Software Contracting and Agile Development in the Norwegian ICT Industry

112 Pages·2009·0.64 MB·English

Software Contracting and Agile
Development in the Norwegian ICT
Industry
A Qualitative Survey
Anders Ganes
Snorre Nævdal
Master of Science in Computer Science
Submission date: June 2008
Supervisor: Reidar Conradi, IDI
Co-supervisor: Hanssen Geir Kjetil, IDI
Norwegian University of Science and Technology
Department of Computer and Information Science

Problem Description
As more and more ICT companies migrate to agile methods, the existing contracts and contractual
frameworks are mostly tailored for plan-based development. It has been indications from the
industry that there are several challenges using agile methods with various contract standards
available today. This assignment aims to find out what the potential challenges are with using
today’s contract models with agile development. In addition, the assignment will look into what
work is done in adapting contract standards to better comply with agile principles.
Assignment given: 16. January 2008
Supervisor: Reidar Conradi, IDI

Abstract
This thesis takes a closer look at how various contract models affect the ability
to use agile software development, and the work being done to help improve
contractssotheybetterfacilitateagileprinciples.
Agile development methods are becoming increasingly popular, while most
contractual standards are meant for plan-based development methods. There
are done little research regarding the subject, but it is a growing concern in the
industry. Work is also currently done on Norwegian contractual frameworks
thataimtoupdatetwocommonlyusedcontracts.
Theresearchdoneconsistofseveralinterviewswithindustrypractitionersrep-
resentingNorwegianconsultancycompaniesexperiencedinagiledevelopment
methods. It also includes interviews of contract experts in addition to a search
andstudyoftheliteratureonthesubject. Theseinterviewshavebeenanalyzed
andcomparedtoliteratureonthesubject.
The results of the research revealed a number of challenges with today’s con-
tractmodels. Severaldiscoveriesshoweddifficultieswithbureaucracyandcus-
tomer involvement. Using traditional contracts could also easily require more
upfront work than what is sensible when using agile methods. It is possible to
bypassthesechallengesbyeitheradaptingthedevelopmentmethod,orputting
thecontractaside.
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Preface
The assignment for this thesis is given by Department of Computer and Infor-
mationScience(IDI)attheTheNorwegianUniversityofScienceandTechnology
(NTNU). The context of the work is within the EVidence based Improvment of
SOFTwareengineering(EVISOFT)project,partlyfundedbytheResearchCoun-
cilofNorway(NorgesForskningsra˚d)underGrant174390/140. Theprojecthas
as its goal to improve software engineering processes, and to do this to such a
degreethatitbecomeseconomicallybeneficial.
Theworkonthisthesishasprogressedthroughthespringof2008andispartof
theourMScinComputerScience. Ourworkconsistsofaliteraturestudy,anda
surveyofboththeexperiencewithdifferentcontractsforsoftwaredevelopment
in combination with agile development methods, and the work done to make
twoNorwegiancontractualstandardsmorecomplianttoagileprinciples.
The thesis started as a case study at a company called Ciber, who approached
the institute with several research topics they would be interested in pursuing
along with students at NTNU. After a review of the topics the authors along
with the co-supervisor Geir Kjetil Hanssen, agreed to focus the thesis on the
potential challenges associated with traditional contracts used in agile projects.
TheworkwasplannedasacasestudyusingseveralavailableprojectsatCiber,
but after the first round of interviews it became clear that the participants with
most experience on the subject were people involved in sale, and negotiation
of contracts. We therefore expanded the interviews to include people with this
experience in other companies. During the literature study we also discovered
the currently ongoing work that Mari Vestre and PROMIS were doing to facil-
itate two Norwegian contractual standards, respectively The Norwegian Gov-
ernmental Standard Agreement for System Development (agile version) (SSA-
S) and Project Management 2000 (PS2000) for easier use with agile methods.
Thisdiscoveryleadustofocusonthisaspectaswell.
We would like to thank our supervisor Reidar Conradi. We would also like to
thank Ciber, represented by Marianne Selle and Sigurd Gimre, for suggesting
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both the cooperation we enjoyed and the basis for the research. Thank you to
alltheparticipatingcompaniesandinterviewees,whoseexperiencesandinput
on the subject has been invaluable. In particular the people who welcomed
us warmly at Ciber (Marianne Selle), ObjectNet (Sverre Tinnen and Lars Ivar
Næss), Bekk (Reidar Sande), Promis (Kjetil Strand and Jørgen Petersen) and
DIFI(MariVestre).
Finally, we would like to thank our co-supervisor Geir Kjetil Hanssen for his
guidance and valuable insights on the subject. He has been a driving force
throughouttheentireprocessofwritingthisthesis,andhiscommentsandfeed-
backhavebeeninvaluabletous.
Trondheim,June2008
AndersGanes SnorreNævdal
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Contents
1 Introduction 1
1.1 Motivation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Projectcontext . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Problemdefinition . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5 DocumentOutline . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2 Background 5
2.1 AgileManifesto . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 Agileterminology . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.3 Developmentprocess . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.3.1 Start-up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.3.2 Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.3.3 Prioritisation . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.3.4 Development/testing . . . . . . . . . . . . . . . . . . . . . 10
2.3.5 Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.3.6 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.4 Agileinresearchliterature . . . . . . . . . . . . . . . . . . . . . . . 11
2.5 Agilemotivation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.5.1 Customercollaboration,adaptingtochanges . . . . . . . . 13
2.5.2 Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.5.3 ReturnOnInvestement(ROI) . . . . . . . . . . . . . . . . . 15
2.5.4 Improvedcontrol . . . . . . . . . . . . . . . . . . . . . . . . 15
2.5.5 Moraleandproductivity . . . . . . . . . . . . . . . . . . . . 16
2.6 Agilechallenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3 Stateoftheart 19
3.1 Thebuyer-supplierrelationship . . . . . . . . . . . . . . . . . . . . 19
3.2 Thepurposeofcontracts . . . . . . . . . . . . . . . . . . . . . . . . 21
3.3 Agiledevelopmentandcontractmodels . . . . . . . . . . . . . . . 22
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Contents
3.3.1 Whyisagiledifferent? . . . . . . . . . . . . . . . . . . . . . 22
3.3.2 Contractmodels . . . . . . . . . . . . . . . . . . . . . . . . 22
3.4 Norwegiancontractualstandards . . . . . . . . . . . . . . . . . . . 24
3.4.1 PS2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.4.2 SSA-S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.4.3 SSA-U . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.5 Challengeswithtoday’scontractmodels . . . . . . . . . . . . . . 29
3.5.1 Agiledevelopmentwithfixed-pricecontracts . . . . . . . 29
3.5.2 Agiledevelopmentwithothercontractmodels . . . . . . . 31
4 Research 33
4.1 Researchgoalandquestion . . . . . . . . . . . . . . . . . . . . . . 33
4.2 Researchapproach . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.3 Researchdesign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.3.1 Interview . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.3.2 Interviewsubjects . . . . . . . . . . . . . . . . . . . . . . . 35
4.4 Researchprocess . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.5 Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.6 Bias . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5 Results 41
5.1 Developmentmanagers . . . . . . . . . . . . . . . . . . . . . . . . 41
5.1.1 SverreTinnen . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.1.2 ReidarSande . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.1.3 MarianneSelle . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.1.4 Othersources . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.2 Contractexperts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.2.1 JørgenPetersen,KjetilStrand . . . . . . . . . . . . . . . . . 49
5.2.2 MariVestre . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6 Analysis 57
6.1 Agiledevelopment . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
6.1.1 Motivationsforworkingagile . . . . . . . . . . . . . . . . . 57
6.1.2 Challengeswithagile . . . . . . . . . . . . . . . . . . . . . 58
6.2 Contractsandagileprojectsingeneral . . . . . . . . . . . . . . . . 58
6.3 Agilemethodsandfixed-pricecontracts(SSA-U) . . . . . . . . . . 58
6.3.1 Motivationsforusingfixedpricecontracts . . . . . . . . . 59
6.3.2 OpinionsonSSA-U . . . . . . . . . . . . . . . . . . . . . . . 59
6.3.3 Challengeswithfixedpricecontracts . . . . . . . . . . . . 59
6.3.4 Positiveaspectswithfixedpriceandagilemethods . . . . 60
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