Agility is becoming increasingly important for companies, as pointed out by the current Agile Pulse study by BearingPoint, in which around 88 percent of the companies surveyed state that the topic of “agility” is already relevant to them.


Furthermore, for 98 percent of the study participants, “agility” will become relevant for their company in the future. This increasing relevance must also be taken into account by companies regarding their contracts, to which this whitepaper refers.

Select a suitable contract model for agile IT services

Many companies want and need to develop customized software solutions and products. However, internal resources are not always able to develop them by themselves due to a lack of time and abilities. So, they decide to source these agile development services from an external service provider.

Agile project management deviates entirely from the classic, “old-fashioned” waterfall methodology. While the waterfall method contains predefined milestones that serve as a contractual framework, agile IT projects have an agile project plan subject to constant and iterative adjustments (sprints).

It is well known that large software development projects are often too complex and unpredictable to be thoroughly planned, which can often lead to disputes between the parties involved. Consequently, a prerequisite for an agile way of working is increased collaboration and trust between the parties.

Required overarching contract elements

Before an agile contract can be set up, the framework conditions of the contract must be defined in a contract, which then serves as the basis for the agile contract model and to counter the risks. The appropriate contract model depends on the individual requirements and needs of the parties, so there is no single universal solution for all circumstances of agile development.

The following key points must be considered:

  • The actual subject matter of the contract in agile projects is described in the form of a vision.
  • The project’s governance regulates how the project is documented and steered and the processes that must be followed.
  • Pricing/compensation are regulated according to which conditions the services are charged.
  • The client’s obligations to cooperate: A RACI matrix is usually created here, which delimits the client’s tasks from those of the service provider.
  • Service Level Matrix: In the service level matrix, the corresponding service levels, which are necessary for the proper control of the project, are defined and evaluated.

The combination of classic contract models with agile services

The white paper elaborates on different contract types and their advantages and disadvantages. One classic contract type, for example, is the contract for work and services, in which the service provider undertakes to produce defect-free work. Service contracts are another traditional way of structuring contracts. In a service contract, the service provider is not bound to a defined result but only to the performance of a task, which shifts the risk of success to the client.

Division of agile projects into individual contracts

Instead of covering the entire project with a holistic work contract, an individual work contract can be set up for each sprint. The service framework contract thus also regulates the relationship between the customer and the service provider.

Another form is the agile fixed price model, which is used to design the contract in even greater detail. An overview in the white paper also clarifies which contract models should be selected for which type of project. It becomes clear that for short and manageable projects, which focus on costs and a clear vision, work contracts should be chosen for the holistic project.

BearingPoint offers an established approach for selecting the appropriate service provider. This approach is based on best practices, market knowledge, and individualized evaluation tools. BearingPoint’s experts have extensive sourcing experience and cater to individual client requirements. In addition, they have the skills to cover the entire sourcing lifecycle.

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