Software Development: Why the Traditional Contract Model Is Not Fit for Purpose

Many IT change initiatives involving the development of software fail, and the scale of the failures can be large. We believe that the traditional contract model for software development is generally responsible for these failures. Even if an IT project is resourced internally, the organisation applies similar management practices to the IT project as if it were outsourced to a third party supplier. The contract model contains three fundamental elements, all of which are seriously flawed in the context of software development. In any IT project the contract model increases the risk of failure, and leads to a suboptimal design and poor return on investment. In this article we examine some of the ways in which this happens. We also consider an alternative approach, based on the principles of complexity theory.