Project Scope Creep Management: Tips, Strategies and Essentials for Coming Out on Top

August 25, 2020 Product Development, Project Management

How to Make Sure Customer Requests Don’t Eat Up Your Profits

When you bid on a new project, you make assumptions, estimate your costs, factor in some potential risks and contingency funds, and add profit. But inevitably, your customer asks for more and the scope, schedule and requirements begin to drift, increasing your costs and resource demands. If you try to account for the cost of all potential scope creep in your initial proposal, though, your price will be so high you’ll never win the business. Therefore, we need to treat scope creep as a change, and implement a process known as change management. Project change management is one of the most difficult – yet vital – responsibilities of a program manager.

But how can you successfully manage scope creep while maintaining a positive relationship with your customer? How do you implement a change management process that combats scope creep? What strategies can you deploy to ensure scope creep doesn’t hurt your bottom line? What tools should you use? Let’s look in-depth at some proven project management techniques and strategies for managing scope creep.

Why is Managing Scope Creep Such a Big Deal?

Successful project execution is a delicate balance of cost, schedule and resources, all of which are interconnected. The reason why scope creep is such a critical component of project leadership is because it is unplanned, unpredictable, and unlimited. When a request is introduced into a project, it will adversely affect one of those variables and, if left unmanaged, extensive scope or project changes can turn what was once a great business opportunity into a financial mess.

Thus, a project’s overall success or failure is often based solely on how changes and scope creep are managed from start to finish.

While a day here or an hour there is certainly nothing to worry about for most projects. some seemingly harmless requests can span weeks or hundreds of man-hours. Before you know it, accepting and absorbing a simple request in a project can significantly chew up your budget, lead to schedule delays and drain resources.

Recognizing Scope Creep

A project’s scope should be clearly defined at the start of the program. We refer to the concept of scope creep when seemingly harmless requests turn into something more.

Here are some common statements that may lead to customer-driven scope creep:

“What if …”
“We would like to try…”
“I can improve this by…”
“I’d just like to see if…”
“It would be so much better if we…”
“We forgot to mention that…”
“One thing we’d also like you to…”

All these examples present very common situations that project managers and business leaders face on a regular basis. A desire to go one step further, a curiosity to explore, or a request to make an improvement are frequent signs of scope creep you must be prepared for.

Scope Creep Is Not Always from The Customer

While a project is usually at heightened risk of scope creep at the hands of the customer or client, it is important to realize that sometimes the working team is to blame. For the same reasons as described above, if members of the project team seek to make unnecessary improvements or introduce unintended features into your product or service, it can begin to add up.

Here are some examples of how the project team can contribute to scope creep:

Labor hours spent developing extra features
Specifying more expensive materials or supplies “because they are better”
Performing extra work or ‘studies’
Troubleshooting issues related to the ‘extras’ they’ve introduced

Of course, distinguishing between scope creep – or unnecessary effort – and going the extra mile for the customer is important. Tasks requiring minimal effort that improve customer satisfaction are certainly acceptable – provided they are in fact… minimal effort!

Is Project Scope Creep Always Bad?

Up to this point, we’ve highlighted the notion that scope creep is something to be wary of. After all, extensions of work outside the contract do add cost, they do require time and typically will add resources. Thus, remaining vigilant to scope creep is essential.

However, scope creep is not always a bad thing for project managers to deal with. In fact, when you can frame it as a customer-driven “change,” scope creep can actually be a good thing and can present an opportunity.

Here are some examples of how scope creep that you negotiate as “change” with your customer is good for projects:

Customer-driven changes and add-ons offer an opportunity for you to recover costs for the change itself as well as for other cost overruns elsewhere on the project that you absorbed along the way.
If you are running behind, a customer request for added work can introduce a delay, giving you an opportunity to catch up and recover some time.
Customer requests offer an opportunity to negotiate other aspects of the project. You may agree to absorb the scope creep ‘for free’ in exchange for something else (such as receiving a milestone payment by a certain date).

Customer-driven scope creep – while something to be mindful of and manage carefully – can present opportunities to bolster aspects of the program that were not previously worth haggling over.

Strategies for Dealing with Project Scope Creep

Now that that we’ve outlined some of the challenges and opportunities associated with scope creep, let’s discuss some proven strategies for managing it.

1. Plan for Scope to Drift

Change management starts before a project begins. When you’re putting the project estimate and resource plan together, build in a contingency. Always include a buffer in your initial schedule and finances so that small and reasonable walk-in requests don’t immediately impact your profit margin.

This also gives you wiggle room in your project plans if you need to have one final round of negotiations with the customer in order ink the deal.

2. Define ‘Scope Change’ With Client at the Start

Ideally, a clear definition of what ‘scope change’ is will be written into the contract. But this is not always the case.

If there is no contractual language about what a change is, have a deliberate conversation with the customer at the start of the project and document an agreement.

Establishing clear understanding of what constitutes an out-of-scope request early on will make the follow-on steps infinitely easier.

3. Ensure Your Team Understands the Project Scope

Managing customer-driven scope creep is difficult enough, so the last thing you want is for your project team to accidentally be working against you.

Make sure everyone working on the project fully understands the project scope – what’s in and what’s out. As the project manager you cannot be everywhere. The project team members are your first line of defense to identify scope creep and potential changes that the customer introduces.

When the team knows precisely where the scope starts and ends, it will also ensure that team members do not expend time and energy on unnecessary tasks or creating those unintended features.

4. Create a Change Log

Similar to things like a Risk Log, a project schedule and meeting minutes, a Change Log is a project management tool that identifies, tracks and organizes customer requests and changes. Whether or not you elect to charge the customer for something is not important.

Rather, use the Change Log as a central repository to identify all requests – or potential changes – so that over time you don’t lose sight of them. You may be willing to accommodate little requests here and there, but seeing the list add up will help you put your foot down when the time is right.

FREE MRH DOWNLOAD: How to Create a Project Change Log – A Tutorial

Project Change Log Template
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The longer and more complex the project, the more useful the Change Log will be.

4. Pick and Choose Your Battles

Over the course of project, you’re going to get some ‘wins’ you don’t pass onto the customer – such as a lower-than-expected price from your supplier. There are also some things that just aren’t worth the struggle, such as spending two extra hours of your time to ensure the customer was happy.

For this reason, set a threshold for when you simply absorb a customer’s requests and above which you submit a change proposal. For instance, on a large, multi-year project you may say anything less than 40 hours of effort will be accepted without requiring a commercial agreement.

Negotiating changes can sometimes be difficult and time consuming – make sure it’s really worth the effort. Charging your customer or delaying the schedule for every little thing they ask for is generally not good practice if you’re hoping to get another contract in the future.

5. Train the Customer

The hardest part of managing change and scope creep is getting started. The first change proposal you submit to the customer for a scope increase is often going to be met with question and concern. Ideally, you want to choose an obvious request that’s clearly out of bounds so the customer cannot dispute it.

Additionally, through your interaction with the client, seek to understand their internal review and approval process. Doing so will enable you to better organization the information to make it easier for the customer to conduct internal discussions related to your commercial details for future scope amendments.

Over time, the customer will learn to be wary of requesting changes and studies, and will come to expect claims when future add-ons are needed.

6. Use Details to Support Your Position

There are four questions you must be prepared to answer at the time you assert there is scope creep:

Why is this a change?
Why does it cost this much?
Why does it take so long?
Are there other options?

Include evidence as to why you believe there is a change of scope. For example, reference the original Statement of Work language, and the new requirement (or the customer’s “What if…” request) to illustrate the difference. Dates, document numbers and timelines are important.

Further, like estimating a new project scope, provide a reasonable breakdown of both costs and schedule impacts to the client so they understand how the costs are determined. Just telling them their request is out of scope and will cost them $9,000 is unlikely to go over well.

Give them a basic understanding so they can appreciate the work that this change will cause (e.g. $5,000 labor, $1,000 material, $3,000 in 3rd party supplier costs, and 2 extra weeks to complete the work).

7. Establish a Minimum Fee for Each Change

In some businesses, a great way to recover the impact of scope creep is to identify a minimum fee for scope changes after a contract is signed. For instance, you may wish to say every change request is a $500 minimum fee, plus the costs of the work.

Establishing a minimum financial threshold helps you recover the little pieces of scope creep that you don’t charge the customer for, but also encourages the customer to minimize requests and studies in order to limit their own financial exposure.

8. Communicate A Possible Charge

Clients and customers will always keep asking for more, which is what makes scope creep so difficult to manage. After you’ve submitted and negotiated your first change claim, communicate potential of additional charges for future requests to solidify your boundaries on scope.

For example: “I understand what you’re looking for but that’s not part of our initial agreement and we may have to charge you for that.”

When you alert the customer that their latest request may require a commercial change, at a minimum it will give them pause.

Certainly, they may take the position that it is in-scope. However, in some cases they may elect to withdraw their request. In others, they may state it is necessary, but it will force them to acknowledge a commercial change will need to be negotiated.

By proactively communicating your scope limitations, you can more easily negotiate changes or avoid scope creep altogether.

When Faced with Scope Creep, Should You Submit a Change Proposal …or Claim?

Estimating the scope, costs and schedule impacts of a change or scope creep is normally straight forward – it’s really just like scoping a new project. But when is the best time to negotiate the change impact? What’s the difference between a change proposal and a change claim? Although they are often used interchangeably, it is important to distinguish between a change proposal and a change claim – the distinction has to do with timing.

When there is a change agreed ahead of time, it is referred to as a change proposal. Ideally, when dealing with a customer’s add-on requests, you evaluate the impact and make a proposal for the client to either accept or decline.

As a best practice for managing scope creep, it is always better to agree on change costs and the additional scope through a proposal before any work is performed. If the client doesn’t like the options, is unwilling to pay the fees or doesn’t like the schedule delays, the request can be mutually ignored. Even if there’s a dispute with the client on whether it’s part of the original scope, you haven’t spent the energy doing the work and are not at risk of doing the work for free.

By contrast, a change claim is typically a commercial claim that you seek to recover after the work has been performed. In other words, the customer asked you to do something and you went ahead and did it, only to present a commercial claim after the fact.

Here are some examples of customer responses you might encounter when trying to recover costs for scope creep after you completed the work:

“I never agreed to this price.”
“You never told me this would cost more.”
“We told you this was needed from the beginning.”
“We never signed off on this work, you did it anyway.”
“Had you told us up front, we would not have asked you to do it.”

Negotiating a change after work is performed is always more difficult and riskier. After all, once the work is performed, you lose negotiating leverage – you can’t undo the work and you’ve already spent the time and money. If you are doing the work in advance of an agreement, at least get something in writing that says the client agrees to settle a commercial arrangement at a later day,

Negotiating changes that result from scope creep ahead of time is always preferable and is the least risk option to your team. Over the course of a long and complicated project, seeking to recover costs after-the-fact is inevitable, but to the greatest extend possible, these should be avoided.

The table below illustrates the key differences between a change proposal and a change claim.

Best Practices in Change Management

Keeping a close eye on scope creep over the course of a project is critical to ensuring its success. However, when you’ve properly planned for contingencies, educated your team about the scope limitations and carefully managed the customer, scope change management can lead to beneficial opportunities for you.