Scope creep ... not necessarily a bad thing
How to look at those insidious changes in a more positive light, and turn a profit on them, too.
We've all heard horror stories of a project's scope growing out of control, and more than a few of us have lived through such experiences. Timing gets later and later, costs keep growing, management is unhappy, and customers are dissatisfied. Essentially, more work is added to a program than originally planned for and the project cannot absorb it without missing one or more objectives (or passing up opportunities). In the latter stages of a project, when changes require modifications to hard tools or brick and mortar, scope creep is obvious. But in the early stages, a project's scope can easily grow through changes in customer wants, miscommunication, poor assumptions and successive minor additions to design. Even though scope creep can be devastating to a project, the pressure to increase the scope of a project will always be there and, if properly managed, provides significant opportunities for the performing organization.
Scope creep can be defined as the slow, insidious growth of a project beyond its original work content and objectives. Several key indicators put up “red flags” when scope starts to creep. But because these same “red flags” can also be indicative of other problems in the project, take care when reaching a conclusion as to the root cause of a particular condition.
One of the key indicators is, of course, project timing. When timing starts to slip for no identifiable reason, growth in the scope of the program should be suspected. Similarly, if the project budget starts to overrun without other identified reasons, you should determine if more work is being done than was originally agreed to and budgeted.
Change = Opportunity
Major changes in project direction are usually well recognized and accounted for, but day-to-day interaction with your customer results in many small, compounding refinements to the project direction. Properly recognized, and properly handled, these can represent an opportunity for your organization to increase sales, build a reputation, and solidify relationships:
- Sales (and profits) can be enhanced by adding content to your final product. If addressed appropriately and incorporated only after assessing its impact on the rest of the project's objectives, every change represents a pricing opportunity.
- Some changes, while they may not provide a direct product pricing opportunity, may well provide the chance to demonstrate to your customer and other potential customers the capabilities of your organization. This positions you for future business with the current customer and also enhances your company's reputation in the industry. Such changes must be well evaluated in terms of the cost versus the anticipated benefit.
- Even at increased cost, absorption of some changes may benefit the development of a long-term relationship with your customer. Helping your customers get their jobs done usually helps you get your job done! Again, any such changes need to be evaluated in the context of the present and projected long-term relationship.
Change Can Drive You Nuts
Among the primary sources of scope creep, one of the clearest is the continual refinement of product direction. In the automotive industry, projects are often initiated with very minimal definition of the final product. Even when a fairly good initial definition exists, the product evolves through the development process with successive additions and changes to design features, colors, materials, option complexity, and so forth.
Assumptions regarding the development process and the relative responsibilities are also refined as the project proceeds. As confusion about who is responsible for various aspects (e.g., testing, documentation) and to what level each task needs to be performed (e.g., types of tests, level of drawing or CAD detail) is clarified, it impacts the performing organization's ability to achieve its internal and customer objectives.
Large customer organizations with various supporting departments may not develop requirements in time to support the initial definition of work. Yet these requirements will subsequently be universally applied to all suppliers or contractors. Because the requiring department doesn't deal directly with the suppliers in a timing and pricing mode, these additional requirements may be issued as a decree, leaving others to sort out the implications.
If the customer organization cannot complete their tasks on time to support you, it may be necessary to “help them out.” Taking on additional tasks because it's the only way to keep the project moving at the required pace builds relationships and demonstrates capability, but, unfortunately, it's difficult to convert such changes into additional sales.
Whether major shifts in direction or minor refinements to the present course of the project, changes should be implemented in the least disruptive way possible, retaining the maximum opportunity to meet project objectives (either original or revised). This means complete evaluation of the impacts on the total project, not on just the immediate task. A review of project-level cost and timing is, of course, a first step, but the implications to project risk must also be considered. For example, in the automotive industry, where vehicle builds are scheduled years in advance and thousands of suppliers are all working to the same deadline, a change to your project schedule that consumes all available schedule contingency prior to the vehicle builds should be looked at as a substantial risk. Missing a vehicle build is not an alternative, so eliminating schedule contingency increases the risk that compression costs (overtime, expedited freight, priority rates) will be needed if any critical tasks exceed their duration estimates.
When dealing with these changes, don't overlook the impact on the project team. Frequent or significant changes in direction or tear-ups in design have a demoralizing effect on all the people involved. No matter how dedicated, a team's energy, creativity and enthusiasm wanes when they begin to feel they have completed the same task three or four times. Factor in the human aspect when considering changes of any level.
So much for some of the causes, effects and opportunities of scope changes; now, let's examine some guidelines for controlling scope change and implementing scope creep as an opportunity and not a risk.
Control is the Key
First, it's vitally important to establish a written, detailed baseline. This baseline should encompass both the final products and the work process that will be used to deliver that product. In some industries this baseline would be determined by a quotation package or a formal contract. In the automotive industry, under the present philosophy of early supplier selection, the product may not be well defined at the time that you are selected as a supplier and expected to commit to some form of cost and timing. This puts more pressure on you to delineate what you intend to provide and all the assumptions used to develop your costs and timing. Although this baseline will probably not represent the final product and process, it does represent the starting point or “stake in the ground” from which all scope changes can be tracked.
Your customer needs to be well informed of the content of your baseline, as any discrepancies between what you think you are selling and what they think they are buying need to be resolved as early as possible. A joint agreement on the “stake in the ground” is crucial to assure appropriate incorporation of subsequent changes as well as to prevent major disagreements over pricing at a later stage in the project.
When establishing the baseline with your customer, also establish how the baseline will be changed. All changes should be documented in a format acceptable to both your own organization and your customer's organization. This reduces the total workload necessary for filling out multiple forms for the same change and also eliminates a potential for translation error. The format should be individually tailored to the particulars of your own organization, the customer's organization, and to the project. Thus, though some differences may exist from project to project within your organization, the overall communication on a particular project will be maximized. Even though additional, more formal documentation may be required later (such as purchase order modifications), a joint direction and communication document maintains the pace of the project.
A change document should include all significant factors. For most projects, this includes items such as project costs, investment in tooling and facilities, product costs, and timing. However, specific projects or industries may have other requirements that must also be closely tracked (product weight, environmental concerns, risk levels). By including all of the significant factors (with justifications), the product change documentation becomes a stand-alone document that requires no further explanation. All variances should be measured against the present approved level of the baseline.
When defining the change documentation format, the individuals with the responsibility for authorizing the change must be identified. This authority may be different depending on the nature or level of the change, and may mean that more than one individual from each organization must be involved. It is imperative that authorizing individuals for both organizations acknowledge (sign) the change document so that the document can be recognized as official direction.
After approval of a change, two significant tasks must be completed. The first is the updating of the baseline to incorporate the changes. This updated baseline is then used as the basis for any future changes. All change documents should be retained so that the project change history can be traced from the initiation of the project to the termination, and post-project analyses can use this history as a guide for future similar projects.
Finally, the change must be communicated to all parties involved in the project so that the entire team is working to the same direction. Slow dissemination of direction changes causes confusion on the project team, with subsequent loss of efficiency and morale. Everyone needs to be working on the same thing, with the most up-to-date direction.
Changes to the work content and objectives of a project, whether small creeping changes or large shifts in direction, are to be expected. With careful attention to detail, changes can be implemented as opportunities for the performing organization. Recognizing the sources and impact of changes and instituting appropriate controlling measures ensures that a project meets all of its objectives.
S. Craig Keifer, PMP, is employed at Prince Corp. in Holland, Mich. He has worked in the automotive industry for the past 22 years, and has been a program manager since 1985.
This article was first published in the October 1995 issue of the Western Michigan PMI Chapter Newsletter, On Target.
PM Network • May 1996