How do you manage scope creep and change requests without hurting your margin?

Scope creep and change requests are inevitable in any project, but they can also erode your margin if not managed properly. As a project accountant, you need to balance the expectations of your clients, stakeholders, and team members, while keeping track of the costs, revenues, and risks involved. In this article, we'll share some tips on how to handle scope creep and change requests without hurting your margin.

1 Define the project scope clearly

The first step to avoid scope creep is to define the project scope clearly and document it in a scope statement or a contract. This document should specify the deliverables, objectives, assumptions, constraints, exclusions, and acceptance criteria of the project. It should also outline the roles and responsibilities of each party, the communication and reporting methods, and the change management process. By having a clear and agreed-upon project scope, you can reduce the ambiguity and confusion that often lead to scope creep.

Add your perspective

Jennifer Ottosen, CPA

Change Management and Automation Leader
Report contribution
Without a clear outline, people can lose focus on the key objective. Also, if everyone know’s their role, people will work more efficiently.

Like

2 Communicate and negotiate effectively

The second step to manage scope creep and change requests is to communicate and negotiate effectively with your clients, stakeholders, and team members. You should keep them informed of the project status, progress, issues, and risks regularly, and solicit their feedback and input. You should also be prepared to negotiate and compromise when change requests arise, and evaluate their impact on the project scope, schedule, budget, and quality. You should always document and confirm any changes in writing, and update the project plan and the scope statement accordingly.

Add your perspective

Jennifer Ottosen, CPA

Change Management and Automation Leader
Report contribution
When this is done, you also create buy in from the team. So if there is a big change that the organization is implementing, very often, people will resist but if this is done, most likely, people will accept the change because they have a better understanding.

Like

3 Track and control the project costs

The third step to protect your margin from scope creep and change requests is to track and control the project costs. You should use a project accounting software or system that allows you to monitor the actual costs versus the budgeted costs, and identify any variances or deviations. You should also use a cost management plan that defines how you will estimate, allocate, and control the project costs, and how you will handle any contingencies or reserves. By tracking and controlling the project costs, you can avoid overspending and undercharging, and ensure that your margin is aligned with your goals.

Add your perspective

4 Review and adjust the project revenue

The fourth step to maintain your margin despite scope creep and change requests is to review and adjust the project revenue. You should use a revenue recognition method that matches the progress and completion of the project deliverables, and reflects the value and quality of your work. You should also review the billing and invoicing terms and procedures, and ensure that they are consistent with the project scope and the change requests. You should also consider adjusting the project revenue if the scope or the quality of the project changes significantly, and negotiate with your clients accordingly.

Add your perspective

5 Manage the project risks

The fifth step to safeguard your margin from scope creep and change requests is to manage the project risks. You should use a risk management plan that identifies the potential risks that could affect the project scope, schedule, budget, quality, or margin, and analyzes their probability and impact. You should also use a risk response strategy that defines how you will avoid, mitigate, transfer, or accept the risks, and how you will allocate the resources and responsibilities for each risk. By managing the project risks, you can reduce the uncertainty and volatility of the project outcomes, and enhance your margin stability.

Add your perspective

6 Learn and improve

The sixth and final step to deal with scope creep and change requests without hurting your margin is to learn and improve. You should use a project evaluation and closure process that reviews the project performance, results, lessons learned, and best practices. You should also use a feedback and improvement system that collects and analyzes the feedback from your clients, stakeholders, and team members, and identifies the strengths, weaknesses, opportunities, and threats of your project accounting practices. By learning and improving from each project, you can increase your efficiency, effectiveness, and profitability in the future.

Add your perspective

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

Add your perspective

How do you manage scope creep and change requests without hurting your margin?

1

2

3

4

5

6

7

1 Define the project scope clearly

2 Communicate and negotiate effectively

3 Track and control the project costs

4 Review and adjust the project revenue

5 Manage the project risks

6 Learn and improve

7 Here’s what else to consider

Project Accounting

Rate this article

Thanks for your feedback

More articles on Project Accounting

More relevant reading