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March 17, 2016
Agile contracts: Working together and preparing for known unknowns
By: Jodi Ader

You are the project manager for a power-generation company, and you will be leading a project to build a new power plant. You have selected the engineering company, construction company, suppliers, and transportation providers to complete the project. Because this is a long-term project, you recognize that there will be regulatory and cost changes, as well as changes to scope and duration. You have been advised by your general counsel that it would be best to sign agile contracts with all your business partners for the project to address these concerns.

Unlike traditional contracts, agile contracts are ideal for situations where solutions may not be predictable at the onset of a contract’s term. Agile contracts include predetermined variables such as regulatory changes, floating costs, technology improvements, and changes to scope, volumes, or duration. These “known unknowns” are dealt with at contract inception by using set terms, ensuring that the parties work together to minimize costs and mitigate risks.

Some variables are best suited for agile contracts, and it is important to know how to incorporate them. Equally important is recognizing the benefits of risk sharing and determining which party is best suited to bear the variable risks laid out in the contract.

By discovering how agile contracts help parties respond to changing needs that result from items such as technology improvements, modifications to costs or service, and regulatory changes, you will become equipped to negotiate such contracts for your organization that have a very high likelihood of success. You will be able to quantify the benefits of your contracts, which will help your company and your partner to grow business and improve profitability.

Are you looking to undertake a new project and to ensure that you address potential regulatory and cost changes as well as changes to scope and time commitment? If so, the Accenture Academy courses Definitions and Variables Associated with Developing Agile ContractsBeneficial Options to Include When Developing Agile ContractsThe Framework and Variables Encountered When Developing Agile Contracts, and Components to Include When Developing Agile Contracts to Ensure Success will provide you with the knowledge to effectively enter into and manage agile contracts

About Accenture Academy

Accenture Academy offers proven, cost-effective learning solutions for a more versatile workforce and a more agile organization. We provide a flexible learning approach that helps your people be more versatile and your entire organization be more agile in the marketplace. Curriculum includes Supply Chain Management, Finance, Procurement, Analytics, Leadership & Management and Specialty Skills.

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