Scope Creep Management For Professional Services Firms - Understanding The Risks & Gaining Control
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One of the key project management concerns worrying professional services firms is “scope creep” management, according to Deltek’s recent ‘Insight to Action’ report. According to our research, 71% of respondents globally were not paid for all change requests, and 39% named ‘well defined scope’ as their number one project management objective for the next five years.
Professional Services Trends Report 2018
What Is Scope Creep?
Scope creep can be defined as the continuous or uncontrolled growth of a project’s scope after it begins, and it presents a major risk to professional services firms because it adds to the project cost.
While it’s true that costs and resource needs have always changed over the course of a project, Architecture, Engineering and Consulting firms are facing new business pressures. In this challenging operating environment, it’s more important than ever to get a handle on scope creep to remain competitive and profitable.
Why Do Firms Allow The Scope Of A Project To Get Out Of Control?
Scope creep can occur for the following reasons:
- The project is not properly defined, documented, or controlled from the outset;
- There is weak project management across its duration;
- There is poor communication between parties involved, or
- There is an absence of necessary controls.
The fundamental cause is poor documentation: the scope is not sufficiently comprehensive, in black-and-white terms, that have been agreed and signed off by the client.
In addition, many firms don’t have adequate processes in place so that – if the scope is revised and/or changed after work has commenced – they are covered for the extra time and outputs. If scope creep does occur, it’s important to work with the client to agree on revised terms, including how any changes or new requirements will be incorporated into the agreed scope– and charged for – before they are acted upon and fulfilled.
In essence, scope creep can be reined in and adequately managed only if professional services firms have the right systems and processes in place to handle it.
What Are The Business Costs Of Scope Creep?
In the past, when profit margins were higher and customer loyalty was more easily relied upon, it was easier for firms to absorb the negative impacts of scope creep. But in today’s operating environment, scope creep can quickly gnaw away at your firm’s bottom line. Left unchecked, it can have many negative consequences including:
- Erosion of profit margins;
- Inability to resource the project with sufficient time or the right talent;
- Putting the firm at risk of being perceived as inefficient by the client, leading to loyalty issues; and
- The unplanned and unpaid diversion of time and resources, which inhibits the firm’s capacity to add other projects to their forward pipeline.
'scope creep can quickly gnaw away at your firm’s bottom line'
Dealing With Scope Creep - What Can Professional Services Firms Do To Lessen The Risk?
Start by devising a work plan that outlines all of the necessary steps required to satisfactorily deliver the project, considering the scope, schedule, and costs of the job.
Break down the project into manageable chunks. Including deliverables, milestones, tasks, deadlines and processes. That will help key stakeholders understand the defined scope, and to see where any new or changed requirements might slot in.
This “modularisation” or agile management of projects is increasingly deployed by professional services firms in sectors such as advertising and consultancy to rein in project deviation and ensure timely delivery of tasks.
'Start by devising a work plan that outlines all of the necessary steps required to satisfactorily deliver the project'
Once your transparent plan is agreed upon by the client, it’s easier to make clear the implications of any changes, should they arise, and how they will impact delivery schedules and project costs.
Of course, it’s necessary to continuously refer to your plan throughout the project, making updates and adjustments as necessary.
Establishing such rigorous systems from the outset will simplify the process of monitoring project progress, charging for time, planning resources and managing project information such as contracts, Statements of Work (SOWs) and invoicing/time/billing.
If your professional services firm is one of the two-thirds worldwide that isn’t currently being adequately paid for change requests, now is a good time to overhaul your internal systems to reduce your exposure and risk.
Doing so will enable your firm to continue to efficiently deliver projects while maintaining your professional reputation and ongoing profitability.
2018 Industry Report
Professional Services Trend Report
- Agency Workflow
- Architecture & Engineering Firms
- Business Intelligence
- Change Management
- Cloud ERP
- Consulting Firms
- Deltek Customers
- Financial Management
- Job Costing
- Legal Sector
- Marketing & PR Agencies
- People and Culture
- Professional Services Automation
- Professional Services Industry
- Project Information Management
- Project Management
- Resource Planning
- Talent Management
- Transformational Trends