Guidelines: Contractor Engagement Models (Agile vs. Formal)

Guidelines: Contractor Engagement Models (Agile vs. Formal)

Collaboration Objective

· Formal Agreement with NDA: Long-term or complex collaboration involving full knowledge transfer and access provisioning.

· Agile Prepaid Model: Short iterations, hypothesis testing, and a "quick start."

Legal Framework

· Formal Agreement with NDA: A comprehensive civil law contract (for work, services, or commissioned work) and a separate Non-Disclosure Agreement (NDA).

· Agile Prepaid Model: Mutual written consent (via email, messenger) based on offer terms outlining the rules for prepaid iterations. An NDA is often absent.

Financial Terms

· Formal Agreement with NDA: In our case, payment is made upon completion of milestones/work acceptance, with signed acceptance certificates.

· Agile Prepaid Model: 100% prepayment for each short iteration (sprint).

  The goal is to minimize bureaucratic financial reporting,streamline it, and reduce documentation overhead in the early development stage while maximizing process automation and transparency.

Information Protection

· Formal Agreement with NDA: Direct protection of trade secrets, source code, client data. Allows for claiming damages in case of a leak.

· Agile Prepaid Model: Protection through architecture (the freelancer lacks access to the complete system). Minimal risks due to module isolation.

Flexibility and Speed

 • Formal Agreement with NDA: Low. Changes require supplemental agreements.

• Agile Prepaid Model: Very high. Priorities can be swiftly changed between iterations.

**More Details on Each Option**

Formal Agreement with NDA: Full Legal Protection

   This is the classic approach for projects where the freelancer becomes an"external team member" with access to critical information.

· How the relationship is structured: The foundation is a civil law contract (most commonly a work or services contract). It should specify in maximum detail:

  · Subject Matter: What exactly is being created (e.g., "API X integration module").

  · Milestones and Deadlines: Clear checkpoints for acceptance and payment.

  · Acceptance Procedure: How work is accepted, deadlines for testing and revisions.

  · Payment Terms (e.g., 30% advance, 70% upon milestone completion).

· What is an NDA (Non-Disclosure Agreement): This is not bureaucracy but a key protection tool. The NDA separately stipulates:

  · What information is confidential (source code, specifications, client data).

  · The freelancer's obligations not to disclose it and to use it solely for the work.

  · The term of the obligations (typically 1-3 years after cooperation ends).

  · Penalties for breach.

· When it's needed: If the freelancer will see the "complete puzzle" — the architecture, database, business logic. Without an NDA, you cannot prove a leak if, for example, part of your code later appears in another project.

Agile Prepaid Model: Flexibility and an Engagement Filter

   This model follows Agile Manifesto principles:"Working software over comprehensive documentation" and "Responding to change over following a plan."

· How the relationship is structured: The legal basis is an agreement via correspondence (acceptance of an offer) outlining the rules:

  · Iterations (Sprints): Short cycles, usually 1-2 weeks.

  · Task Backlog: A prioritized list of tasks for the iteration, agreed upon at the cycle's start.

  · Definition of Done (DoD): Clear acceptance criteria for each task.

  · Fixed Prepaid Payment: 100% prepayment per iteration is the cornerstone. It's your main guarantee and filter. As experienced freelancers note, working without prepayment carries significant risk.

· Why an NDA might be absent here: Risks are deliberately minimized at the architecture level. The freelancer works on an isolated module and does not have access to the system core, servers, or data. Therefore, a formal NDA may be redundant.

· Engagement Filter: The model indeed works as a filter. A serious specialist will see clarity, predictable payments, and respect for their time. Those unwilling to frequently share results and show progress will decline such terms themselves.

**Which Model Suits Which Stage?**

Agile Prepaid Model

· Decentralized development.

· Modular architecture, non-critical functionality.

· Goal: to test the approach and filter out unfocused contractors.

· Early-stage project development fits perfectly with the Agile Prepaid Model.

This is the fastest and most flexible way to start work. You can begin with one short iteration (sprint) of 1-2 weeks, with a clear list of 3-5 small tasks and full prepayment for each task separately. This:

1. Shows the client the contractor's actual speed and quality of work.

2. Gives the contractor confidence in payment.

3. Allows for painless termination of cooperation if something goes wrong.

Formal Agreement + NDA

· Long-term collaboration.

· Integration into the main codebase.

· Work with critical business logic or sensitive data.

· Need for maximum protection of intellectual property and clear allocation of rights to work results.

All of the above are direct grounds for choosing a Formal Agreement with a comprehensive Contract and NDA. This model ensures legal certainty, formalizes acceptance and payment procedures, and legally secures confidentiality and exclusive rights to the developed code for your company.

**If a Freelancer Has Questions. Recommendations:**

1. Respond to the freelancer, describing the difference in detail as outlined above.

2. Propose starting with a trial iteration using the Agile Prepaid Model. Describe its duration, example tasks from the backlog, acceptance criteria, and the fixed prepayment amount.

3. This is standard practice for agile development that protects the interests of both parties: the client pays for a specific result, and the contractor receives payment quickly and without delays.

If, in the future, the client wishes to involve the same freelancer in work on a more complex and integral module, it is always possible to propose transitioning to a formal agreement with an NDA.

Note: Long-term collaboration is possible in both cases. The choice of the proposed engagement model is based on the company's current organizational strategy and the tasks being solved.