Scott Ambler in The Dire Consequences of Fixed Price IT Projects lays out in print the common problems with fixed price projects and the bad habits it forces on the project team.
- Big requirements up front (BRUF) approach where you create a detailed requirements specification early in the life cycle.
- A change management process which strives to avoid "scope creep" throughout the project.
- A big design up front (BDUF) approach where you attempt to specify your architecture in detail before coding begins.
- A software development life cycle that is mostly serial in nature.
He then goes on to discuss each of these points in detail, illustrating how a fixed price project forces the project down a non agile route, right from the start.
Scott walks through the project life cycle, tying up the all too common events of strained projects with the fixed price characteristics, paying particular attention to how rigid change control and up front estimation encourages the customer further along the fixed price project route. He also notes that "Fixed-price IT projects aren't good for the developers working on the project because it motivates questionable behaviors which put your job at risk in the long term."
In summary, Scott calls for a revisit in how we fund our IT projects, as clearly fixed price puts unacceptable, controlling constraints on both the business stakeholders and delivery team alike. The alternative to fixed-price projects is of course variable-priced projects. In practice it is much easier to reduce financial risk on variable-priced projects with gated investment based on interim deliverables (ideally working software).
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