Purchasing and Contract Management: Adaptive and Plan-Focused Approaches

I felt the need to make an explanation as I continued the series of articles I mentioned about the main differences of adaptive and plan-oriented approaches. It is not to argue that the purposeful adaptive or plan-oriented methods of these writings are superior or completely different from each other, or that they must be used alone. Based on my experiences, as I said in my previous writings;

“… if we try to adapt our agile or traditional method / method / methodology to our projects and the business environment we are in, we will ensure that the appropriate methods are selected and, if necessary, privatized, according to the requirements of the institution, the customers and the projects.

Before we examine the fundamental differences between adaptive and “plan-centric” approaches to procurement management, I would briefly talk about procurement management and contracts in adaptive approaches.

Purchasing management, 2-3-4-5, and 10-11 are interrelated with agile principles. http://www.agilealliance.org/the-alliance/the-agile-manifesto/the-twelve-principles-of-agile-software/

In adaptive approaches;

It is necessary to explain to procurement units why the contract should be prepared to adapt to changing requirements.
It is extremely important that the contract preparation phase cooperate with the vendor and proceed in confidence.
In order for procurement processes to be able to adapt to agile approaches, it is essential that senior management is very well aware of the benefits of agile methods. Gains; increased product quality, reduced risks, more controlled and accurate tracking of project performance, …
Unlike other approaches in agile contracts, the following headings can also be included
Agile approaches that the firm can apply
If the firm does not use agile methods, describe how the firm and the firm’s work will integrate with the buyer’s development team and iterations
Agile Methods – Purchasing Management – Contract Types

DSDM Contract
«Fit for business purpose» – Successful completion of a product / application and tests suited to your business need is sufficient.
Especially in the UK and some European countries
Additional fees for changes (Money for Nothing and Change for Free)
A contract type proposed by Scrum’s creator Jeff Sutherland
Fixed price contract.
With «change for free»;
New requests that do not change the scope of the contract are free
New requests are free instead of lower-equal-priority requests
However, if the client does not work in collaboration with the team, Time & Material (T & M) based pricing is done.
«Money for nothing» allows the client to finish the project at an early stage. Thus, work is not done for unnecessary and unhelpful features. The contractor will charge a certain percentage of the contract value remaining if the project is prematurely terminated.
The terms “change for free” and “money for nothing” apply if the client works in cooperation with the team in each province.
Graduated Fixed Price Contract
Parties share risk and success together depending on deviations in time schedule
Company payment:
If the delivery is on the scheduled date,
Early delivery, for less hours, but with a higher rate
Delayed delivery is made for less hours and at a lower rate
Fixed Price Work Packages
Build fixed-price business packages
As the project progresses, the firm re-estimates the remaining business packs according to their learning and new risks.
Thus, the client can prioritize the remaining business again according to the resulting financials. The firm can update its costs more realistically, depending on the progress, rather than the «contingency» funding that will be added to the project at the beginning, taking uncertainties into account.
In the event of additional costs, the changes can be managed by converting them into small work packages.
It is possible to summarize the fundamental differences between plan-oriented approaches and adaptive approaches in terms of procurement management.


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Note: I will share the comparison of adaptive and plan-centric approaches in the areas of team dynamics and communication management, quality and risk management in further writing.