Steve Eichert asks:
Is an agile methodology only appropriate for non-fixed bid projects? If not how is an accurate bid placed? Has anyone had a positive experience using an agile approach on a fixed bid project?
Honestly, the answer is that you DON’T do fixed bid projects. At least not the way most people think of them. _place_holder;
You can’t price the entire project, but you can fix price each feature (or Story in XP). I have had a lot of success with this. If the customer will provide Acceptance Tests for the feature, then you should be able to come up with a good time estimate for getting it done.
Some Project Managers like to extrapolate this and say, “OK lets just do acceptance tests for every feature and then we can add it all up and get a fixed bid.” This is true as far as it goes, but you would be foolish to write a fixed bid contract based on it if you intend to let the customer be agile during development.
So what is the answer? In my experience (and I’ve done _place_holder;more than 10 successful XP consulting projects) you try to get as many features defined up front as possible. You estimate them as best you can. You explain it all to the customer. You always implement in order of priority. You explain it all to the customer again. You write a contract that is NOT a fixed-price, fixed-scope contract.
If the customer is willing to provide good Acceptance Tests for all of the features selected in an iteration, then you can fix price each iteration before it starts. This is as close as you can get. You still get the agility of short controlled iterations and the customer gets to control their spending.