Agile myths: If we are doing Agile procurement, we don’t need contracts.

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Debunking Agile Myths: The Essential Role of Contracts in Agile Procurement

When it comes to agile procurement, there’s a pervasive myth that needs busting: “If we’re doing agile procurement, we don’t need a contract.” This belief is not just a fundamental misunderstanding of the Agile Manifesto; it’s a risky oversight that can lead to business pitfalls.

Contracts: The Agile Parachute in Troubled Times

Think of contracts as a parachute – you might not need them when everything is smooth sailing, but they become crucial when turbulence hits. In business, as in life, things can go awry. And when they do, the contract is what you fall back on. It’s the law, it’s business, and it’s non-negotiable.

Location Matters: Jurisdiction in Contracts

Where you’re working matters, especially when contracts are involved. Each contract must specify its jurisdiction, whether it’s England and Wales, Scotland, the United States, or elsewhere. This isn’t just a formality; it’s a necessity.

The Agile Manifesto Misinterpreted

Too often, people take the Agile Manifesto and run with it – neglecting the parts they find inconvenient like processes, tools, contracts, or plans. This isn’t agility; it’s chaos, laziness, and unprofessionalism. Don’t confuse them. Agility demands discipline and focus, as it’s about delivering precisely what the organization and its customers need.

Agility and Discipline: Two Sides of the Same Coin

Agility is not the absence of structure; it’s about having the right kind of structure. It requires a disciplined approach to deliver value to customers. And when working with others, this structure is formalized through contracts. Contracts are the backbone of business agreements, outlining the “I’ll do this for that” and setting the terms and conditions of engagement.

Collaborative Contracts: The Agile Way

In the lean agile procurement community, we strongly advocate for contracts. However, our approach is different. Instead of the traditional adversarial contracts laden with punitive clauses, we promote collaborative contracts. These contracts are designed for iterative and incremental agile delivery, allowing for adjustments in backlogs or requirements and setting payment terms that support interactive delivery.

Avoiding Waterfall Traps in Agile Environments

One common pitfall in agile environments is using outdated, waterfall-style contracts. These contracts, which require all requirements to be signed off before any payment, are fundamentally at odds with agile principles. They hamper the iterative process and create unnecessary barriers between the company and the supplier.

Adapting Contracts to Agile Delivery

The key to successful agile procurement is structuring contracts to support your delivery process. This might mean having more flexible payment terms or clauses that allow for the iterative development of the product or service.

Working Agreements: The Mini-Contracts of Agile Teams

Even at a small, focused scrum team level, working agreements act as mini-contracts, setting behavioral expectations among team members. These agreements are crucial for maintaining harmony and productivity within the team.

Final Thoughts: Agile Needs Contracts

Let’s set the record straight: Agile does need contracts. The absence of contracts is not a sign of agility but a red flag for potential chaos and unprofessionalism. Professional businesses need good contracts – ones that are adaptive and collaboratively built to ensure value delivery and create a win-win situation for all parties involved.

To sum up, agile procurement is not an excuse to ditch the contracts. Instead, it’s an opportunity to rethink and redesign them to align with agile principles, ensuring they are flexible, collaborative, and conducive to agile ways of working. Remember, in the agile world, contracts are not just necessary; they are essential.

Connect with Advanced Product Delivery.

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If you have identified Lean Agile Procurement as a great opportunity to enhance #agility within your organization, visit the Lean Agile Procurement Training course or Lean Agile Procurement coaching page.

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