How to keep your customer and your bottom line happy

How to keep your customer and your bottom line happy

One of the most difficult tasks a project manager faces is serving as guardian of a project’s scope. Making sure that the team delivers the agreed-upon features is hard enough. But if he or she doesn’t succeed in policing scope creep, they will never bring their projects in on time and on budget.

If you’re not familiar with the term “scope creep,” it works like this. Let’s say a real-estate developer contracts with your excavating company to dig a ditch. In your proposal, you state the specifications for the ditch you are proposing to dig. The developer accepts the bid and the job moves forward. But as it nears completion, the developer has a new idea. The ditch really needs to have a little more digging at one end. It also needs to be somewhat deeper at the other end to allow for drainage.

This is a discussion that happens in every kind of project we’re familiar with. In most cases, customers don’t intend to chip away at your project’s profitability. They merely want to get the best possible result from their perspective. This is just as common in home-bathroom remodeling jobs as it is in the complex machines that companies like Setpoint build for its customers. You could call it Beach Boys syndrome: everybody begins singing “Wouldn’t it be nice…,” just like the old Beach Boys song.

The only sure way to inoculate your project against Beach Boys syndrome is to analyze and define every out-of-scope wish-list item and put a firm dollar figure on each one as you go along. Sometimes the process is cut and dried, other times you must negotiate. If you do have to negotiate, do it right away. The worst thing you can do is save up all the change orders as the project goes along and present them to the customer at the end. If you do that you are likely to face a serious backlash.

With scope creep inevitable at some point, there are a couple of things that can be done to help everyone get out without negative feelings and negative profit margins. The first is to track and treat change orders like a separate project. Doing this helps isolate exactly where the inevitable problems are coming from when issues with project budget and time frame arise.

The second thing that must be done is updating the client weekly of the “change order tab.” This helps the customer understand their responsibility in making project changes- namely their financial responsibility. If your project tracking system lets nothing slip under the radar, you either get paid for the extra work or the customer declines to pay and the work isn’t done. There are really no other options when all the facts are out in the open.

Scope creep is an inevitable reality in the project-based line of business. But by setting clear lines to the customer about how change orders work, tracking those changes as a separate project, and informing the customer weekly of the “change order tab,” you can help keep scope creep in check and your projects profitable.

Source: Project Management for Peofit by Roger Thomas, Joe Knight and Brad Angus, together with input from Joe Cornwell and Joe Van Den Berghe from Setpoint Inc.  Setpoint has a 25-year history of successfully designing and implementing custom rides and attractions for the top amusement and theme parks in the world.

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