Handling and Preventing Contract Scope Creep

Even experienced contract managers sometimes find the scope of their contracts growing out of control. When projects are underway, it is common for additional features to be tacked on, or for project priorities to change due to unforeseen circumstances. When this happens, project delivery timeframes and costs often rise as well.

Some contract managers and their clients try to compensate for this by keeping terms vague. However, this tends to increase the likelihood of higher costs in the process. In order to avoid going over budget, it is important to try to prevent contract scope creep when possible.

Defining Scope

One of the more significant causes of scope creep lies in a poorly defined initial contract scope. Contract scope statements need to be clearly defined and agreed upon by all parties. At times, this can be challenging because scope statements may require multiple meetings between key stakeholders, and a continued refining of project aims and goals.

Stakeholders tend to each bring their own version of the scope statement to the table. One goal of the contract manager is to collect these statements and form a single cohesive report. The final statement should be as clear as possible, and include timelines and prerequisites for completion.

List Specific Terms

When drafting the scope statement, it is important to be specific, both for the benefit of clients and for teams that need a clear sense of how to proceed. A well written scope statement should explain which team members are responsible for key action steps, who the points of contact are and include a list of important deliverables and deadlines.

Scope statements should also try to anticipate issues and include a sense of how mediation would be handled and how the project would respond to change. Generally, the more detailed contract managers can make the scope statement, the less likely the project may grow beyond the stakeholder’s or client’s intentions.

Pricing Strategies for Minor Creep

Even with a well written scope statement, some degree of scope creep is unavoidable. In order to prepare for this, contract managers should negotiate a small allowance (under 15%) of overall pricing to handle creep. While scope creep should never be desired, including precautionary provisions is a way to minimize the damage and keep teams on track.

Similarly, it is important for contract managers to work with a cushion in the budget that allows for extra hours for incorporating unforeseen contract changes. Changes may be small, but if unaccounted for, it is possible that even a minor negotiation may push the client over-budget.

Handling Change

If some degree of change is inevitable, then it is important for contract managers to facilitate this change as much as possible. Contract managers should generally work with the possibility of repeat business in mind. Contracting with previous clients is typically easier than finding new ones. With this point in mind, contract managers generally utilize a standard template of procedures to make room for change in a way that is agreeable to all parties.

This template may include a fee for contract changes, yet one that is designed to encourage balance. It should be high enough to discourage unnecessary modifications, yet low enough to allow clients to make significant changes if they truly wish to do so.

Creating a Budget

Preventing contract scope creep is generally a matter of trying to be as detailed as possible in defining project terms. While some degree of scope creep is inevitable, a small budgetary allowance and fair consideration of changes can minimize the chance that the contract grows out of control. Taking these points into consideration should allow contract managers to draft contracts that are agreeable to all parties.