Rigid and non-agile subcontracted projects - where do they come from ?

Everyone wants to be Agile these days, and that's absolutely good !

But for the last 15 years or more, the trend in subcontracting in Finland has been towards more text in Frame agreements and more rigid purchasing terms for projects. And little mentioning of anything Agile... A lot of this culture originates from the Big N. It has (had ?) quite powerful and strict puchasing department and they have had interest and money to invest for legal departments costs to make up an agreement template that covers just about any risks and problems one can imagine. Now that the N has changed a bit, many of that talent pool involved in making that contractual jungle happen are available for other companies, that eagerly take what the big N got to develop during it's Glory Days. That's one legacy from the great days of the telecom boom, that is less frequently in headlines.

(Sorry, the pictures have little to do with the text, they just look good... Let me know if You recognize the hardware in pictures !)

But the thing is : The big N is also a highly competent in handling subcontracted projects in practice. There are seldom problems when the contracted projects scope changes. As they always do to at least some extent. It is understood that it may also change the costs upwards - not always of course, sometimes the change is for smaller and sometimes there are non requested costs that shouldn't be invoiced at all. There is usually enough engineering talent present to understand what's going on and management balls to make actual decisions and spend money when there is a reason for it. So, even if the contracts make really agile project models rare, changes can still be handled in projects.

But taking that culture along with the template for miles long Frame agreement is much harder... It's more easy to duplicate the paperwork and frame agreements to other companies than the cumulative engineering know-how and management competence from tens of years of developing world class products...

There are situations, where there is a strict Frame agreement, and lot of emphasis on getting the Project Order stuff done rigidly on paper. But also difficulties in handling the situation when the understanding of a projects content is updated. Because there are always holes in the Projects definition, its deliverables and overall things change and understanding of the needed end results do just change.

Of course it's not a requirement to be a world-class expert in order to start subcontracting a project. It's also the subcontractors work and responsibility to guide the process so that end results are available within the agreements. We should be in it together. R&D subcontractor gets a decent profit during development and the Customer gets truckloads of money when the products start shipping. When things go as they should. 

So what about Agile projects ? They do exist of course, but in the end they are not possible to be done in that mindset. You cannot give a fixed price, deadline and content for an Agile project that doesn'n even have a first product backlog available. And still it's widely understood that an Agile project model is often efficient and gives best bang for the buck in many cases...  So how is that kind of project even possible and how can they be agreed upon, guided, followed and delivered ?

It requires trust and good history between the companies, It requires more engineering wisdom or Product Management capability and less legal department involvement. And is this really a big risk for the Customer ? An open order book for doing anything for the subcontractor ? No. Because subcontracting is so strongly trust business, that a subcontractor just cannot break the trust and still prosper for any longer time period. If You don't deliver value for the customer, so that the results feel good even if the costs always are slightly too much, the happy story of the subcontracting company just  comes to a sudden end. (like happens to that T-34 in Portinhoikka...).

More important than a strict legal paper is subcontractor that has been and wants to still be around for a long time ! And understands the basic facts behind that.

But that my dear readers is a subject for another writing :)