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Evan McLaughin 1 article
Residence: CA Scarborough, Ontario, Canada
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The Unified Project Management Dictionary

Actual Cost

The incurred cost for the work performed on an activity during a specific time period. Actual Cost of a project represents the true total and final costs accrued during the process of completing all work during the pre-determined period of time allocated for all scheduled activities as well as for all work breakdown structured components.

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How to stop Scope Creep, Part 1

The mortal enemy of all project managers, our kryptonite our ongoing antagonist; Scope Creep. While I can make several statements on how to reduce this dreaded cause of project overrun at the end of the day it always seems to rear its ugly head. Well with all that being said lets delve right in and start the journey on battling scope creep.

The sales team is the first in to communicate with the client so lets explore this key area first. I have noticed over the decades that some sales reps will over promise services and then fail to insert them into the sales contract so as to ensure the sale passes the job feasibility assessment.

We also have unqualified sales people selling products they do not fully understand, when this occurs the builder and the client can end up suffering greatly. We need to thoroughly vet our sales people and give them the training they need to get their job done efficiently.

There are times when a client does the selling to the sales person instead of the other way around, when this happens the client can sell their project at an unrealistic price. Selling to the seller is a tactic that savvy consumers can use to get incredible pricing from sales people. We are either selling or being sold, who is doing what is determined by the strength of the person doing the selling. So without even knowing our sales people can get roped into this situation and close a sale that they have no business closing.

Having sales people develop comprehensive build scopes may not be the smartest thing for your firm as they are not builders. Taking their scope and expanding on it once the job is closed is also not a good idea. I would suggest having a site review with one of your senior PM’s to go over the project and build out a proper scope that will be inserted into the contract.

Another culprit for creating scope creep is bad scheduling. When a job is promised to be completed to quickly because a client has a deadline they are hoping to meet, this will usually cause unwanted expenses. If extra labour or trades are needed to finish a job, you are going to endure uncalculated expenses that would not normally happen in an ordinary build situation. Some may say that finishing the project faster is a benefit but once a cost analyses is done on a regular priced job being completed in a compressed time schedule you will quickly realise your errors. Unless your firm is set up to complete projects at an accelerated rate, you are almost certain to lose money.

The client will presume the sales person understands the build process and has included everything that is require to complete their project in the contract. Unfortunately many times the sales rep misses things and the client is left with several change orders. Although these C/O’s may seem to be generating extra money for the firm they usually are not. Sudden change orders will add time to the build because the client normally takes time on deciding how they want to proceed. Also unexpected C/O’s throw off the work flow and cause confusion between the trades and management. Further more this can cause customer dissatisfaction which can lead to delays in payment and decisions. When a project drags on to long it creates additional expenses to the firm. Short days, re-allocating trades and having to rebuild and move things because things where missed in the scope will hurt your profit margin.

Once a project has started it is a good idea not to have the sales person communicate with the client regarding build matters. The sales team will sell and promise things that can not be done at the time they are being asked. This may not happen maliciously but from a lack of understanding the build process and where the build team is currently at with the build. A large part of gold plating/scope creep is verbal communication that has not been properly documented and passed on to the correct stakeholders. The sales team usually does not meet with or communicate with the build team so errors are inevitable if the two are involved in a project at the same time.

Closing a sale is not an easy process and if the sales person is under pressure to close because the company needs sales for cash flow or the sales person personally needs cash then things can start moving sideways quickly. This is why a thorough feasibility before a close is good but many companies have unqualified people doing that as well. I would suggest hiring a seasoned PM that has field experience to go through all sales contracts before they are signed. Never take the word of your sales people, not that they can not be trusted but they have a different agenda than the PM’s and the builders.

In conclusion for part one of this series on scope creep I would recommend that all communication between the client and the sales team is documented with follow up emails. Have all pre-construction drawings and scope thoroughly reviewed by qualified people. Make sure the client has been educated on the build and what will and will not be included or happening on their property. Insert a change order clause in the contract that lets the client know that change orders will change the duration of the project and that payment for change orders are due before the change order begins. This synopsis on scope creep may seem to be heavily pointed towards the sales team but that is because they are first in to communicate and deal with the client. In following articles I will expand on how all members of the firm are responsible for scope creep.

Published at pmmagazine.net with the consent of Evan McLaughin
Source of the article: {Linkedin} on [2019-02-17]