While penalties can cover financial risks, they don’t always guarantee the quality of what’s being delivered. Traditional models like Fixed-price or Time & Materials don’t fully commit to ensuring high-quality outcomes either.

The Output-Driven delivery model is different. It’s all about delivering real value with measurable results that align with your business needs. Rooted in agile and iterative development practices, this model focuses on short delivery cycles, quality, and speed.

Why Choose Output-Driven?

Unlike traditional models, the Output-Driven approach makes both the client and supplier responsible for the project’s success. It pushes for collaboration, where the supplier is driven to meet clearly defined goals and performance indicators. The focus isn’t just on completing tasks—it’s about delivering real results that matter to the business. This approach builds a sense of shared ownership and accountability.

Another key advantage is flexibility. This model adapts as your business needs evolve, without sacrificing speed or quality. So, no matter how fast things change, your project stays on track and relevant.

How Does It Work?

The Output-Driven model is all about deliverables. In each iteration, the client validates the quality of what’s delivered and only pays for what’s approved. This way, the client always has control over what they’re paying for. This model works for both new projects and ongoing application management.

Instead of contracting for an entire project or a team, the client contracts for specific deliverables. By combining this with agile methodologies, you can use story points to estimate the complexity of each task, which helps set pricing. Deliverables can include things like UX/UI design or testing, and the client can choose whether to have their own teams handle certain parts. This makes sure everything is delivered just as the client needs, with a focus on quality every step of the way.

How to Implement the Output-Driven Model

Step 1: Set Up the Contract

First things first, you need a solid contract between the supplier and the client. This contract outlines the project management framework—Agile is the preferred choice, but it can also be adapted to Interactive Waterfall. The contract should cover:

• Definition of Done (DoD): When and how each deliverable is considered finished.
• Definition of Ready (DoR): When a requirement or user story is clear enough to move into the development backlog.

An estimation matrix also needs to be established. This matrix ensures that all development teams provide consistent estimates. It’s important that this matrix reflects the client’s unique situation and is agreed upon during or before the contracting phase. The goal is to keep everything fair and clear for all teams involved.

Finally, you need to set up the delivery velocity baseline. This helps define how many deliverables will be completed in each sprint or iteration, allowing everyone to plan and track progress accurately.

Step 2: Calibration Phase

Once the contract is in place, there’s a calibration phase where teams fine-tune their approach to meet the estimation matrix and delivery expectations. This period is key to making sure everything runs smoothly. It allows the teams to adjust their estimates and delivery speeds based on real-world challenges and capacities.

The calibration phase helps catch any issues early on, ensuring smoother, more predictable deliveries in future sprints. At the end of this phase, both sides can revisit the contract to make any necessary tweaks.

Step 3: Execution Phase

Now it’s time to execute. This is when the project gets underway, following the agreed framework. During this phase:

• New backlog entries are estimated based on the Definition of Ready (DoR).
• The contract’s progress and the quality of deliverables are regularly reviewed.
• KPIs are applied, and adjustments to team velocity are made as needed to keep everything on track.

The focus here is on refining the process as the project moves forward, ensuring every deliverable meets the set standards.

Conclusion

The Output-Driven delivery model requires a close partnership between the client and the supplier. Success hinges on mutual trust, commitment, and clear communication. By focusing on business outcomes rather than just tasks, this approach ensures high-quality deliverables that can adapt to changing business needs.

At AdvanceWorks, we’re committed to delivering with both quality and dedication. We understand how to make this model work for our clients, ensuring successful outcomes every time.