Unfortunately, there is no ONE best type of contract because the risk the vendor and customer share is determined by the contract type.  The best thing you can do is understand who bares the risks or benefits of each.  Being I don’t know if you are a vendor, a customer, or a project manager, this objective description of each contract type should help shed some light on the subject.

There are three categories of contracts: Fixed-Price, Cost-Reimbursable, and Time and Material (T&M).

Fixed-Price is a contract category involving setting a fixed total price for a defined scope of work to be provided.  Fixed-price may also incorporate financial incentives for achieving or exceeding selected project objectives, such as schedule delivery dates, cost and technical performance, or anything that can be quantified and subsequently measured.   Vendors under fixed-price contracts are legally obligated to complete these contracts, with possible financial damages if they do not.  Under the fixed-price arrangement, vendors must precisely specify the products or services being offered.  Changes in scope can be accommodated, but generally at an increase in contact price.  The three common types of fixed-price contracts are Firm Fixed Price Contracts (FFP), Fixed Price Incentive Fee Contracts (FPIF), and Fixed Price with Economic Price Adjustment Contracts (FP-EPA). [risk is on the vendor]

Cost-reimbursable is a contract category involving payments (cost reimbursements) to the vendor for all legitimate actual costs incurred for completed work, plus a fee representing vendor profit.  Cost-reimbursable contracts may also include financial incentive clauses whenever the seller exceeds, or falls below, defined objectives such as costs, schedule, or technical performance targets.  Why would anyone ever use this contract vehicle?  Assume the customer doesn’t know what they want.  By absolving the vendor of risk, they may actually get something delivered.  Three of the more common types of cost-reimbursable contracts in use are Cost Plus Fixed Fee (CPFF), Cost Plus Incentive Fee (CPIF), and Cost Plus Award Fee (CPAF). [risk is on the customer]

Time and Materials (T&M) is a hybrid type of contractual arrangement that contains aspects of both fixed-price and cost-reimbursable contracts.  They are often used for staff changes, acquisition of experts, and any outside support when a precise statement of work cannot be quickly prescribed. [blended risk]

So there you have it, the three categories of contracts.  Some people make it their job to know these inside and out.  I wouldn’t recommend getting too far into the weeds unless this topic really interests you.  If there is one takeaway from this post, I would say remember which party is at risk and which party will benefit. It’s not fun being on the short end of that stick.

Image courtesy of: Shutterstock

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by Aoife city womanchile via Flickr

Guest post by Laura Brandenburg of Bridging the Gap.

In an ideal world, the business analyst and project manager work seamlessly together to help the business achieve the most valuable solution. The Business Analyst owning the scope of the solution and the Project Manager owning the scope of the implementation.   The ideal world is dependent on your organization having standard roles, clear project sponsorship, and every individual understanding their role and being perfectly qualified to fulfill that role.

The ideal world rarely happens.

I know within the Business Analyst profession, we often find professionals with a varied background that may or may not have had the opportunity to learn about how to do the role. We come from the ranks of SMEs, QA, and sometimes even PM. We find our way into business analysis because we are good communicators and learn the techniques of business analysis as we go. On the other side of the fence are formally trained BAs (and PMs) who know how everything should work and nearly nothing about how things happen in real organizational life.

To top things off we Business Analysts are a fairly idealistic bunch. We have some great ideas and a passion for our products but we can also wreak havoc on a nice little project with a specific estimate and a set-in-stone target date.

What follows are a few frustrations I’ve heard about business analysts from my project manager cohorts and a few ideas for how you can help the Business Analyst in these situations. No choking allowed. Work your PM magic.

No estimates

My BA has no idea how long the requirements will take!

We are hard-pressed to provide an estimate, or provide estimates for such a broad range with so many assumptions that they do little to help you plan the project.

How you can help

Recognize that we often start a project from an ambiguous hole of muck. “Defining scope” and “gathering requirements” sound simple but in reality are mucky processes. Some stakeholders know exactly what they want, others are difficult to work with and eliciting the requirements is like finding a needle in the haystack. Others are unavailable for our meetings, cancel at the last minute, or send someone in their stead who knows nothing about the project.

When you ask “how long will it take to gather requirements”, first we get frustrated because you said “gather” instead of “elicit” and then our mind goes into a tailspin trying to think of all the factors and tasks we need to do and all the things we do not yet know because we haven’t had the time to ask. We want to provide you with a number that we can deliver on. And very often the factors are complex and the details to hang out to scarce.

Instead of looking for a hard number at the outset, agree to talk through the factors, list out reasonable assumptions that you’re willing to help us realize, securing commitments from stakeholders, and giving us an appropriate amount of time to dig into the project before coming up with a detailed plan and meaningful estimate.  This is often the starting point of a new project and a great time to start with a collaborative effort. After all, we’ll be in this together for quite awhile…

Analysis takes a seemingly long time

“We are still discussing it.”

We go off into a hole to “analyze” for weeks on end, producing nothing that fits into your WBS charts and generating a lot of meetings and discussion.

How you can help

First off, did you ask us for a plan before you set us off to do requirements? Were we given full license in our discovery process or did you explain the project constraints so we could help you manage them?

If the answer is yes, and you did not get an answer, recognize that you are probably not working with a senior Business Analyst. Help them set milestones, break down the work they need to do, and track toward some intermediary goals.

If the answer is “no” then what were you doing while we were off analyzing? We are probably just as frustrated with you for not starting a plan and providing input on project boundaries. In fact, we probably think we’re doing part of your job while you are “waiting for the requirements”.

Dig in and start the conversation. A senior Business Analyst should be able to give you a plan for what they are doing in this analysis phase. The plan will probably have a lot of “if/thens” meaning that as we go through discovery and make preliminary decisions, the plan takes different paths. A senior BA will appreciate your help in aligning the rest of the team at the appropriate touch points and helping drive the key decisions that will keep the analysis moving.

We like perfect solutions

“No, you can’t cut scope. We absolutely have to do….”

We tend to be perfectionists. We spend a lot of time understanding what the business wants and we can get invested in our ideas about the solution. We can gold plate the requirements.

How you can help

Trust that we are committed to delivering value. Expect that we’ve already done some work to separate out the truly low priority requirements (if not, again a sign your working with a junior analyst that may need a mentor). Given that we’re working from a defined set, tell us what it will take to achieve our requirements. Help us help the business make informed decisions about priorities at a more granular level by providing some idea of the cost of implementation. (Like it or not, it’s really difficult to prioritize a list of “must haves” without having a general idea of the cost of implementation.)

Just three ideas. I’m sure there is more.  I’d like be interested to hear your comments or additional frustrations…

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This layout has worked well for over a year now, but it’s time for some changes.

A few of the key enhancements in design and functionality I’m looking towards are:

• Improved ability to see what’s relevant to you immediately when visiting the home page.
• Enhanced discussion capabilities, including thing like the ability to edit your own comments within a specified time frame, etc.
• Enhance navigation through topics of interest to you.

Anything else you’d like to see?  I’ve already opened the commenting capability even wider, so it should be easy for you to leave a comment and have it published immediately below.

by David Reece via Flickr

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I tried to not indoctrinate him.

I really did.

At the Wacipi

by Jeff Kubina via Flickr

This week we went to a Wacipi, which is a Native American celebration.  These occur every so often in our area and are attended and put on by the local Lakota, Nakota, and Dakota tribal nations.

It’s great fun, and the kids really love it.  My wife noticed my oldest son doing what he normally does in large groups of kids…  Displaying some of the traits of a project leader.

Let me explain.

A small group

There were 3 children playing who started a small ring, holding hands and dancing around the circle.  Mazaryk (my son) saw them and immediately ran over to join in the fun.

Recruiting

Soon, he decided that 4 just weren’t enough.  He saw the potential for a larger group and ran off to find other children and recruit them to the cause.  He went for all ages and ended up with children between 4 and 10 years old.

Soon, there were slightly over 20 children holding hands and dancing around this ring.  When the ring reached a certain point, Mazaryk stepped into the middle of the ring.

Facilitating

Then, he started looking after the ring of children.  If the chain broke, he rushed over to get the kids to hold hands again.  He alternated between direct participation and facilitation.  It seemed to me that his favorite part of the experience was making sure the ring kept going, and that the other children were having fun.  Overall, he had a great time like he always does when there are tons of kids and mass chaos to be put in order.

In a way all this made me a very proud dad.  In another way it made me sad.

Is my son doomed?

Doomed to be a project leader?

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That’s what I asked the first time I heard about it too.

Check out this guest post from Dave Prior and find out, even if you’re scared of the sound of “Pecha Kucha”.  It’s actually kinda cool.  I’m looking forward to viewing the entries!

By Dave Prior, PMP, CST

Whenever I tell people that I am both a PMP and an Agilist, many look at me as if this had to be some deep, dark secret.

by by Anonymous9000 via Flickr

How could one study and practice a formal project management methodology and also use Agile?

The first time one of my coworkers and I went to go speak before a PMI Chapter about Agile, we were led to believe the audience may throw tomatoes. But a funny thing happened, not only was almost everyone receptive, but many people told me, “yeah, we’ve been using some of this for years!”.

Indeed, I have been surprised with the number of PMI members who have run Agile projects – perhaps not in name – under the radar of some large organization. This was very similar to some of may earliest experiences using Agile project  anagement.

by Anonymous9000 via Flickr

I recall when working with a large financial firm, we were told we have a very strict process if we were doing projects of over 400 hours. But if we were below that threshold, there was a much lighter process. You wouldn’t believe how many “396 hour” projects that team executed.

Working with the PMI Agile Community of Practice (CoP) has been a validating experience.  So many project managers are committed to the profession of project management and interested in using Agile practices to improve their craft. In fact, over the past year we within the virtual community have been thoroughly impressed with the number of people using Agile practices in spite of circumstances.

It is with that in mind that we would like to let you know you are not alone, and we want to hear from you. The Agile CoP is hosting an online video contest, “Confessions of an Agile Project Manager”.

Submit your own video in a Pecha Kucha format telling us your story.   Perhaps it was a guerrilla project conducted quietly so as to deliver value without attracting too much attention, or maybe it was an organizational  transformation. Whatever your experience, we want to hear from you, the community, about your experiences using Agile.

by Anonymous9000 via Flickr

We will be asking the community to provide their stories and evaluate those that they like most. Most importantly, we will have cash prizes for the three best submissions!
Submissions can be made to the PMIAgile YouTube group.

Rules
Dates:
- March 5th: Contest officially begins
- May 10th: Last day to submit videos
- May 17th: Last day to vote on videos
Prizes
- 1st Place: $1000
- 2nd Place: $750
- 3rd Place: $500

Participation
Anyone is eligible to submit and vote on videos

Video Format
Submitted videos should be in formatted as pecha kucha presentations. This is a power point (or similar presentation capability) showing 20 slides that auto-advance every 20 seconds, for a video that is 6:40 in length. Videos that deviate from this format significantly, while impressing us with their creativity, will not be considered for the competition.

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