DON´T PANIC! Contracts for agile Partnerships #interactive ... · Manage Agile 2019...

© JURIBO Anwaltskanzlei Rechtsanwalt Kristian Borkert

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DON´T PANIC! Contracts for

agile Partnerships #interactive #agile

#smart_law

Kristian Borkert, Attorney at Law

(German Rechtsanwalt)

Berlin, 05.11.2019

http://www.juribo.de/


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About me

For almost 10 years Kristian Borkert is working in national and international project related to information technology and data protection law.

His expertise areas include IT and business process outsourcing, SLA, software licensing, software project agreements, data protection agreements and other IT sourcing related topics.

He is particularly interested in agile methods such as Scrum or Kanban, collaboration models and blockchain.

Kristian Borkert

Attorney at Law (German Rechtsanwalt)Certified Scrum MasterData Protection Officer DSB-TÜVInternational Procurement Manager

Areas of Specialization▪ IT Law▪ Data Privacy Law▪ Commercial and Corporate Law

Blog: www.sourcingrecht.de

Manage Agile 2019 2


http://www.sourcingrecht.de/


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HAgile Law – „Focussed on your endeavour I will shape a tailor-made and flexible solution for your needs. “ Kristian Borkert, Attorney at law (German Rechtsanwalt)

▪ Draft and negotiate IT sourcingcontracts for projects, outsourcing, cloud / SaaS etc.

▪ Manage performance, service levelsand contracts, RFx support

▪ Legal representation and mediation▪ Assessment: Fit for IT sourcing▪ Assessment: Fit for projects

▪ Draft and negotiate licensing contracts as well as legal representation

▪ Prepare, support and manage a Licensing audit

▪ Advisory regarding busines model transfromation to cloud services

▪ Check and draft data protection agreements such as data processing agreement, data policies

▪ Prepare or check documentations e.g. impact assessment

▪ Legal representation ▪ Assessment: Fit for GDPR

▪ Draft and negotiate salescontracts forprojects, outsourcing etc.

▪ Legal representation and mediation▪ Assessment: Fit for agile Sales

Manage Agile 2019 3



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JURIBO Legal & Consulting

Manage Agile 2019

▪Pragmatic solutions in plain language

Our Mission is to Simplify Digital Value Creation and Enhance its Security.

#agile#blockchain#it-sourcing

▪Practical knowledge and agile methods

▪IT and law since 10 years

▪Digital transformation and start up´s

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38Open Spaces and Current Challenges4

24How to reflect agile collaboration in a contract?3

14Why is developing the Infinite Improbability Drive different?2

10What are standard contracts made for?1

Agenda

Manage Agile 2019 9



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Agenda

Manage Agile 2019 10



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Anyone who only has a hammer as a tool sees in every problem a nail.

Paul Watzlawick




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What are standard contracts made for?

Time elapsing

Trad

ition

alAg

ile



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Manage Agile 2019

Let´s talk in private: Does a Contract make your Project more Successful?

Does the right contract guarantee

the success of your project?

Does a bad contractprevent the sucess of

your project?

No, but life is much easier

No, but life is worse

Good contracts support the sucess of your project!

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Agenda




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Sourcing Space Labs

was easy contracting.




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There is some rocket science behind, but the requirements

are stable!




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17Manage Agile 2019

And what about this one? Or the Infinite Improbability Drive?



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Agenda




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To be able to find the perfect (project) partner, …

… first you need to understand the business model!




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Manage Agile 2019

How does German Law Classify Contracts for (IT-) Projects?…to be honest, it depends.

Service Contract § 611 ff. BGB*

No Specification required

High cooperation of the customer

Intention of contractor to bear

the risk of completion of the software [product]

Management by contractor

Partnership Agreement

§ 705 ff. BGB*

Intensive cooperation of customer and

contractor

Pursuing a common purpose

Is not intended by the parties

Lack of equal footing

License Contract

Licensing the use of a software

[product]➔ usage rights will be transferred

License contract is not a codified contract type

Focus of service is on development

Co-authoring possible

Contract for Work and Labour

§ 631 ff. BGB*

Intended share of risks and

responsibilities

Factual management by

contractor

No specification available

High cooperation required by client

Purchase Contract

§§ 433, 651 BGB*

Arg ex § 651: Delivery of

moveable goods to be manufactured

Interpretation according to the

contractual object / main purpose

Design services are dominant

Formal acceptance complies with

intention of the parties

-

-

+ +

+

-

-

+

-

-

-

+

+

+

-

-

+

-

-

-

* BGB = Bürgerliches Gesetzbuch = German Civil Code

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Manage Agile 2019

How does German Law Classify Contracts for Agile (IT-) Projects?That´s what the Federal Supreme Court (BGH) says…

Scrum Projects as Contracts for Work and Labour

▪ Design is integrated with the development. Both are in- separately connected ➔ Design service is a central part of the development at Scrum. Thus it is the focal point of the contract.

▪ The lack of a detailed specification does not prejudices the applications of a contract for work and labour ➔ At the beginning of the project the vision and the objectives as well as use cases and the product back lock are already defined.

▪ Objective of the Scrum process ist to generate a potentially deliverable product or increment – already tested, implemented and documented ➔ the essence of a contract for work and labour

BGH Decision from 23.7.09 (Silo Instalation Decision):

„An exception [to the application of § 651 BGB] could therefore only be valid if the design service is dominant in a way that it is the key aspect of the contract and therefore requieres the application of contract for work and labour law. This could be the case e.g. if the focal point of the mandate is to design a general solution for a constructional challenge “

Scrum Projects as Service Contrats

▪ If intended by the parties or▪ Scrum team is jointly staffed by customer and contractor (Mixed team).

28Foto: Von Peter Van den Bossche - originally posted to Flickr as Silage, CC BY-SA 2.0, https://commons.wikimedia.org/w/index.php?curid=10063001



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Manage Agile 2019

Latest Jurisprudence regarding ScrumLG Wiesbaden, Sentence from 30.11.2016 – 11 O 10/15; OLG Frankfurt, 17.08.2017 - 5 U 152/16; BGH - VII ZR 203/17 (pending)

▪ Contract for SCRUM project based upon a LoI ➔ Contract for work and labour, even if payed according T&M.

▪ Intended contract provides important indications with regard to the cooperation between the parties.▪ Method based on sprints is a kind of integrated planning. ▪ Sovereignty of concept by customer, responsibility of execution by contractor▪ Not clarified: Minimum usability of sprints, Importance of the Definition of Done.

Not legally binding!

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Manage Agile 2019

Quality Prevails! …but You have to Agree Upon!

One contract for work per Sprint

Contract for work and labour for the

entire project

Service contract

Personnel leasing

Partnership Agreement

Contracted service

Sprint backlog

Sprint backlog

Accurate execution

Work upon instructions

Company purpose

Quality

User Story & Definition of Done

(DoD)

User Story, DoD &

Collaboration

General professional standards

-

-

Acceptance

Formal acceptance per Sprint

Release per sprint & final formal acceptance

Not applicable

Not applicable

No, dissolution of company (purpose

reached)

Warranty for defects

Per Sprint

Starts with final formal acceptance

No warranty, other liability if applicable

Not applicable

No warranty, other liability if applicable

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Partnership-basedCooperation in a Change-resistant Contractual Framework




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Manage Agile 2019

Possible Development of in the Course of a (IT) Project

Initial costs max.

Final maximum costs = Agile Fxed Price

Exit possibility

Time

Price / Costs

Tender & contractnegotiation

Initial phase Progression of the project End of project

Bonus

Risk share

Joint estimation

Transparency and common estimation of project in total are fundamental for the cooperation model with risk and gain share

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Manage Agile 2019

Requierement Changes along the Value Chain:Comparision Software Industry vs. Automotive

OEM 1. Tier Supplier

2. Tier Supplier Freelancer

Client General Contractor

Sub contractor Freelancer

Specifications Specifications Specifications

Specifications Specifications Specifications

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= Changed requirement



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Manage Agile 2019

Recommendations for Scrum Contracts

Joint initial estimation of the project (Clean Room

Approach)

Definition of Scrum roles, meetings and artefactse.g. product backlog, Sprint backlog with

contracts

Collaboration of the parties, especially active

involvement of the customer

Provisions regarding approvals of Sprints and

final acceptance

Warranties and liabilities based on detailed

specifications of Sprints

Dynamic and transparent system for price and

services robust to changes

Milestones and Timelining's should be related to functionality and payed according delivery ➔ Money for

performance

Definition of a accompanying dispute

resolution process for the project with a surveyor

who is an expert in Scrum

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Agenda




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Open Space

Agile Contract Drafting

Your Cases / Topics

Scrum vs. ANÜ

Commercial Deep Dive



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Agile Contract Drafting




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From Your Standard to Agile Contract

▪ Preamble

▪ Performance▪ Contributions and provisions▪ Teamwork

▪ Acceptance; Warranty▪ Change requests

▪ Prices and commercial

▪ Termination rights

▪ Other▪ IP (copyright, patent etc.)▪ Confidentiality & privacy▪ etc.

Timebox - "Sprint"

P 1 !

P 2 !

max. 4 weeks

sprintreview

dailyscrum

team

productowner

P x

P x

sprintbacklog

P x

P x

P x

P x

P x

P x

productbacklog

Incorporate the agile elements of your project into your contract, in particular

procedure of the agile method (e.g. Scrum), cooperation model, warranty



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Complex

Complicated

Simple

MinorClarity/

Concord

MajorClarity/

Concord

"Under control" Unclear/Uncertain

Demand /

Requirement

Technology/

Method

Chaos


The Agreement Must Match with the Situation! ...and Not Vice Versa...

Nach: Ralph D. Stacey: Strategic Management And Organisational Dynamic: The Challenge of Complexity

▪ Vision Unclear ➔Design Thinking ➔Service if necessary with fixed price

▪ Vision & Backlogclear➔ Scrum➔ Contract variants Scrum

▪ Requirements very clear ➔ Kanban, but also classic project management & CIP ➔ according to desired risk distribution

CIP

Design Thinking

Traditional Project Management

Scrum

Kanban



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Model Clause: Definition of Scrum Terms

(1) Definition of requirements

All existing requirements are collected in the product backlog. The requirements of the overall project are specified in different granularities at the time of contract conclusion: The overall project is described by the product backlog defined in Appendix 3. This product backlog is divided into individual topics. These are further detailed in detailed Epics on various subtopics. For the actualrealization, an Epic is divided into the required number of user stories in the course of the project.

• Product Backlog: The list of all topics with a corresponding prioritization and complexity/effort evaluation - including the includedEpic(s) and user stories, if already defined. At least at the detail level of Epics, the Product Backlog is a complete description ofthe subject matter of the contract.

• Topic: A group of requirements from a business perspective, each topic being described at a very high level of abstraction and concisely in a short paragraph. The description is sufficient for experts to estimate the complexity and thus the scope of work.

• Epic: A topic is divided into functionally related groups of user stories. These sub-themes are called Epics. An Epic is succinctlydescribed in a paragraph.

• User Story: The description - from the user's point of view - of a correct, functionally independent use case as well as an appropriate number of test cases (good and bad cases, if applicable) for checking the correct function of the use case.

(2) Other definitions …



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Model Clause: Service Description

(1) The following documents are the basic conditions for the performance of services under a contract for work and services:

1. …

The Contractor has checked these documents for completeness, unambiguity, consistency and practicability, insofar as theywere available at the time of conclusion of the contract. If the documents are further developed in the course of the project, thisreview is carried out in the event of amicable change of the annexes.

(2) The project and the services to be rendered are described today by the following documents:

▪ Product backlog with topics, Epics and user stories▪ Definition of requirements▪ Payment plan (Annex x "Payment plan")▪ Schedule and cooperation services of the AG ▪ Schedule, services, provisions including cooperation services of the AG

(3) This service description is to be further developed according to the rules of the contract. The delivery performance of eachsprint shall be described in accordance with the format agreed in Appendix x.



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Model Clause: Project Organization in Particular Scrum Ceremonies and Roles

(1) The agile approach in the project essentially follows the principles of Scrum and includes various "ceremonies". The followingdiagram gives an overview. The ceremonies and roles are briefly described below.

Scrum roles: The agile team consists of the Product Owner, the Development Team and the Scrum Master.

a) The product owners of the client define and prioritize requirements or adapt them to changed circumstances. They are responsible for the ROI. The product owners of the client define the acceptance criteria and accept the results. They are available to the team 'just in time' for details.

b) Scrum Master moderate the process and support the collaboration of all roles and functions. They protect the Development Teamfrom disruptions and remove obstacles. A Scrum Master is responsible for adhering to Scrum values and techniques.

c) Development Team (Developer & Tester): A Development Team is a self-organized team consisting of full-time employees if possible. They develop cross-functional business functions.

Other stakeholders are available to monitor, advise or supply.

The following Scrum ceremonies take place during the individual sprints: ….



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Lego for Lawyers and SourcersIn 4 steps to the agile contract

1. Arrange the contract terms in themeislands.

2. Discuss the dependencies and areasof tension.

3. Select the topic areas to change foragile contracts.

4. Suggest topics affected by agility and change the contract.

Duration: approx. 30 minutes



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Scrum vs. ANÜ




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Rollen und Risikosphären bei Scrum-Projekten

Product Owner

Entwicklungs-team

Scrum-Master

Customer User

Management

Scrum-Team vollständig durch

Partner besetzt ➔Werkvertrag

Product Owner intern ➔ Werkvertrag noch

möglich (kritisch)

Entwicklungsteamgemischt ➔

Dienstvertrag

Scrum-Master intern ➔ Dienstvertrag

Die Verteilung der Rollen und damit der Schnitt der Risikosphären ist für die Vertragsgestaltung wesentlich.



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Was ändert sich durch das Update des AÜG?Übersicht Abgrenzung Arbeitnehmerüberlassung

Grundsätzlich ändert sich nichts bei Werk- und Dienstleistungen, die wie beauftragt erbracht werden.

Arbeitnehmerüberlassung Werkvertrag

Scheinselbstständigkeit Scheinwerkvertrag

» (1) Durch den Arbeitsvertrag wird der Arbeitnehmer im Dienste eines anderen zur Leistung weisungsgebundener, fremdbestimmter Arbeit in persönlicher Abhängigkeit verpflichtet. Das Weisungsrecht kann Inhalt, Durchführung, Zeit und Ort der Tätigkeit betreffen.

» Weisungsgebunden ist, wer nicht im Wesentlichen frei seine Tätigkeit gestalten und seine Arbeitszeit bestimmen kann. Der Grad der persönlichen Abhängigkeit hängt dabei auch von der Eigenart der jeweiligen Tätigkeit ab.

» Für die Feststellung, ob ein Arbeits-vertrag vorliegt, ist eine Gesamt-betrachtung aller Umstände vor-zunehmen. Zeigt die tatsächliche Durchführung des Vertrags-verhältnisses, dass es sich um ein Arbeitsverhältnis handelt, kommt es auf die Bezeichnung im Vertrag nicht an.

» (2) Der Arbeitgeber ist zur Zahlung der vereinbarten Vergütung verpflichtet.

§ 611a BGB n.F.

Entleiher Verleiher

Arbeitnehmer

Auftragnehmer

Auftraggeber

Auftragnehmer

Auftraggeber

Rechtswidrige (verdeckte) Arbeitnehmerüberlassung

Tatsächlich Arbeitnehmer, da nur scheinbar frei in der Gestaltung seiner Tätigkeit und der ArbeitszeitKlärung ➔ Statusfeststellungsverfahren.

» Arbeitnehmer des Verleihers arbeitet weisungsgebunden und fremdbestimmt beim Entleiher.

Zusätzlich nach alter Rechtsprechung: Eingliederung in die Betriebsorganisation



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Weisungsrecht und Scrum

arbeitsvertragliches Weisungsrecht (§ 106 GewO)

Leistungsgegenstand wird durch die Anweisungen erst bestimmt

Weisungen betreffen Inhalt, Zeit, Ort und Ausführung der

Arbeitsleistung

fachliches Weisungsrecht

(§ 645 I S. 1 BGB)

Werk-, sach- oder projektbezogene Weisungen

Betreffen nur die Art, die Reihenfolge oder die einzelnen

Inhalte einer bereits vereinbarten Leistung

z.B: Fertigungsmethoden, Qualitätsanforderungen, Reihenfolge, Stückzahl

„Unternehmerische“ Weisung/Mitwirkung notwendig zur

Vertragserfüllung

Scrum als Agile Methode

Begründet keine Rechtsbeziehung

Ist Methode zur effizienten Organisation

Scrum Master ➔ keine arbeits-vertraglichen Weisungsrechte

Ist Hüter der Methode➔ Hindernisse beseitigen

korrekte Umsetzung des Vertrages, Abgrenzung der

Weisungsketten in der Praxis



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Modell einer rechtskonformen Zusammenarbeit bei Scrum

Timebox – „Sprint“

P 1 !

P 2 !

max. 4 Wochen

Sprint-Review

DailyScrum

Team

ProductOwnerProxy

P x

P x

SprintBacklog

P x

P x

P x

P x

P x

P x

ProductBacklog

Cortesy of Heupel Consultants & Prof. Dr. Ayelt Komus, Quelle: Jeff Sutherland

ProductOwnerKunde

Scrum Master

Hüter der Methode = Compliance Organ

▪ Vereinbarte Leistung▪ Werk-, sach- oder

projektbezogene Weisungen

Dienstleister

Projekt-vertrag



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Rechtskonforme Zusammenarbeit bei Scrum – Freiberufler ARGE

Timebox – „Sprint“

P 1 !

P 2 !

max. 4 Wochen

Sprint-Review

DailyScrum

Team

P x

P x

SprintBacklog

P x

P x

P x

P x

P x

P x

ProductBacklog

Cortesy of Heupel Consultants & Prof. Dr. Ayelt Komus, Quelle: Jeff Sutherland

ProductOwnerKunde

Scrum Master

Hüter der Methode = Compliance Organ

▪ Vereinbarte Leistung▪ Werk-, sach- oder

projektbezogene Weisungen

Projekt-vertrag

ARGE / Konsortium von Freiberuflern



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Ansatz für ein ANÜ- Compliance-Managementsystem

• Stichproben Verträge &

tatsächliche Umsetzung

• Auswahl nach Zufall, Dauer, etc.

• Festhalten-Erklärung bei entdeckter ANÜ

• Vertrag beenden• ANÜ-Vertrag

abschließen

• Leistung genau beschreiben

• Vertrag schließen• Zusammenarbeit

beginnen • Leistung erbringen

• Geplante Zusammenarbeit analysieren

• Risikoarmen Vertragstyp wählen

• Awareness Training

Plan Do

CheckAct

Scrum Master= Compliance Organ



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JURIBOLegal & Consulting

#agile #blockchain #it-sourcing

04.11.19Verträge für agile Projekte 62

Rechtskonforme Zusammenarbeit bei Scrum – Compliance Model

AuftragnehmerAuftraggeber

Werk- / Dienstvertrag

Zusammenarbeit im Projekt

Projekt-mitarbeiter ANProjekt-

mitarbeiter AG

Arbeitsrechtliche Weisung

Arbeitsrechtliche Weisung

KeyAccount

KeyAccount

Ausschließlich fachliche Weisung



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Commercial Deep Dive




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Manage Agile 2019

Possible Development of in the Course of a (IT) Project

Initial costs max.

Final maximum costs = Agile Fxed Price

Exit possibility

Time

Price / Costs

Tender & contractnegotiation

Initial phase Progression of the project End of project

Bonus

Risk share

Joint estimation

Transparency and common estimation of project in total are fundamental for the cooperation model with risk and gain share

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Contract Puzzle Agile Fixed Price

Bonus & Malus

Checkpoint & notice

T&M with budgetaryupper limit

Jointestimation

Scopeand

Change Management

Money fornothing,Change for free



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Agile Fixed Price: Elements and Mode of Action

Synchronization andresponsibility in the team

Cooperation, added value

Added value, project vision

Cost transparency

Synchronization, collaboration

Productivity, collaboration

Added value, project vision

•Divide the residual budget in case of overperformance•Sharing the risk for estimationBonus & Risk share

•Largest value added at the beginning•Project vision achieved earlyMoney for nothing

•Welcoming changes to the plan•Enable prioritization on value creationChange for free

•Transparency over expenses•Costs capped at upper limit

T&M with budget ceiling

•Joint view of initial project•Joint assessment of effort and risksJoint estimate

•Verification of assumptions after 4-6 sprints•Fail fast, fail cheap!

Checkpoint and termination

•Stability for time and budget•Balancing value creation and costs

Scope and change management



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Money for Nothing…Prioritizing the Project Scope According to Business Benefits

= Project scope / required functionality

Δ costs

Δ business benefit

Benfit (ROI)

Sprint(Time)

100%

20%

To achieve the best cost-benefits-relation it could make sense to end the project earlier

Δ 20% of planned income= Money for Nothing

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Change for Free… Prioritizing the Project Scope According to Business Benefits

= Project scope / required functionality

Δ Kosten

Δ Nutzen

Benefits (ROI)

Sprint(Time)

100%

20%

Within the Sprint Planningfeatures can be moved or

changed for free

= New Project Scope

New feature

Feature re-prioritized

= Change for Free

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Project Partnership Model in Terms of Bonus and Risk Share

Manage Agile 2019

▪ In case of efficient work project partner shall not be punished for spending less project budget.

▪ Hence project partner will receive follow up project/order at least in the same amount of money of the saving or budget which has not spend corresponding to project share of project partner.

▪ Project partner is able to chose Bonus earnings model alternatively

▪ In case of efficient work project partner shall not be punished by less earnings.

▪ Hence project partner will receive bonus payment out of the total project savings corresponding to project share of project partner.

▪ Project partner is able to chose Bonus turn over model alternatively

▪ Despite common estimation of the project partners in the clean room (qualification workshops) projects efforts exceeds the final maximum costs because of unpredictable impacts

▪ Project partners will share additional costs and efforts corresponding to project share of project partners. Each partner shall be obligated to

Gain shareturn over model

Gain shareearnings model

Risk shareFunding obligation

Fair solutions emphasize the joint responsibility for all project partners to accomplish the project successfully

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Joint Venture as a Core Concept for Project Partnership Model

Manage Agile 2019

▪ Buffer within project estimation will be divided related to shares of project partners

▪ Full alignment of interest of project partners to accomplish the project successfully

▪ Preferred by Customer

Pure joint venture Simple limitation Graduated joint venture

Absorption of cost of risk of common project estimation


▪ Takeover of risk limited to x% of estimation▪ Alignment of interest of project partners needs

to be assured by additional mechanism


▪ Full takeover after graduated increase▪ Alignment of interest of project partners

depends on the width of the steps and may needs to be assured by additional mechanism

For failure of estimation

Buf

fer w

ithin

pr

ojec

t est

imat

ion

Share of project partner

Share of Customer

Takeover of risklimited to x% of estimation

Buf

fer w

ithin

pr

ojec

t est

imat

ion


Share of Customer

Common project estimation Common project estimation

Full takeover after graduated increase

Buf

fer w

ithin

pr

ojec

t est

imat

ion


Share of Customer

Common project estimation

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Your Cases / Topics




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Take Aways and Outlook

➢ Agile Projects do not fit within existing contract forms. TCO´s have to be adapted accordingly.

➢ Robust and transparent alignment of all project participants is a key factor to a successful project.

➢ Collaborative concepts like Agile Fixed Price seem to be adaptable to automotive whenever solely the design and development is purchased.

➢ Temp labour laws do not ban scrum project contracts.

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Contact and Planning Poker Cards

Kristian BorkertAttorney at law(German Rechtsanwalt),

[email protected]+49 179 665 5128

Am Rötepark 82, 71332 Waiblingen, Germany

79

Contact me on LinkedIn


mailto:[email protected]


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Offerings regarding Agile Project Tenders and Negociations

Intensiv Coaching and Mentoring

➢Intensiv training with procurement, controlling & legal affairs (1 day)➢Mentoring parallel to a tender➢Review and feedback

External Management and

Execution➢Full commercial and legal

support of the internal project leader at the tender process➢Alignment with procurement,

controlling and legal affairs of customer with regard to progress and result

Power on Agile / Tandem Approach

➢Initial intensive training with procurement, controlling & legal affairs (1 day) ➢Support of tender process in

tandem approach➢Transfer to daily practice of

contract management covering the entire life cycle

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