Project management

When Noah was directed by the Lord to build an ark, he was given a specific scope of work and detailed instructions on how to construct it.

This is not always true in business when you are required from time to time to submit a quote or respond to a RFP (request for price) or a RFQ (request for quote). Normally, the request details the work required and the timeline of the project. But in some cases the request is not at all specific.

Recently, I have spoken with local businesspeople in a number of industries about the challenges they face in quoting on the scope of work.

Determining the scope of work

When confronted with an incomplete or unclear scope of work, many businesspeople submit a list of questions seeking to clarify areas that are unclear or where information is missing. When the client is unable to clarify or provide complete information, they include assumptions and conditions in their proposal to address these issues. The assumptions and conditions along with the proposal must become a part of the purchase order. In most RFPs, there is a pre-proposal meeting where they try to get their questions answered.

One local business found that the best approach was to schedule a face-to-face meeting in the home to walk through the areas in question and get a sense of the customer’s expectations. In this manner, the business is able to present a proposal that suits the customer’s needs. Some customers get impatient and want a quote over the phone. It is at that point that the business tries to educate the client on the process or find out if they have a proposal in hand that they are trying to comparison shop. Without asking questions or looking at the project they can never be sure if they agree with the other contactors’ assessment of what needs to be done.

In cases where there are a set of plans, they will recommend to the client that the scope of work for the end-deliverable be estimated based on the agreed upon set of design plans, or an adjusted set of plans with components removed to scale to a given budget. This permits the clients to see everything they want, and understand the foundation of a cost proposal, and can clearly adjust the scope in partnership with the provider.

When the client asks the vendor to develop the scope of work, they see this as an advantage. This permits them to craft the requirements around their firm’s capabilities, using processes that competitors either do not have or are inefficient in delivering their product. One business in Milwaukee provides their clients with a list of questions to ask when evaluating bids. This insures they have the necessary information to make an informed decision.

By following these strategies, companies avoid inaccurate pricing or loss of work to another bidder who submits a different scope of work. Sometimes, these companies get involved in assisting a client or prospect in developing an RFP. With IT type projects, they perform a needs assessment and then define the scope of work based on that assessment. In these cases, they try to avoid any appearance of creating their own scope.

Dealing with scope creep

The biggest problem many of these businesses face after the scope is defined is “creeping scope” or “scope creep.” Often the customer asks you to do work outside the original scope and, if left unchecked, it tends to creep even further. One business interviewed stated, “Many times we do design work for potential customers that is not (directly) compensated.” Companies need to be diligent that these design efforts don’t consume too much engineering effort when compared with the scale of the opportunity and the likelihood of winning the business. Otherwise, the client will continue to take advantage of the (free) engineering support.

Controlling scope creep is a critical part of managing client relationships and client projects. One business I interviewed works through the clarity piece, and then through the proposal process. An engagement letter is issued to the client if the proposal is accepted. It is extremely specific regarding the services to be provided. When they are asked to perform services out-of-scope they immediately identify that fact with the client and provide a separate estimate of fees for those services.

Another businessperson stated, “We don’t like to issue change orders, especially when it’s something that should have been noticed the first time.” They try to deliver their proposals in person so they can walk the client through what was estimated and educate them as best as possible what factors could impact their estimate. The goal is to educate the customer so that they are comfortable making a decision based upon their needs.

The consensus of the group is that companies cannot be apprehensive about calling out those tasks or initiatives that are a departure from the defined scope. Such efforts need to be compensated or dropped after being discussed with the client. Too many uncompensated hours are lost to creeping scope. As one business owner stated, “We draft our scope of work from the RFP and any other information we receive from the client. We include in our proposal the date of the RFP and date of any addendums issued. Also included in our proposal is a list of services not included. We specify that additional services, site visits etc. can be provided, but at an additional cost. We also add that out of pocket expenses billed at cost.”

Simply stated, “A successful project comes down to good communication throughout the process and developing trust with the customer.”

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