5 benefits of integrating agile methodology in contract ... · pdf file5 benefits of...

5 Benefits of Integrating Agile Methodology in Contract Management

In today’s competitive business world, the ability to adapt to change can be the difference between success and failure. The same holds true for the field of contract management. To help increase performance and efficiency, many companies have implemented Agile, a methodology designed to help simplify problems, eliminate waste and accomplish goals faster and with higher quality.

Nevertheless, there is a common misconception that Agile can only be utilized in certain industries, primarily software development or project management. In reality, Agile can – and has – been used in areas such as ship manufacturing, construction, automobile production, the military and in the Federal government.

One industry that has yet to fully tackle Agile is contract management (CM). Not only can Agile be applied to CM, but doing so can be beneficial for companies, clients, vendors, young CM professionals and their more experienced, senior-level counterparts.

Before we explain the benefits of integrating Agile methodology into contract management, it’s important to understand the fundamentals of Agile, the key areas of CM and how the two can work together.

Introduction

www.VillanovaU.com | 855-300-1473 1

http://www.villanovau.com/

There is a difference between doing agile and being agile. Agile is a very focused methodology designed to better manage teams and projects. Its core set of values places emphasis on collaborative decision-making between a customer and client, and unlike many other frameworks, it allows for change and encourages feedback. It is focused on delivering the most important jobs first, and projects are defined by the client, not by an arbitrary date.

According to the Agile manifesto, the methodology focuses on four main principles:

• Individuals and interactions – over – processes and tools

• Working software – over – comprehensive documentation

• Customer collaboration – over – contract negotiation

• Responding to change – over – following a pre-defined plan

Many projects today rely on outdated processes, infrequent communication and a siloedworkforce, with many teams and departments working on separate parts of the project. Left untreated, this can lead to team confusion, low-quality work, monetary losses and ultimately project failure.

What is Agile?

2www.VillanovaU.com | 855-300-1473

“To be successful at the game, you

first must understand the rules.”


However, Agile-led projects help change the way leadership looks at requirements and team structure. It concentrates on all areas of a project and puts team members into one collective cross-functional group to work together. It also mandates that teams break the project up into several demos and deployments, so that the customer is continually updated on the team’s progress and is able to give feedback when necessary. If the customer does provide feedback, an Agile project is able to adapt and make changes, without the fear of having to start over from the beginning.

Agile projects place more focus on teamwork and communication and less on the process of contract negotiation. However, the value of customer collaboration over contract negotiation is often misunderstood. It doesn’t diminish the contract’s importance, but rather it says that collaboration needs to be a key part of both the project and the contract in order for it to be successful.

According to industry expert and Villanova University Online instructor Robert Annis, CSM, ICP, ICP-TST, REP, “Agile is not an end-point, it’s a journey. It’s a better way to work, for all those involved.”

What is Agile? (cont.)


Agile-led projects help change the

way leadership looks at requirements and team structure.


A contract is a legally binding agreement between two parties. When an organization enters into an external agreement, a contract manager or contract writer finalizes the terms of the agreement in a contract. Often, these details include:

• Delivery date

• Fees

• Requirements and responsibilities

• Stipulations

• Penalties for missing requirements

A contract manager must be careful to include all details of the agreement to limit liability, penalty, risk and exposure. Contracts typically act as a protective blanket against legal action. They also help formulate the plan to complete a project, and determine how the customer, client and/or vendor will interact with one another.

What is Contract Management?


A contract manager must be

careful to include all details of the

agreement to limit liability, penalty, risk and exposure.


Agile isn’t a new approach in managing projects. The Agile manifesto was written in 2001, and since then, many prominent organizations have implemented it to help bolster their quality and performance needs. According to Annis, the methodology is used by some of the world’s most profitable companies, such as Google, Microsoft, John Deere and Amazon. In addition, it has been applied in numerous in-demand career fields such as project management, IT and marketing.

Agile has been adopted into government organizations, as well. In 2012, the U.S. Government Accountability Office (GAO) studied the effects of Agile when it was applied to software development for federal projects. Federal officials who used Agile generally agreed that it was a more effective approach than other traditional methods. Overall, more than 10 specific Agile practices were used and found to be effective from at least five different federal agencies.

As a result of the findings, the GAO recommended that all Federal government projects be made Agile. Today, numerous federal agencies such as the Department of Defense, FBI, IRS and Department of Veterans Affairs have adopted the Agile approach for various projects.

Who Uses Agile?


It has been applied in numerous in-

demand career fields such as

project management, IT and marketing.


With a basic understanding of Agile and contract management, we can tackle the big question: Why should Agile be used in contract management?

According to Annis, the answer is simple.

“Why are you doing work that can hinder productivity? If everyone else [large corporations and government entities] is doing it, why wouldn’t you want to use Agile? It’s obviously going to be a big game play in the future.”

On top of that, incorporating Agile in CM offers several benefits. First, it allows contract managers to write contracts that are focused on quality, rather than punishing vendors for not delivering the terms of the contract. Second, it enables change to benefit the business, meaning that Agile contracts allow for adjustments so that the end product is what the client desires.

Next, Agile encourages innovation and sets aside time for the vendor and client to collaborate regularly to make sure each are on the right path toward project success. As a result, Agile contracts increase visibility, meaning that there are visible checkpoints along the way in the form of demos, deployments and tests, so that team members and stakeholders are aware of how the project is unfolding.

Finally, Agile-led projects are typically less expensive, completed in less time and deliver higher value than non-Agile projects. The methodology is already widely used throughout the world, and its core structure is able to adapt to change and match real-life expectations.

Additionally, learning how to be agile in contract management can be a big selling point for both young and experienced CM professionals.

Integrating Agile in Contract Management


Agile-led projects are typically less

expensive, completed in less time

and deliver higher value than non-

Agile projects.


As Annis described it, whether you are a young or experienced contract manager, “your worry is not contract management. It is competitors. It is getting a job and being good at your job.”

Contracts are typically written in a way to protect the client and penalize vendors for not delivering. Contract managers are often comfortable writing a boilerplate contract that says ‘x’ will be delivered on this date, or else. Contracts are written specifically so that projects cannot change without penalties. There is a beginning and an end, and projects follow a predictable plan.

However, the reality is that projects are not always predictable. There is usually a starting point, some form of research and development and sometimes a midway checkpoint, followed by another solution process. In other words, most projects don’t have the entire plan mapped out from beginning to end. The entire target isn’t visible from the outset of the project. Bad contracts can lead to poor project planning, risk and exposure, liability and weak team structure.

A project first begins with the contract. An Agile contract explains the same limitations and liabilities as a traditional contract, but is written in a way that requires time for team collaboration and feedback. Agile contract managers should make sure that the contract impacts the project, and that there is information in it that defines how the project should be run. Rather than the contract being written to punish the vendor who does not deliver, Agile contracts break down sections of the project and place emphasis on teamwork and collaboration between the customer and client. They are focused on maintaining high-quality team performance rather than simply ‘x’ must be delivered on this date.

Agile Contracts are Focused on Quality


An Agile contract explains the

same limitations and liabilities as a

traditional contract, but is written in

a way that requires time for team

collaboration and feedback.


Projects rarely follow a contract plan step-by-step. Changes to the project’s plan inevitably happen, and a standard contract may not be able to make up for it. As a result, many projects go through a sort of lag time, where nothing is delivered and there is a complete lack of feedback between the client and customer/vendor until the very end of the project. Only at the designated delivery date do teams generally find out whether the project successfully or unsuccessfully aligned with the client’s needs.

Fortunately, it doesn’t have to be this way. Agile contracts allow and encourage change to happen because they can adapt to new circumstances and delivery dates. Rather than following a plan simply because a plan exists, Agile encourages collaboration and change, so as to confirm that the plans are meeting the expectations of the client. Agile contracts also make sure that frequent deployments are written into the contract, so that the client is continually being updated throughout the course of the project.

What if a contract manager could say that they are able to write a contract that will make a project more successful? What if they could say that they are able to decrease risk and advance a client’s relative interests? An Agile contract manager is able to help decrease project risk and liability, which gives them a valuable asset to pitch to potential employers.

Agile Enables Change to Benefit the Business


“If you don’t find out your success

or failure until the end of the

project, the contract could, and

should, be written in a much better

way to help stop that from

happening.” – Robert Annis


Contracts typically do not allow for client/vendor creativity. The standard basis of a contract is to plan a beginning and an end, and detail what will be done within that time. However, traditional contracts fail when the client doesn’t know where they are going. According to Annis, almost every project in the world has some kind of uncertainty along the way.

Agile contracts help solve this problem. By promoting innovation, they encourage clients and vendors to meet regularly and brainstorm ideas to ensure each are on the same page, and make sure the vendor is able to give the client what they ultimately need. Since the client is able to communicate the requirements of the project upfront, this helps give vendors more opportunity to creatively solve for the contracted project. One way Agile contract managers can ensure that the vendor is following the client’s requirements is by contractually incorporating a feedback loop between the two parties.

A feedback loop helps project teams stay on the right path, and is one of the most efficient ways to follow an Agile contract when the client doesn’t know exactly what they want, which is a common theme. When dealing with a client who is unsure of their ultimate goal, it’s easy to get off target.

A feedback loop works by providing the client with several demos and deployments during different stages of the project. Then, when the client gives feedback, it can help put the team back on the right track. A client may not know what they truly want until they see the initial test product, so it’s important to involve them in the project from the beginning to make sure their deliverables are being met.

Feedback loops also help cut out waste and ensure project teams are not doing more work than necessary. Without incorporating feedback loops in the contract, project teams run the risk of going in the wrong direction and delivering a product that does not meet client requirements.

Agile Encourages Innovation


“Contracts stifle innovation by

definition. Contracts don’t allow for

the fact that you [clients] don’t

know exactly what you want.

Contracts force vendors to purely

think, we must deliver something

on this date,” said Annis.


Another way Agile contracts are beneficial is because they prioritize project responsibilities so that the most important tasks are completed first. This helps decrease risk and liability if the terms of the contract change, and it may help increase the chances the client is pleased with the quality of work provided.

Transparency and visibility are key parts of an Agile project because they can help gauge how long it takes to complete a task, and what requirements need more attention. Agile contracts are different from traditional contracts in the way that each party is aware of how the project is unfolding. For instance, a process method like the Waterfall technique doesn’t address daily issues that can impede a project’s progress.

Instead, Waterfall relies on a siloed workforce, and all plans are laid out from the beginning of a project. Teams generally meet only at the beginning and end cycle of the initiative. While this method can work in some scenarios, overall, it’s often unreliable because it is very easy to make a mistake at the beginning of a project and not recognize the mistake until it’s too late. A project run under Waterfall does not have the infrastructure to correct a problem until the very end of the project.

In comparison, the Agile methodology encourages contract managers to apply check-ins and frequent collaboration discussions to the contract so that teams are working together, and leadership is aware of accomplishments and further responsibilities. In addition, when project teams are meeting on a regular basis, providing constant demos and deployments to the client and modifying plans when necessary, it’s very difficult for a mistake to be missed.

Agile Contracts Increase Visibility


“While [contracts] think of only

project completion or failure, what

Agile focuses on is delivering the

highest priority and highest value

[tasks] first, so that if the project is

forced to end suddenly, we actually

may have the most important

things already completed.”

– Robert Annis


The Agile methodology is already being incorporated throughout the world in governments, banks, hospitals and small and large businesses. Agile helps simplify problems, save money, promote teamwork and enhance end-product quality. Agile is a better way to work, for all those involved in the project.

Whether you are a young professional just entering into a career or an experienced, senior-level expert, it’s important to continually upgrade your qualifications and skills in order to secure and maintain a job. In this case, Agile is a relatively new technique, but when it is applied to contract management, it can help decrease threats of risk and liability, improve process quality and ensure that projects become successful through the use of adaptability, organization and teamwork.

Learning how to incorporate Agile in CM can help validate a professional’s understanding of the subject and show potential employers that they are capable of writing a contract that defines how the project should be run, rather than penalizing vendors for incompleteness.

To be an effective contract manager today, and a proficient contract manager in the future, it is integral to understand the fundamentals of Agile and how it relates to the field of contract management.

One of the overarching themes in Agile is: Adapt or fail. Which will you choose?

Agile is the Future


“No matter your age, if you want to

remain consistent [in your career],

you’ve got to be looking around at

what everyone else is doing. Just

because you have 20 years of

experience, the world is changing,

and some of that experience may

not be relevant anymore. You’ve

got to keep building up your

qualifications, experiences and

skills.” – Rob Annis


Offered with a new student experience and led by industry-recognized expert faculty, Villanova University’s 100% online Master Certificates in Government or Commercial Agile Contract Management focus on the contract management process from requisitioning through contract closeout. With curriculum enhanced by advanced learning tools and content that covers Agile methodology, you can gain the knowledge needed to set yourself apart from the competition and effectively prepare for NCMA professional certifications.

For more information on the courses, visit VillanovaU.com or call 855-300-1473 to speak with one of our student representatives.

More Information


http://www.villanovau.com/programs/certificates/contract-management/



PROFESSIONAL EDUCATION ONLINE

www.VillanovaU.com | 855-300-1473


5 benefits of integrating agile methodology in contract ... · pdf file5 benefits of...

Documents