The best change order I have had – hands down – was when a customer on a very large software implementation liked the business analyst on the team so much that they wanted him on site for the remainder of the project. Umm...ok. It resulted in a $95,000 change order just to ensure he remained onsite for most of the rest of the project – something he was basically already doing but wasn't part of the original project requirements. You can imagine how our management felt about that cream puff change order. Most don't go that way, though, do they?
But seriously, change management is critical to the success of the project for many reasons and I've come up with my personal top five. As you read through these please consider your own scope and change management successes and pain points and share your experiences and thoughts about what would make your personal top five. Here's mine...
Eliminate expensive gold plating. For those of you not familiar with the term “gold plating” in the world of project management and software development, here is what it means... it is the error of working on a project or task past the point where the extra effort is worth the added value. It is working on a task past the agreed upon – and paid for – work required. Gold plating can introduce a new source of risks to the original planning i.e. additional testing, documentation, costs, timelines, etc. By making change management a top priority and watching scope management closely, the project manager and development team together can eliminate gold plating any portion of the end solution and if such enhancements are truly needed, they can then be discussed in detail with the client and turned into revenue producing change orders..
Increase revenue. Change orders usually increase revenue. The aware project manager – and project team members – watch for and listen for potential requests or needs to change the scope of the project. Anything such as an added feature, functionality, report, training, etc. can and should result in a change order to the customer which identifies the additional work and cost necessary to incorporate the change. Usually these come about as a request or need stated by the customer but they can be items that are just deemed necessary based on the requirements of the project but were not part of the original scope because both the delivery team and customer were unaware of the need during that early planning phase. Hopefully the process of creating and implementing the change order is not painful and does not create customer dissatisfaction, but if it is truly needed and lies outside the original scope of work on the project, then it must happen and the customer should readily sign off on it.
Increase project profitability. With increased revenue can come increased profitability. By paying very close attention to scope on the project the project manager and team will at least definitely be able to keep profitability as high as possible on the project. Making sure that all work performed is either part of the original work required (and thus costed out and being paid for by the customer) or part of a new change order and thus being paid for by the customer is critical. No change order in place just adds cost with no associated revenue resulting in decreased profitability. Tight change management means no free work is being performed by the delivery team and that means no added costs that have no revenue associated with those costs...keeping profitability at or above (hopefully) planned levels. Your CFO will be happy.
Keep the project on time. Watching and managing scope carefully helps contain costs and increase revenue if change orders are needed, but it also helps keep the project on track in terms of timeline, task completion dates and deliverable dates and milestones. The project may end up taking longer when change orders are implemented, but that is approved work and approved timeline extensions that are part of the extra effort...and thus meaning it's ok to deliver a bit later...it's already part of the revised plan.
Keep the project on budget. I may be a but redundant here, but keeping any project on time with proper scope management should also go a long way in keeping it on budget as well. As mentioned previously, if scope is managed well, then the project will stay true to the requirements already laid out, only the planned work will be performed and it should be much easier to stay on time – and, likewise, on budget. That said, I've never managed a project that didn't have at least one change order. By managing change closely, those needed change orders actually happen – meaning they are carefully documented changes to the original scope, they are priced accordingly and signed off by the project customer resulting in new revenue and a new budget target to hit and manage against.
Summary / call for input
Managing scope and getting change orders reviewed, approved and signed off by the client is one of the least favorite activities of most project managers. But it has to be done. Next to overall project communication it may be the single most important thing a project manager does on every engagement. It ties directly into on budget and on time delivery which are two key factors determining project success on every project initiative we ever lead.
Readers – what are your thoughts on this list? What makes your top 5 reasons why change management needs to be a top project priority on every engagement?