Project Scope Creep
Have you ever had the feeling that your outsourced tech project would never stop growing? Have you ever felt like it’ll never be finished? Your project may be suffering from “scope creep.”
“Scope creep” is an insidious growth or change in your project which happens while you’re working on your project. It typically involves adding or modifying features as a project evolves. It can increase costs, require time-consuming rework, delay your launch date and fray tempers.
Scope creep is bad enough when it happens on a purely in-house project. The worst case scenario is that you’ll have co-workers at each other’s throats. (Of course, depending upon whom is at whose throat, you may find it to be good spectator sport.) When it happens on an outsourced project -- particularly one with a fixed price -- you could be looking at an ugly legal dispute.
Define Your Project
Scope creep can occur with fixed price deals as well as contracts calling for payment on an hourly fee basis.
With an hourly fee deal, ugliness can rear its head if the project goes significantly over budget. The customer will often feel like the vendor low-balled them on the budget. The seller of the services will typically contend that as the project developed, the customer wanted more than she originally requested -- scope creep.
With a fixed-price contract, scope creep can be an even uglier situation. Here, you may have a customer arguing that the fixed price includes something that the other side thinks is outside of the scope of the fixed price.
In both cases, the beginnings of the solution are the same. You have to define the scope of your project carefully.
I’ve done enough of these deals over the years to know what your reaction is. You’re thinking that this sounds great, but that it’s unrealistic. You’re thinking that I’m living in a world where there are 60 seconds in a minute and 12 months in a year.
Actually, I’m not. As a tech lawyer, I live in your world with compressed time that we call “Internet time” where my clients need to move at “Internet speed.” I know that your product cycles are short and the competition always seems to be moving faster than you.
I also see more deals than you do. It’s the nature of what I do which causes me to have a bigger database of experience than the typical businessperson.
While your business life is mostly about routine ordinary course of business tasks with an occasional big project issue, I tend to live a life where I only see larger and more complex deals. Nobody hires a computer lawyer to help with the contracting for a PC purchase at a local computer store.
Among the many things that my experience has taught me is that the old cliché (predates the Internet) “Haste makes waste” still applies even in an Internet speed world. If Internet time drives you to the exclusion of other factors, you will make more mistakes along the way. The likely result is that you’ll be farther behind the time curve than if you had moved at a more deliberate pace.
You simply must take the time to define the scope of your project. This definition must find its way into your contract and you must reach a consensus -- both internally and with your vendor -- that this defines the scope.
While Internet speed makes it tempting to march into a project with a loosely defined scope, you must resist the temptation. If you don’t, you’ll pay dearly later in aggravation, lost time and money.
A good agreement for most tech projects will usually include a “change order” procedure. “Theoretically,” the change order procedure is the only method by which the project scope is supposed to change. In reality, people make changes all the time without formal change orders -- although they shouldn’t.
“Theoretically,” as used in this context, has the same meaning as when you say, “Theoretically, only Congress can declare war.” Of course, as we know, Congress hasn’t done that since 1941 and we’ve fired a few bullets in anger since then. Likewise, although it should never happen, let’s just say I’ve seen a few contracts evolve without change orders.
The Right Way
A good procedure typically involves a written request for a change, a period for the other side to consider the request and a requirement that the change, if approved, be documented and become part of the contract. If your agreement does it right, it will require that the change order, as approved, take into account not only the price change, but the change in the timeline and impact on other aspects of the project scope.
A good change order procedure can help control scope creep by requiring formality. Often, scope gets out of hand because it’s too easy to change. It’s too informal.
This happens because people often want to appear friendly, informal and cooperative. While these are certainly all great attributes, scope creep can be a consequence of these wonderful traits. You have to stay disciplined because every change has consequences in money and time.
One of the most common mistakes I see my clients make starts with the role they give their tech lawyer. They see him as a part of the team during the negotiation and contracting phase, but then end his involvement during the implementation stage. The feeling seems to be that implementation is a completely non-legal stage that can be run by business folks without legal consultation.
That’s wrong because what they’re implementing is a project governed by a legal document. It’s ironic that they’ll put tremendous effort to craft a legal document that satisfies the parties, but then put the document along with its chief architect in the drawer as soon as they start building whatever it is they’re building.
It would be like going to an architect to construct an office building, paying lots of money for her to draw up plans and then putting the plans aside and never consulting with her during the actual construction.
A good tech lawyer will impose discipline during implementation. That means adhering to the agreed upon specifications and requiring that the letter of the change order procedure be followed for all changes.
After hearing this, you may be thinking that this level of formality will muck up your project while keeping your lawyer happy. That’s simply wrong.
What it will do is discipline everybody into full and frank communication. There will be no informal trade-offs, additions, subtractions, price increases or whatever.
Scope creep is a difficult thing to fight. It’s an almost inevitable result of complex projects. The buyer of the services feels like they’re just tweaking the project. The service provider feels like the project has become a never-ending nightmare.
Honest people can and do honestly disagree. In fact, most business litigation is about honest people honestly disagreeing. You minimize the likelihood of you ending up in this type of honest disagreement if you insist on formally documenting any changes in the deal.
Nice people do have lawyers and contracts, and do insist on formal change orders. More importantly, so do smart business folks.