Fixed budget project? Sprints are better.

How to establish flexible and trusting relationships using Agile Contracts.

Giovanni Zennaro

Partner, CEO

Moze is a studio of designers and developers. We design and develop digital products such as websites, web applications and mobile apps. Our customers are entrepreneurs, technology startups and managers responsible for innovation within large companies.

Innovation is the main ingredient of all the projects we work on. To innovate you need to be quick and flexible, willing to continually question your ideas. The only constant of innovation is change.

“Fixed budget” innovating: why it doesn’t work

At the beginning of our journey we worked on this kind of project with a traditional approach: the client came and told us his idea, we helped him translate it into a list of features and, on this basis, we presented a lump sum quote for the software design and development.

After a few years we realised that this was not working: the need to define detailed specifications before starting the project forced us and our customers to make a major effort. This effort became enormous in the (many) cases where the client was a startup company, asking for our support while they were still perfecting their product idea, business model and budget.

Furthermore, this effort was not usually repaid by the creation of the “right” product. The entire project team ended up spending months focusing more on technical aspects than on the value proposition of the product. The type of agreement between ourselves and our customers made it quite complicated to modify the product specifications and the work plan when everything was already moving along. This was a problem especially when the knowledge accumulated required a critical revision of the project scope.

Agile: it’s not just developer stuff

Unlike contracts with our customers, the organisation of work within our team has always been rather lean and flexible. From the outset our developers chose to follow the principles of the Agile methodology, establishing a workflow soon adopted by our designers too.

We wondered if it was possible to transfer this same approach also to the relationship between the customer and the supplier. In the spring of 2015, Jacopo Romei gave us the answer to the problem during a workshop in Bologna, when he shared his experience as an Agile Coach. Jacopo told us: “It can be done, I did it. But it does not always work”. Thanks to his advice, we better understood the risks and opportunities of a change that would have had a huge impact on the sales activities and our entire business model. There were many questions: would we be able to convince customers to use a contract based on mutual trust, defining and protecting an approach rather than the final deliverable? Would we be able to make our customers active players in the Product Development process – a necessary condition for working in a truly Agile way?

Just a few weeks later we met a new potential customer and proposed him to use Agile Contracts. These contracts consists of work organised in sprints (always equal periods in terms of duration and allocated resources), constant sharing of a high-level roadmap, establishment of detailed goals at the start of each sprint, and the possibility of reviewing the activities planned for future sprints along the way. They allow us to work for two, three or six months, as long as it takes. Trust is the cornerstone of the relationship between the parties.

It worked. That customer was the first of a long series. The growing diffusion of the key concepts of Agile and Lean, not only in the startup ecosystem but also within large organisations, has made it easier for us to propose an approach to Product Development that often breaks standards, but that is easily understood by everyone because of the enormous benefits it brings.

Agile Contracts in Moze: the results

Four years after the first experiment, over 60% of our turnover is generated by Agile Contracts. Their flexibility has allowed us to establish ongoing relationships with many clients, sometimes even working on several projects managed within the same contractual framework. Thank to Agile Contracts, we have built true relationships of trust with our clients. Their value often goes beyond the projects on which we collaborate.

There have also been some negative experiences. Agile Contracts require that both parties share the same organisational approach and focus on objectives, and permanently allocate resources from their team to the project. They always have to be willing to question the project scope based on budget and other existing constraints. In short, whoever signs an Agile Contract should always also embrace the underlying work philosophy.

In closing

Innovating requires a continuous exposure of oneself and one’s company to change. To be able to do it effectively, it is essential that all the instruments adopted – including contracts with strategic partners – allow people to work free from rigid constraints. In the field of design and software development, our experience has shown us that Agile Contracts are an excellent tool, helping put the relationship between the customer and the supplier on the right track.

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