Types of Agile Contracts

Name: Types of Agile Contracts
Author: Michele Hagan

There are multiple ways to establish a successful agile contract between parties. This course identifies the three main types of agile contracts: capped time…

Preview the first lesson free — get full access to all 3 lessons.

Request a demo Sign in

Course: On-Demand

Generally, it's difficult to standardize a contract for every project, but there are three main types of agile contracts that can be distinguished: capped time and materials, target cost, and incremental delivery. Let's discuss the differences between these contracts and how to choose the right one for a project, depending on the needs of the parties involved. With a capped time and materials contract, a purchaser can limit or cap production costs. This contract benefits both parties, as it protects the purchaser from cost overruns and encourages efficiency by the supplier. A traditional contract based on time and materials is very common, but also may not be the most cost-efficient option, because the purchaser is charged for the time expended, materials used, and delivery costs. For example, if a supplier is hired to develop a product for $5,000, they have every incentive to manage their own project costs by spending the least amount of time with the least expensive materials to maximize profits. Meanwhile, the purchaser has no real leverage on managing or negotiating the supplier's costs. Even worse, in some cases, the customer may also be forced to pay for cost overruns. But with a capped time and materials contract, if you wanted to limit your production cost to $15,000, then it's best to choose a capped contract where you can limit spending to $15,000. A capped time and materials contract utilizes an agile approach in contracting, but very little of the approach is used in production, because it's only exercised by the supplier. Additionally, this contract approach puts less focus on the production team's performance, the essence of the agile approach, and more focus on each party's costs and profits. However, a capped time and materials contract is more agile than a traditional one because it allows both parties to have flexibility and collaboration during the stages of contracting. One party can limit or cap the product price, while the other party can determine the steps to produce a product for the agreed upon price.

Advanced Provider : Michele Hagan 3 Lessons · 6m in Arabic, German, English, Spanish, French, Portuguese, Chinese

Course Description

There are multiple ways to establish a successful agile contract between parties. This course identifies the three main types of agile contracts: capped time and materials, target cost, and incremental delivery. We will also explore each of their attributes and explain how to choose the right one for your project.

What You'll Learn

Understand the basics of the three main types of agile contracts: capped time and materials, target cost, and incremental delivery
Examine the attributes of capped time and materials contracts
Explore the attributes of target cost contracts
Explore the attributes of incremental delivery contracts
Learn what makes each agile contract useful to different project scenarios
Choose the best type of agile contract for your project

Key Takeaways

There are multiple ways to establish a successful agile contract between parties.
This course identifies three main types of agile contracts: capped time and materials, target cost, and incremental delivery.
Each type of agile contract has its own attributes that make it suited to different project scenarios.
Choosing the right type of agile contract depends on the needs of your project.

Frequently Asked Questions

What types of agile contracts does this course cover?

The course covers the three main types of agile contracts: capped time and materials, target cost, and incremental delivery.

What will I learn in this course?

You will learn the basics of the three types of agile contracts, what makes each one useful to different project scenarios, and how to choose the best type of agile contract for your project.

How is this course structured?

The course is organized into three lessons: Capped Time and Materials, Target Cost Contracts, and Incremental Delivery.

Will this course help me select the right contract for my project?

Yes. The course explores the attributes of each contract type and explains how to choose the right one for your project.