No Cure No Pay: How to Contract for Software Services

Tom Gilb

Contractual motivation is needed to avoid costly project failures and improve the delivery of stakeholder value. Only if the supplier management is made to feel the pain of project failure will it strive to avoid it. The current culture of rewarding failure, by paying for systems development work regardless of the product delivered, must be altered. Such contractual motivation must be supported by quantitative requirements and evolutionary delivery. Quantitative requirements allow project progress and success to be measured enabling monitoring and testing for contractual compliance. Evolutionary delivery (that is, delivering early high value in small increments and using feedback from deliverables to determine future increments) allows early reporting of the ability of systems development to deliver and so enables any required corrective actions. Note: This paper specifically addresses the software problem, but the ideas most likely apply to the wider systems engineering problem to some interesting degree as well.