In a fixed time and budget project, the project manager needs to balance the customer's expectations and the project's profitability. If the customer wants the development of a core component to be based on agile practices, the project manager should use a hybrid contract that combines both fixed and agile elements. This way, the project manager can accommodate the customer's changing requirements while maintaining control over the project scope, schedule, and cost. A tiered contract for fixed and agile components allows the project manager to define the fixed deliverables and the agile deliverables separately, and assign different payment terms and conditions for each. For example, the fixed deliverables can be paid based on milestones, while the agile deliverables can be paid based on iterations or value delivered. This also helps the project manager to manage the risks and uncertainties associated with the agile component. Providing alternatives to scope change at specific project phases within the contract is another way to control the development costs and ensure the profitability of the project. The project manager can specify the criteria and process for requesting and approving scope changes, and offer different options for the customer to choose from, such as adding or removing features, adjusting the quality standards, or modifying the schedule or budget. This way, the project manager can negotiate with the customer and reach a mutually beneficial agreement that satisfies both parties' needs and expectations. Limiting the number of iterations for development in the contract is not a good control, as it may compromise the quality and value of the agile component. Establishing a governance committee to review the contract delivery is not a specific control for the development of the core component, but a general practice for any project. Requiring that only internal resources be utilized for this project is not a relevant control, as it does not address the customer's requirement or the project's profitability. References:
PMBOK Guide, 6th edition, pages 704-705, 718-719.