Preventing Scope Creep

November 8, 2014

Handyman dog with a hammerI am relaunching this article I wrote back in 2014 because I have been made aware of a most helpful article from Toptal on the same topic.  Lots of great tips in here. Enjoy

One of the most insidious problems in any kind of project work is scope creep. The impact of scope creep is often a dissatisfied customer or a loss of profit for the vendor or both.

Either way, the situation has caused the result to be less satisfying than what was envisioned.

It is very easy to understand how scope creep happens. No complex project can be fully described in every minute detail before doing the work.

There are always going to be surprises that come up along the way in terms of unexpected delays, schemes that did not work as expected, resources being unavailable, new features requested by the customer, and a host of other changes in the description of the project.

This phenomenon should be understood by both parties ahead of time and not come as a surprise.

There is no 100% guarantee that any project is going to be completed without some change in scope. The trick to manage scope creep effectively is to recognize when a change is being suggested.

It is very easy to accommodate small or subtle changes in the specification for the project, and yet the sum of many small changes can mean a huge difference in the success of the project.

Make sure all changes to the specification are openly discussed. That will protect you at least partially, because it will notify the customer that a change from the original design has been requested.

You can then renegotiate the price or the delivery time in order to accommodate the change in scope.

If you are the customer, recognize that the vendor was not able to envision 100% of the things that needed to be done to deliver your project. In reality, changes in scope will be happening for both the vendor and the customer on every project.

Life happens, and both parties are going to have to roll with the vicissitudes that are being faced on a daily basis.

Here are 12 tips that can help reduce the stress of scope creep:

1. Ensure there is enough communication with the customer when creating the specifications.

2. Do not go into the project with preconceived notions of what the customer really wants.

3. Make sure specifications are detailed and specific, because any vague deliverables are going to be areas of contention down the road.

4. Factor in the potential for scope creep by building contingencies or safety factors into the bidding process.

5. Keep a ledger of requested changes on both sides. It is not necessary to renegotiate the entire deal for each change, but it is important to have all changes documented.

6. Plan the job in phases with sign off gates at specific milestones. If there is a scope change it can be confined to one phase of the project and not infect the entire effort.

7. Look for win-win solutions to problems. Often a creative solution is available that will delight both the vendor and the customer.

8. Avoid rigidity about the job. Make sure the entire project is constantly moving in the direction of a successful conclusion. If things get significantly off the track, call for a meeting to clarify the issues and brainstorm solutions together.

9. Keep the customer well informed about progress of the project.

10. Express gratitude when the other party is willing to make a concession. Good will is important in every project because life is a series of projects, and a poor reputation can severely hamper future income.

11. Have a formal closing to the project where each party expresses gratitude for a job well done. If there were any specific lessons learned during this job, make sure they are documented so both parties can benefit by them in the future.

12. Plan an appropriate celebration at the end of a challenging project to let people feel good about what they have done and reduce the pressure.

The best defense for stress caused by scope creep is to bring all changes out in the open. Changes can occur on either side of the equation, but they need to be made visible and the impact on the total delivery whether it be the specification or the time or cost to make it happen need to be understood along the way.

The key objective is to avoid disappointing surprises that result from lack of communication between various stakeholders throughout the process.


Do You Pad Your Numbers?

March 29, 2014

Tax calculator and penWe had an interesting discussion in one of my MBA classes last week. I asked the students to discuss the practice of padding estimates.

At first, most of the students said it was a wrong thing to do from an ethical perspective. One should tell the truth at all times and not play games trying to outwit the system.

On closer inspection, it became obvious that adding contingencies to estimates is not only ubiquitous, it is prudent business. Still, I believe there are some precautions to be followed, and this article is for the purpose of discussing these.

We are all familiar with the manager who is reaching the end of the fiscal year trying to encourage people to spend the budgeted money on anything, justified or not, just so the next year’s budget would have less chance of being cut.

It is a real trust buster for a frugal and careful boss to throw a lavish year-end party in an obvious attempt to somehow spend the full allotment. People see through the ploy, and it adds to the feeling that we are “playing games with upper management.”

Padding estimates for project work is so common that a project with no uplifts is suspect. The honest approach to reducing risk of overspending on projects is to allow a “contingency” line in the budget.

This practice recognizes that there will be several surprises during the course of a project, and although some surprises may be happy ones, my experience is that about 70% of them mean spending more than the original plan.

Stretched

 

 

 

 

Some managers advocate no contingency line item, but I think that is a dangerous practice because it encourages covert padding.

As the conversation became deeper, one individual asked, what happens if you are the only person in the pack who is not padding and everybody else is including contingencies either overtly or not.

This is reminiscent of the “Prisoner’s Dilemma” experiment, where the optimal result occurs only when individuals elect to cooperate with each other and trust the other person will cooperate with them.

In this case, upper management needs to set the tone of no padding of budgets. Of course, since padding is by nature a secret event, it usually becomes a cat and mouse game.

Top managers unwittingly contribute to padding when they take a look at submitted budgets and demand a 30% cut before approval. Lower level managers quickly get the idea that in order to have adequate funding to do the job, they need to submit an initial budget that is inflated by at least 30%. That kind of escalation goes on in projects every day.

There are some mechanical systems invented to reduce the tendency of padding budgets. Zero-based Budgeting is one such technique.

This is where you start with a clean sheet each year regardless of the former pattern of spending. The technique sounds good on the surface, but it normally does not last longer than one cycle, just ask Jimmy Carter.

Reason: Even though a zero-based budget starts out with a clean sheet, managers have their historical files for comparison, so ultimately the good intention to start fresh breaks down.

The best antidote for padding is a culture of trust. If top leaders begin to stress that we are telling the truth here and not playing games with each other, then things may begin to change.

It may take several cycles, and top leaders need to be incredibly patient with people and consistent in their message, but it is possible to get to a real situation on budgeted funding.