. Three out of eight of these bullet points that are below the line, they got what they would've got anyway, which is the tnm. Right? Expenses are Wash tnm. They got that money, they got this extra mm-hmm.. So you might say, Wow, that's great, but the company that pays the extra Right, that's below the line also got more. Yeah, they got more because they didn't just get hired hands. They've got tangible results that were delivered by those people. The how isn't of concern for the company that is paying on this contract? It is of concern for the company that is providing. So as long as there is enough there below the line, they will make the how happen. Meaning they may even have to hire people if it's lucrative enough. Yeah. Or if it's correspondingly like profitable, whatever. Yeah. That is a. Like a variation of a tnm TNM plus plus is what I call that. Well, if you're trying to beat a date or something like that. Yeah. It totally makes sense. We're working together the vendor and the, and the whatever supplier, I don't know. Yeah, yeah. Supplier. We're both working together to try to be a date, and if you have to bring on more people and I'm willing to pay for more people, we just have a conversation and then it happens. The time and materials, we didn't spend a lot of time talking about time and materials we kinda weed in with different things we were talking about. Yeah, sure. Because that, that makes the most sense, like the time and materials is, I want more things I have to pay to get more things. Like, it makes total sense to me. I'm not talking a lot about time and materials in the podcast because I can easily wrap my head around time and materials and agile. The idea is I'm gonna focus on one goal at a time. That's, that's the idea. And then if I want to pick up a second goal, Or like for example, I'll, I will, I can only have one priority one. Yes. And then if I wanna pick up a second priority one, the answer is very easy. Well then we pick up a second team, we have to spin up a whole nother team, A and a B team, and you have to pay for another team. So you can deliver on priority one A and priority one B, which happened at the same time in the, on the same timeline that makes a lot of sense to me. I don't think anybody has difficulty with that. And understanding agile. where my tiny, tiny brain gets short circuited is when you have a development team and that development team. Has successfully delivered for either this client or other clients functionality A, functionality B, or functionality C, and now we're going to turn around and implement functionality A, B, or C for you, Mr. New government client. Okay. Under the fixed cost. Yeah. But you get to pick from a menu and you can only pick A, B, or C and know you can't customize it and know you can't change it, and no, he won't tailor it for your environment or whatever we'll, we'll give you A or B or C, because we've done that before, we know exactly how long it takes to do it. My point is it's something that, that we, that the entire complexity of the software change is 100%. To me and my team. Okay. It, it basically is I can go pluck a story outta my backlog, change a copy it, clone it, , keep the story points or whatever that are on it, and just spin it off and my team does it again for you. If you tell me to do something truly unique that none of my team members have done before. So we have to learn it for the first time unless you are willing to pay for that learning to do it the first time. Separate from paying for the software delivery. Yep. Unless you're willing to have some kind of, I don't know, clauses in the contract about training time versus actual doing time I don't see how that compatible with fixed cost contracts. That, yeah, those two are almost incongruent. I mean, you're looking at doing something that is a no known, right? So you will do this by the state. We, we, we believe, and it's largely a fixed fixed price contract with that stage versus something that, Yes. You need to ideate over Right. And delve into this unknown area. And how does the providing org get paid for that? Mm-hmm., when you don't know the deliverable. So, couple things there is one is if, if they, certainly in the case of the government if they wanna pay for some innovation, they can do that. right? Say, go figure out how to solve this problem. We're not looking for the solution to the problem that needs to be delivered by the end of this contract. That's fixed. Yeah. But we're looking for is a prescription for a solution. Here's how it could be solved, here's what we found, and then they can fund another project, to actually deliver that. Right. That's okay. That's pretty rare as well. I think in the space world it's more common than anywhere else probably. Yeah. Right. Yeah but also now of course, we're in unique times, so it's also prevalent in the in the public health space where people are looking at taking old, old formula that we had for antiviral treatments and, and vaccinations and seeing how they can be modified for the here to for unknown viruses. So they're coming up with almost like a Lego brick approach that says, here, here's a bunch of Lego bricks. Yeah. Now let's look at a pattern based on that, we'll arrange these so that they can block certain protiens or whatever, whatever that is. Right that level of thinking doesn't happen overnight, and it's usually funded through contractors that the government pays money to go figure out stuff, not necessarily to deliver a solution yet. Yeah, Right. Of course, the long term play for the people that are providing the services is Yeah. When we do provide the, the ideas for it, if the need arises, they will contract us to deliver it. And that's where it becomes lucrative but again, because in this example, specifically because it's the government, they cannot do that with only one company, right? Yeah. They have to do it with two or more and I think that's true generally in the regulated industries as well anyway, where I was going with this is fixed price plus plus, right? Which is kind of fixed price plus expenses, fixed price plus this the other way around. Incentives or penalties. All the variations of fixed price. Yeah they get you to a certain point, right? Where there's more known than not known, that's when you would sign a fixed price cuz you are basical. Mitigating your risk of not losing money. The other side we talked about, a little bit about the time and materials. You're really not paid to deliver a tangible product. Historically you've been paid to deliver a bunch of expertise services, brain power, essentially. And that's the tnm, Right. Where I see it's changing these days is, TNM Plus. Plus, if you like, where people say, Well provide these, but at the same time, if we do these other things, it will pay us. But if we don't, you'll still pay us what we said we would. That's the line that I mentioned. Yeah. Put things below the line versus above the line. Yeah interesting concept, I think cuz there's no equivalent to the other side, meaning we said we would do these, we also said we might do these and you pay us, but if we don't, there's penalties. I haven't seen that. I get the idea of time materials saying, Hey, here's our, here's what we originally promised we're gonna do. And then if we go over and above like these stretch goals, right? Yeah, yeah, yeah. We go over and above, then maybe we get a little more money. And even in the banner of like a government agency where, well, we only have we're only funded to $5 million or whatever, or 1 million whatever. Yeah. A hundred thousand dollars doesn't matter how much it's, we're only funded to a hundred thousand dollars in a year so we'll, we'll give you 50 K to do this contract work for us. And, but if you hit this other deliverable, we will potentially give you an extra 20 k and maybe another 20 on top of that for this other stretch goal that it's very unlikely you'll meet. Why I'm having such difficulty with this is at the end of every sprint the constant shifting of goal posts would be concerning to the, to the contract person in this, I, I say to the contract person, but I'm also like, while I'm talking about it, I'm also like quietly undermining in my own head what I'm saying. Cause I'm saying cuz the product manager in that case, they're your go-to person Yeah. To make sure that like a Why is a customer asking it for wildly different things Yeah. Than you, the product manager are delivering and planning you really should be together. And I, the contract person shouldn't really be involved. Like, the whole reason we're doing agile development is so I, the contract person don't have to get in and start a bunch of wars and fires and stuff because, Completely against. So, so like I'm kind of bringing it up to say like, Yeah contract people are weird. That's what I'm saying with this. Like, you never know where they're gonna drop in and be like, That's not in the contract. Well, the customer says they don't care about that anymore. Yeah. But this in the contract, we gotta gotta do it. I mean, that's a real conversation. Yeah. None of that's in the contract and we're on fixed costs, so Everything you're doing doesn't count to the contract. Yeah. But it's what the customer wants. It, it is a difficult calculus. I think for most organizations it's gonna be a learning lesson, Right. If they haven't worked in this way just to say, let's try, let's try with what, Depending on where they're at, If they're working in agile, Yeah. Maybe they can try the T&M model first and. I think most people that are doing software development are already doing that cuz you're outsourcing to offshore Right. Developers and then try experimenting with the plus plus piece of it, which is these are smart developers, they cost less per hour than what we can get locally. Mm-hmm., which is the whole reason why we're doing this. It's all economics. So how about we entice them, the, the offshore developers, the partners to say if you can also do these things Yeah. Then correspondingly we'll pay you more. Yeah. You know, their company so I think the skill lies in, in seeing the possibilities. And then the biggest thing is, just discussions, negotiation. Ah and see what we can put into the contract. Yeah. All of that done. It is still possible for both parties to go over and beyond that in the spirit of forming a, a good solid. Commercial partnership. Yeah, it is definitely that you don't have to be working to the letter of the contract. it's amazing that organizations do software development this way. The reason I say that is because the people that I think of as wanting the most control in your organization are the people pushing for this fixed cost stuff, which only turns around and sabotages them when they're doing it on a software development project where you can only execute successfully on fixed cost contracts when the effort is known to you. And you can basically pick your margin, so I know that my development team costs half a million dollars for a year, and I know that I can execute on items one, two, and three in this contract, so put items one, two, and three in there. I'll strike out items four and five. Four and five because we can't do it And, uh if we turn out that we can do it, we'll all look like heroes or whatever I, I know what my costs are. I know I can do one, two, and three because I did it for some other customer last year. Right. Analogous, right? Yeah. I was just thinking about some of the contractors for real, right out there that work for the government as part of a couple of them. And I can tell you it is nerve wrecking to work for a contracting organization because when the contract is signed, everybody's happy that we used to Blair out, little claxons. Mm-hmm. the air horns. We see that everybody move. Yep. And, and people just get up and clap and, oh, well here's the order. That was great. Like we didn't have every day. Of course when it did happen, it was great. But the problem was the flip side, like how we gonna deliver these? Yeah. And being in the delivery teams. I was like, Yeah, we got an order. Who do we have to bring to bear on this? Mm-hmm. the capability side of the provider org is a, to me at least, it's a, it's a question mark in my mind. There's something to think about. If you're a provider org, would you hide that from your prospects, or would you be open and say, Look, we can only give you this much mm-hmm., right? Or would you say, Well, we're great, we're a 200 person organization, and you're counting everybody in the company. Mm-hmm. Not, not necessarily people that can develop the solution. So I don't know. I think the onus is on both sides to do their homework, right and then try and, and try and minimize in the spirit of agile at least, try to minimize the legal-ese. Because every time you have a legal clause of statement in your, SOW it goes against forming trust. Right. And camaraderies like, if I do this, it says, So in the contract, I was planning on doing this, but I'm not gonna now. Yeah. Because I might get in trouble. Yeah. That is something that I think we don't think enough about that because day to day our audience ourselves, I, I I would say we're not really involved with that. It's your biz dev guys and your sales people that are involved but I think we can be influencers for sure. You may not be involved in the formulation of a contract or anything like that or negotiation, but at a very minimum, find out, find out what kind of contract you are working under, and then see if your day-to-day behaviors aligned with fulfilling the contract. What's the pig and chicken thing? Like you might not be involved, but you're committed. Committed. Hey, listen let us know what you think of this one plus any other topics you'd like us to delve into. That's right. And make sure we go ahead and like our podcast. Subscribe Most people put the subscribe thing in weird places, but I put it right in the middle. And why not? Why not?