Agile Software Projects: Fixed Budget vs. Dedicated Software Development Team

How to Implement your Software Project?

Every time your company needs to outsource a software development project you must ask yourself:

• Should we request a quote to work based on a fixed budget?
• Should we go for a dedicated software development team?

Let’s start defining an Agile fix budget project and an Agile Dedicated software development team:

Agile Fixed budget project

• Requirements and Scope are defined in detail at the beginning of the project between the development team and the client.
• Based on requirements, the outsourcing software company creates a roadmap, milestones and deliverables, detailed user stories, testing planning, software architecture, tech stack, and a quote for a fixed scope.
• Once the project starts and the team realize there are required adjustments to the original scope, both parties have to meet to adjust, roadmap, milestones, and detailed planning. A Change Order Request is made to formalize the changes on the scope, and the team can continue to work.

Dedicated Agile Software Development Team

• Requirements and Scope are defined from a high-level perspective; the software development team can provide a roadmap, a high-level estimate, a suggested team structure and a quote for the monthly investment for the agile software development team and a ballpark quote to complete the project.
• Detailed requirements and scope are defined per Sprint (only for the next two weeks). The agile software development team can provide Detailed planning and deliverables for the sprint. This process repeats every two weeks until the project is completed.
• Once the project starts and the team realizes there are required adjustments to the original scope, the client provides priorities and the team decides whether to include them on the current sprint (and delay another task/backlog to a future sprint) or to add it into a future sprint.

Advantages

• Agile Fixed Budget Project
  • Fix the budget, the client has a detailed quote for every task of the project.
• Agile Dedicated Software Development Team
  • Able to start the project almost right away.
  • Flexibility Requirements; with a dedicated team it is very easy for the client to pivot and change priorities daily if necessary. Changes on Scope are part of the Agile methodology. The client only has to assign priorities to the Scrum Master who allocates them in the current sprint or a future sprint.

Disadvantages

• Agile Fixed Budget Project
  • Takes time to start the project, the project could take days or even weeks to start while the scope is defined and the detailed planning is done.
  • Changes on Scope generate unnecessary delays while the software company and the client review. if a certain requirement is part of the original scope, defining the new scope and new estimates.
• Agile Dedicated Software Development Team
  • Estimated Budget, the client receives a ballpark quote that gives the client an idea regarding the final budget.

For a startup with very limited funds, I would suggest building the initial Minimum Viable Product (MVP) based on an Agile Fixed budget approach and the iterate new versions with an Agile Dedicated Software Development Team.

For any other project software project, I would suggest going for an Agile Dedicated Software Development Team approach.

If you are looking to start a new project, contact us and we will suggest what we consider to be the best approach.