Contracting for software development
Management Science
Incomplete contracting issues in information systems development outsourcing
Decision Support Systems
Introducing Flexible Quantity Contracts into Distributed SoC and Embedded System Design Processes
Proceedings of the conference on Design, Automation and Test in Europe - Volume 2
Managing Information Technology Investment Risk: A Real Options Perspective
Journal of Management Information Systems
Special Section: Competitive Strategy, Economics, and Information Systems
Journal of Management Information Systems
Economic rationale of high cost and slow delivery in software development
ACM SIGSOFT Software Engineering Notes
Client-Vendor Relationships in Offshore Applications Development: An Evolutionary Framework
Information Resources Management Journal
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We address the case where a user contracts for the delivery of a new information system from an independent vendor, both of whom are risk-neutral. The delivery task is partitioned into two consecutive stages: system design and software development. The parties can contract for each stage separately or specify an initial contract that covers both stages. We compare the impact of different contracting structures on prices, project value, project completion probability, and the value to the developer of obtaining the first stage of the contract. Specifically, we show that a two-stage contracting can lead to a higher business value than stage-by-stage contracting. When there is competition for the design stage, the vendors bear more of the software development risk, and the probability the system will be completed depends on the contract structure.