How to contract for outsourcing agile development

The buttoned-up contracting approaches used for traditional software won’t work for outsourced agile projects. Here’s how to implement different protections for agile development agreements.

consulting contract

Agile software development methodologies are hardly new. But figuring out a way to adequately contract for them in IT outsourcing deal is.

“Under traditional contracting approaches, there is an assumption that the development team can define, with some specificity, the ultimate ‘thing’ to be created supported by a detailed project plan and key milestones tied to client acceptance and financial payment triggers,” says Derek J. Schaffner, attorney in the Washington, D.C. office of law firm Mayer Brown. “These concepts are very easy to memorialize in a development agreement due to the linear nature of a traditional software development approach that commences with detailed planning, followed by design, coding, testing and deployment.”

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Agile software, however, rejects traditional software processes in favor of more fluid development. “There are no detailed project plans or key milestones because the client and developer continually evaluate and prioritize activities in short iterations or sprints,” Schaffner says. “An agile software development approach requires a leap of faith by clients who are accustomed to the formality and control of traditional software development.”

However, there are contractual mechanisms that clients can implement to reduce uncertainty while still reaping the benefits of this more collaborative development method. talked to Schaffer about how to implement protections in agile outsourcing deals. What are the biggest challenges in drawing up contracts for agile development deals?

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