Using an Agile Approach in Contract Management

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(bright music) Agile contracting is an innovative growing trend when it comes to contract management. Let's discuss what an agile contracting approach is, the differences between agile and traditional contracts, and the advantages and disadvantages of agile contract management. An agile approach to contracting is an alternative to the traditional contracting process. Unlike the more rigid traditional approach, agile contracting emphasizes flexibility, collaboration, and communication between parties throughout the entire contracting process. This is often preferable to meeting fixed production deadlines, or the fixed costs required of a traditional contract. The business world has become increasingly dependent on technology, and digitization and automation are the cornerstones of the shifting marketplace. Because of this, many companies and corporations must adapt to the needs of their clients, which includes finding the most versatile approach to contract management. At first, agile contracts were exclusively used in the IT industry. Today, more and more industries utilize agile contract management, including medicine, telecommunications, automotive, and aviation. For example, circumstances fluctuate in the production of medicine. It can be difficult to contract the scope of work involved especially when considering unpredictable factors such as chemical components. Developing formulas requires experimentation, trials, and countless modifications before a drug is successfully developed. The agile approach to contracting medicine production embraces flexibility and expects the unexpected. Agile contracting allows each party to be creative rather than confined to the terms of a contract. While the terminology of a contract does matter, the business relationships between parties become just as important as completing a project by a fixed date. Agile managers know that the trust and collaboration of the parties can make or break these types of contracts. Because of this, agile contract management should also prepare for and address potential breaches and trust between the parties. Keep in mind that even with the agile approach, contract negotiations can be a complicated process. The goal of agile contract management is not just to navigate any product or deal, but rather to ensure the success of all parties involved. Consider what might happen if the product specifications stated in a contract could not be met. Imagine if the specifications used to develop a prosthetic hand differ dramatically from what was originally outlined in the contract. What's the remedy? Do the parties cancel the project? Head to litigation? Or is there another way? An agile contract adheres to the ability to alter product specifications and respond successfully to inevitable changes. This form of contract management responds well to market disruptors and competitors. Cell phone companies have undergone dramatic changes in the last decade in order for their technology to rapidly evolve and for their operating systems to outpace their competitors. An agile approach to contracting the production of cell phones gives the parties an invaluable opportunity to avoid disputes and expensive legal fees, which they may face within the terms of a traditional contract. As a result, agile contract management can transform how contracts are developed, reform contractual terms and negotiations, resolve contract disputes and more.