So How Much Will It Cost and How Long Will It Take?
With our scope defined we can now concentrate on setting the price and time and to do this we need to look at Team Velocity, how many points can a team achieve during an iteration.
Team velocity is based on many factors, not just how much work they can do. Our working practices already define our communication strategy and we therefore know how much time is spent in planned meetings with the team and the client. There are other factors to consider such as holidays, volume of tasks, etc. At the end of the day velocity will be a figure that is partly based on experience but contains a lot of guesswork—if it is winter there, you can be sure that someone will have flu.
Let say for example we have calculated that the team can deliver 30 story points within a 2 week iteration and there are 240 story points to deliver (now defined in the contract). We now have a delivery date of 8 iterations making 16 weeks in total. With 70 hours allocated to each iteration, a team of 5 and an hourly rate of $100 for each team member we can easily calculate the price at $280,000.
So now we have our fixed contract values:
- Price $280,000
- Time 16 weeks
- Scope 200 story points
These values are just part of the contract pricing procedure but they do tend to be the most difficult numbers to arrive at with any confidence.
What we were trying to show here is that the way we work in Agile projects can be transferred also to the contract negotiations environment.