Milestone Contract
Long-horizon delivery with board-level checkpoints.
A Milestone Contract chains two or more Fixed-Scope Packs together, each tied to a measurable business outcome. It’s designed for programmes that span 6–18 months where execs need predictable spend and periodic scope resets. Best entered when your Feature Clarity Index (FCI) is 7 – 9 and you foresee multiple releases.
1. When to Choose a Milestone Contract
| Signal | Why This Model Wins |
|---|---|
| Multi-phase roadmap (e.g., MVP → v1 → international roll-out) | Locks funding per phase while keeping strategic agility. |
| C-suite oversight | Board gets a go / no-go vote at every milestone acceptance. |
| Incremental ROI needed | Each milestone ships deployable value, not just code. |
| FCI 7–9 but lots of surface area | Split the risk into bite-size, price-certified chunks. |
2. Contract Structure
| Element | Description |
|---|---|
| Master SOW | Defines vision, governance, and max total budget. |
| Milestone Schedules | Addenda that freeze scope, price & acceptance criteria for each phase. |
| Payment | 40 % start · 30 % midpoint · 30 % acceptance per milestone. |
| Warranty | 30-day defect SLA per milestone; can roll into Full DaaS. |
| Rate Lock | Labour rates fixed for 12 months; reviewed annually or CPI > 6 %. |
3. Typical Milestone Flow
| # | Objective | Duration | Key Deliverables | Exit Gate |
|---|---|---|---|---|
| M-0 : Sprint-0 | Align artefacts & backlog | 2 weeks | BPMN L1-3, BDD suite, risk heat-map | FCI ≥ 7 |
| M-1 (MVP) | Launch core workflows | 6–10 weeks | Working product, NFR benchmarks | Live users |
| M-2 (Scale) | Add integrations + data migration | 8–12 weeks | API mesh, migrated records | Perf & security pass |
| M-3 (Optimise) | UX polish, cost-to-serve ↓ | 6–8 weeks | A/B results, cost KPI drop | ROI ≥ target |
4. Governance & Transparency
Steering Day (Monthly)
Budget burn, FCI trend, risk review
Milestone Retro
Lessons folded into next schedule
Live Dashboards
Velocity, escaped defects, spend vs. cap
Decision Log
All scope/budget moves stamped by exec sponsor
No surprise SOW rewrites—every change is visible in the dashboard first.
5. Change Management
Inside a Milestone
- ≤ 5 % effort swing absorbed.
- 5–15 % becomes mini change order.
- 15 % triggers Steering vote: re-scope or bump to next milestone.
Between Milestones
- Backlog re-prioritised freely; price/length of upcoming milestone re-costed.
Contract friction stays near zero because the master SOW already covers scope drift.
6. Switching Pathways
| Trigger | Recommended Move |
|---|---|
| FCI leaps to ≥ 9.5 mid-programme | Chain one large Fixed-Scope Pack instead of another milestone. |
| Roadmap stabilises, ops required | Convert to Full DaaS for velocity + run. |
| Market pivot shrinks scope | Downgrade to Sprint Pod or Mini-DaaS; unused milestone budget re-forecasted. |
Switches carry no penalties—just a fresh forecast.
7. Commercial Guard-Rails
| Topic | Policy |
|---|---|
| Cancellation | 30-day notice; in-flight milestone invoiced pro-rata. |
| IP Ownership | Transfers milestone-by-milestone on payment. |
| Cap on Liability | 100 % of fees paid for current milestone. |
| Audit Rights | You can audit time sheets & repos each milestone. |
8. Mini Case Study
Global Logistics Re-platform — 3-milestone contract (MVP, Integrations, Optimisation) over 14 months. Each milestone closed within 4 % of price and beat OKRs by avg 28 %. Switched to Full DaaS for ongoing expansion; same squad, new billing.
9. FAQs
Need enterprise-grade control with agile output?
Book a Milestone scoping call—walk away with a draft master SOW and first-milestone quote in 72 h.