Many projects suffer from scope changes. I suspect that projects with no changes in scope are a vanishingly small minority. Certainly in the IT (Information Technology) world, the scope tends to grow throughout the project, as the clients realize how much they forgot to include in their original requirements.
How does a small consulting business protect itself from scope creep? There are four main routes:
- Iron-clad minimum payments
- Partial payments for partial projects
- Work orders with new costs for new deliverables
- Open-ended retainer fees so clients pay for dithering
Here is a little more information on each route:
Iron-Clad Minimum Payments
These minimum payments reimburse the consultant for the upfront time and effort of bidding. These are usually invoked if the client “cools off” after signing a contract but before any deliverables are completed or approved.
Another name is the up-front “retainer fee”.
Partial Payments for Partial Projects
Itemize the deliverables in the contract, project plan or scope of work. Ensure, of course, that these are included in the signed-off contract even if they are found in separate documents.
This is something like your automotive repair shop’s itemized invoice: list everything and price everything.
Then charge for what you actually delivered, in case the project is terminated before completion.
Work Orders with New Costs for New Deliverables
This item truly addresses “scope creep”. When the client asks for more…even if it simply extends an existing item…get the request in writing and haggle out the price.
This does not apply if the consultant forgot to include something in the original quote. But if the client makes the request, ensure it is priced out fairly.
If you decide to provide the extra service at no extra charge, that’s your call. Just be sure your client notices that it is an extra item.
Updated March 25th: Here is an example. One client’s ghost-writing assignment suffered from scope creep…adding a chapter to a small book, then spinning off an article, and then re-working the article. I called him on it; he replied with an apology and an offer to up the payment. So even though the original contract did not include these clauses, this particular client recognized what was happening and made good. It would have been wiser to put all the conditions into the original contract, but it is still possible to make a poor situation better.
Open-Ended Retainer Fees so Clients Pay for Dithering
This item solves the problem of a client who cannot make a decision. “What colour would you like? Do you accept the new design? What should go there”?
Include a penalty, whether daily or monthly, so the client knows that their time is costing them money. You have to keep some slack in your schedule to respond when they ultimately do contact you. Your cash flow is being harmed by their delay.
Calling it an “on-call retainer” might make it more palatable in the contract. Do explain it during your initial negotiations. It can keep you afloat while your client treads water.