The best of both worlds: an Agile nearshoring working model with a fixed-price contract

Project management is no easy task, especially when we talk about Agile nearshoring.

Traditionally, the waterfall methodology, which allowed for Agile nearshoring projects to be organized into isolated stages that would flow into each other and lead to a very thought-out process from the very beginning, meant that both the client and the IT service provider had a clear plan and budget with regards to the project, the expenses, and the tasks at hand. All these details were discussed and agreed upon under a fixed scope and fixed budget model, at the beginning of the project.

In the last few decades, the paradigm started to shift, and a competing principle appeared in the IT market and within the nearshore software development outsourcing ecosystem. The Agile nearshoring model advocated for a more dynamic and interactive workflow, in which not all specifications of the project were laid out from the very beginning. While this working framework could sustain multiple lifecycles and stages running in parallel, this type of model also changed the rules of the game in terms of contracting models. This new working principle moved away from a fixed price budget and switched to a “time and materials” pricing model.

Quality will no longer be the neglected trade-off in Agile nearshoring software development projects

There are pros and cons to both these methodologies.

With a waterfall method, there is not much room for flexibility, and a rigid project layout may hurt the end result since software development teams cannot easily adapt to the changes and demands of an increasingly dynamic, fast-paced, and highly competitive IT market.

Even though Agile nearshoring allows for a fixed pricing model, there is no fixed scope. Thanks to this flexibility, IT teams are able to change, update and modify according to the needs of the project. While an Agile nearshoring budget may not cover all the expenses that may come along with the project, it will cover most of the necessary features. On the other hand, changing or updating the scope within a waterfall model is an extremely complicated and bureaucratic process, which may not satisfy the demands of an evolving and dynamic project.

From Odeen’s experience in dealing with both these methodologies and different project management arrangements, we propose our clients a hybrid solution, by merging both of these worlds: a dynamic Agile nearshoring working model with the predictability and transparency of a fixed price contract.

“Through this approach, we want to address the needs of those clients who prefer a fixed-term contract and who would like to know their budget ahead of time, while also keeping a certain level of flexibility around the features that we develop throughout the project”, says Mihai Cvasnievschi, Technical Director of Odeen.

With this mixed working methodology, IT experts will work closely with the client to create a clear set of desired features, and the backlog will work as an overarching layout of where the project is heading. Without the commitment of full implementation, Odeen has the flexibility to choose and prioritize along with the client the features that we deem to be most necessary and useful for the progress of the IT project.

With this model, we will have a clear budget and timeline in mind, so we’ll know exactly what kind of team to assemble, in order to meet the needs and rhythm of the project. From the pre-settled backlog, we will focus first on those necessary must-have features, and only after a version or two, we move on and discuss with the client what comes next on the list of priorities, in terms of developing the solution”, Mihai Cvasnievschi continues.

Using this mixed approach, – having a clearly set-out timeline and budget -, while also enjoying the flexibility of prioritizing certain project features, Odeen believes that this will address a problem, which has long been neglected and seen as the necessary trade-off, in order to make these methodologies work. Paradoxically, however, this trade-off is also the most important element of any project: quality.

“When you have the features, the timeline, and the budget clearly set out, the only variable that remains at your disposal, as an IT service provider, is quality. You can try to maximize the profits and assign fewer people to do the job or do the work more sloppily. However, with this novel working approach, there needs to be a strong level of communication and collaboration between the two camps, and also a transfer of trust that the client grants the IT team. If we want to do everything to the highest level of quality that we can possibly provide, we have to realize that we have to give up certain features and commit to fewer tasks, but to the utmost quality”, concludes Mihai Cvasnievschi, Technical Director of Odeen

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