HOW TO CURE SCOPE CREEP
If there’s a common operational problem faced by the majority of design and professional services businesses, it’s the difficulty of completing jobs within the quoted hours. If you look regularly at these sort of businesses, it comes up all the time.
Sometimes it’s a matter of managing staff time correctly. Sometimes, it’s about quoting accurately in the first place.
But sometimes, it’s about scope creep: the tendency for a job to be extended by the client (and occasionally by staff over eager to please) to the point where the quoted price no longer covers the time needed to complete the job. When this happens, profit diminishes, and if the creep continues, disappears. After that point, the job becomes a net cost and you would have been better off saying no to the job in the first place.
Scope creep can be a difficult one to tackle, because it’s ultimately about customer relations. The ‘look, we’re now beyond what we originally quoted on’ conversation is a tough one, and the lives of both client and supplier would be easier if it never had to take place.
Consider a few of these methods for stopping the creep in its tracks:
- Have a well drafted service agreement in place, signed by the client. This should clearly specify that you’ll charge for additional hours outside the scope of work. This is a bedrock document for you to rely on if needed.
- Specifically mention in the quote what happens if the scope blows out. That way the possibility is flagged up front.
- Where additional tasks are requested mid job, point out to the client that they are outside the scope of work. Do this when the requests are made, not once the hours have run out. It makes for a much easier negotiation.
- Offer the client alternatives to either downing tools or charging more money. Specify what you can deliver for the original quote. Provide clear pricing for each additional element.
- Maintain good client relationships in case you have to have the conversation about additional hours. Again, it’s much easier if you’re on pleasant terms.
- Develop good time management and job tracking skills. It’s not the client’s fault if you take longer to do the work than is necessary, or if your processes are inefficient.And never ever say these words: “well, the client didn’t know what they wanted to begin with”. It’s your job to clarify the brief and understand the client’s needs, even if they are unclear of that themselves. You’re their guide through this process, not the other way around.
There’s more on this topic in our new online resource ‘Top Tips on Cash Management’. It’s free and along with a range of other free stuff, is available here.
If you’ve got issues in your business you don’t seem to be able to get on top of, why not get in touch? Not only do we provide a full suite of bookkeeping and tax services here at Generate, but we’re also able to help with business coaching, strategy workshops, business plans and much more. You name the problem and I’m sure we can help.