Dr. Jeff Sutherland (original signatory of the Agile Manifesto and co-creator of Scrum) proposed a contract format for Agile based projects that he calls “Money for Nothing, and Your Change for Free”.
The fundamental approach, is that the parties agree that they are working together, and building trust in each other’s expertise.
To do this, the contract requires active customer participation, including:
- Prioritizing features according to business value
- Mutually agreed estimates for all work
- Active participation in each Sprint Planning
- Active participation in writing the acceptance criteria for each
feature (for a shared definition of done)
- Active participation in each Sprint Review, and providing timely
feedback for work (both completed and in-progress)
The value of the contract is agreed on, along with time & materials, and the scope. These are based off of the mutually agreed estimates for the work (usually produced using relative estimation by the team and the team’s historical velocity).
With this contract comes a couple of additional clauses:
Change for free - If the customer actively participates with the team as above during the process, the customer can change the scope without any additional cost, as long as the total scope is not changed (e.g. they could pull out a 13 point story further ahead in the backlog that is no longer needed, and replace it with other stories so long as they total to 13 or less points).
Guarantee of Work - If the customer actively participates with the team as above during the process, the customer can terminate the contract at any point at which they feel the implementation of the next feature costs more than the business value of the next feature, for 20% of the remaining contract value.
PDF of slide deck:
(I would include more links - but my reputation will not allow more than two - however if you search for "Money for nothing and you change for free" you should find further reading)