Scope Creep: Setting Parameters Protects Agency Profits

Scope Creep

Smaller agencies often have a learning curve with regard to “corporate-speak,” particularly with regard to the lingo of procurement departments. A very important term to understand is “project scope.”

According to the Project Management Institute, a global association for project management professionals, project scope is “the work that needs to be accomplished to deliver a product, service, or result with the specified features and functions.”

While that seems pretty clear, there are often problems when agencies work with client personnel who aren’t part of the procurement department. Often, your client contact selectively ignores project scope, out of ego, lack of understanding of how agencies work, or simply through a desire to “soup up this project” to make points with the C-suite. Regardless, it jeopardizes the agency’s ability to deliver the project on time, on budget, and within all other parameters, to the procurement department’s dismay.  This is called “scope creep.”

Out of Control

Scope creep is the nemesis of good project management. Creep consists of “uncontrolled changes or continuous growth in a project's scope.” Scope creep occurs when the scope of a project is not properly defined, documented, or controlled. Scope creep includes changes to end requirements or applications; revised schedules; altered budgets; failure to meet deadlines for materials, resources or tasks; requesting revisions beyond those allowed for in the estimate; and do-overs arising from poor communications between client and agency.

The biggest problem with scope creep is that budget and schedules are almost never adjusted to align with the changing scope… leading to agencies being unable to bill what a job actually costs. We call this lost billing “slippage.” And slippage is one of the biggest issues agencies face in a world where downward pressure on fees, lost commissions and increased competition are depressing agency profits.

Reining In Runaway Projects

Let’s face it—clients will tend to add on to projects if agencies fail to keep them on scope. Some will do it deliberately, just to squeeze as much as they can out of the agency for the least amount of money. It’s not malicious; client budgets have grown tighter, too. But it means you need a sharp project manager and traffic management to keep an eye on the process, hours and expenditures against the budget. It also means clearly defining the scope of a project at the beginning, so expectations are managed and some parameters are agreed upon.

Defining project scope includes:

  • Setting clear objectives
  • Producing a tight estimate
  • Allowing for a set number of revisions
  • Agreeing on deadlines and responsibilities
  • Checking estimate against actual throughout the job
  • Informing clients if project scope is in jeopardy

Here is a sample Scope of Work form.

How adept are you at managing scope? Take a hard look at your project management procedures, estimating and workflow, and have a talk with account service staff about being alert to “creep.” Scope creep is a key factor in lost billings, and reducing or eliminating it can greatly enhance your profitability as well as your relations with clients .