We’ve all heard our project managers utter the exasperated phrase, “How did my project get so fat!?!” And they make the same face we all do. That look of surprise, when all of a sudden our favorite pants or shirt are too tight.
How could this have possibly happened? What went wrong?
I call this the “one little donut” problem. One little donut with breakfast, a small fries with lunch, a little sliver of cheese cake with dinner and before you know it, you can’t fit into your favorite pants.
For Project Managers, it becomes too many “servings” of scope creep. It is too much effort to track the extra hours and they want to do the customer a favor so some things are thrown in. Or they made a mistake and just fixed it without telling anyone or documenting it. Now their project doesn’t fit inside its original budget. It wasn’t just one “little thing” that did it. It was multiple little things. And eventually a bunch of those little things add up to a big thing and that big thing is significantly reduced or negative project margins.
Here are three important steps to putting scope creep on a diet!1. Tracking changes takes too much time.
Sure, on the front end it takes a little more time. You have to create a detailed change order quote, discuss it with your client, get their approval and then add it to the project plan. But at least you know in advance what the impact is on margin and you have an audit trail and accountability. The alternative is to do the reconciliation on the back end to determine why the project margin is so low, what happened that caused the project margin decrease, what was included in the change, and who authorized the change. It takes a lot less time to follow a proper change order process on the front end, than trying to figure out what went wrong on the back end (if you can back track it at all).2. Aggressively managing change requests reduces the risk of a “super-sized” project.
Many people struggle with managing scope creep because they don’t want to upset their customer. But if a significant change is requested, why wouldn’t you propose a change order? “Throwing things in” is essentially the equivalent of discounting your project after the fact. And once you’ve thrown in the first item, customer expectations have been set, so now it’s going to be even harder to introduce subsequent change orders, not easier. Among all the alternatives, the customer chose your solution because it represented the most value. Nothing has changed just because you’ve started the implementation. If you’re going to be adding more value, you should be charging for it. A formal change order process while letting the customer know that you continue to see value in what you offer and anything “extra” has value as well. Think of the change order process as the equivalent of your weigh scale, telling you that there’s a cost associated with “super-sizing” your lunch order.3. Excluding internal change orders is like saying the Coke you received instead of the diet Coke you ordered has the same calorie count.
Perhaps you under quoted, or the wrong part was spec’d, but the customer doesn’t know, so let’s just fix it and move on. Not having an internal change order process is one of the number one causes of disconnects between expected margins and actual margins. A change order should still be created, and it should still be approved, just internally instead of by the customer. This approach also allows you to cycle implementations lessons learned back into the quoting process so the mistakes aren’t repeated. They gave you the wrong Coke – don’t just shrug it off because it wasn’t your fault. Track what the impact is on today’s calorie count so that you’ll know next time whether it’s worth the hassle of fixing it, or whether you can live with the consequences.
At the end of the day, everyone would like to eat whatever they want and never gain any weight.But everyone agrees, this approach is not likely to help you achieve your target weight goal. As your company grows, one of the most important decisions you’ll make will be around formalizing processes and procedures to ensure that your company consistently produces a positive result. Putting a formal change order process in place will be one of the most important decisions you will make in this regard. Having one or not having one is often the difference between consistently hitting your project delivery schedules and project margins, or being all over the map, with no way of knowing how to get yourself back on course.
When a customer chooses to do business with you, they are doing so because they see the value in what you do. That value does not go away in the transition between the sales and delivery process. Scope creep happens because a formal change order process has not been implemented. Companies try to get away with conducting a manual reconciliation after the project closes but we all know that rarely happens.
Much like staying on your diet, it’s all about the effort you put in at the front end and then diligently tracking your progress.
• Track the changes up front.
• If you add more value once the project starts, charge for it.
• Track exactly how things didn’t go as planned, so they can go as planned next time.
Follow these steps and you and your projects will stay lean and healthy. Learn more about service automaton by Promys.
Jim Barnet, Promys