Regarding milestone payments for Agile FP project

Discussion in 'Agile and Scrum' started by Suresh Vipperla, Aug 28, 2016.

  1. Suresh Vipperla

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    Hi,

    I have handled few projects using Waterfall and V models. As per initial agreement, the payment to be done by customer at the end of every phase i.e after completion of Requirements analysis (SRS), Design, Development, SIT, UAT (Acceptance test) and Deployment.

    My question is ... how to define these payment milestones for Agile FP projects. Is it based on the total number of sprints... ie... if I have total 10 sprints, can I ask customer to pay 4 equal installments (each payment after completion 2-3 sprints).

    What is the industry best practice. I have to decide asap.. can anyone please quickly answer...

    Suresh V
     
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  2. Raj K(3066)

    Raj K(3066) Well-Known Member
    Trainer

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    Agile Fixed Price Projects have payment structures influenced by Releases.

    Release deploys working, fully tested code into Production. Therefore, first see if there are any releases in your Project. In a typical agile project, there could be multiple releases. Each release indicates a Milestone. You can map your payments to that release.

    If there is no releases in between but there is only one towards end of project, you can ask for actual consumption of effort by your resources during the project. This is where you can go by your sprints. For ex: per quarter (say 3 monthly sprints) a payment to meet your efforts - as risk mitigation - so your company (supplier company) is not at loss of payments. You can upfront state in the proposal that there is huge gap in payment cycle - to mitigate that risk, actual effort needs to be compensated by the client at regular intervals.

    Another option is to work with Product Owner and identify the value that the sprints deliver. Based on that payments can be planned. For ex: 30% of Business value is expected to be delivered in 5 sprints. So charge customer 30% of payment with clearly defined "Definition of Done" - agreed and documented with Product Owner.
     
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  3. Suresh Vipperla

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    Thanks Ranga for your time and detailed explanation..
     
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