This is basically how it was with project scope management. The project manager must act as the gatekeeper between what the project team has been tasked to do and what they are being asked to do. Those two things may start out being the same, but on nearly every project since the beginning of time they have ended up being different by anywhere from a few hours of effort to several hundred or even thousands of hours of effort. The project manager must recognize these 'extra' requests for what they are and not let that requirements line in the sand be moved without a complete understanding and agreement among all parties and a documented change that identifies how the project budget and hours are going to be affected by said change.
Here’s how the process works…
Identifying that a change is about to occur
The process starts when the customer makes a request that you think is outside the agreed upon scope of the project. Your team may help you manage scope, but as the ultimate gatekeeper it’s the project manager’s responsibility to raise the red flag when it seems that work is being requested that is outside the documented project scope. After all, no one has more to lose – in terms of reputation – than the project manager by letting the project go out of control. Out of scope changes, made without the benefit of a change order, can have disastrous affects on the project budget and timeline – which ultimately are two of the three key measuring sticks in determining overall project success (the third being customer/stakeholder satisfaction).
Documenting the change
Once the potential change has been identified – usually by the project manager or one of his team members – the first step should be to give the customer a heads-up that the work being discussed may fall outside of the scope of the project. It never hurts to let the customer know this as far in advance as possible. The last thing you want to do is surprise the customer with a change order that they are not expecting – it doesn’t win you any points in terms of customer satisfaction. Newsflash - customers like to be informed.
The next step is to discuss the change in detail with the entire team. Treat it like a mini project and discuss what tasks are necessary, who will do the work, and what the estimated effort is. This information will feed into a formal change order document to present to the customer as well as the project schedule and project budget forecast. The project schedule will need to be revised to show the new or revised tasks and the resource assignments and the project budget forecast will need to be revised to show the additional revenue that is going to be realized on the project by doing the work.
Negotiating, finalizing the project impact
Once your team has agreed on the change order effort, tasks, and estimate and you have it formally documented in the form of a change order, it’s time to take it to the customer for formal approval. There’s no guarantee that you’ll get agreement on the first pass. You may need to negotiate – especially if you’re discussing a $150,000 change order rather than a $1500 change order. It’s also possible that you’ve overstated the work due to not fully understanding your customer’s request. The key is to tweak the change order to get the change accurately documented so that you can get a formal signoff with the customer – which serves to essentially create a new/revised baseline for the project, the project timeline, the project budget, and the project scope.
Often, project managers look at change orders as something to avoid. Kind of like doing your taxes or taking a report card to your parents. Indeed, some customers flair their nostrils at the mention of a change order. However, when presented right, with solid documentation and with a forward-thinking rather than defensive or aggressive attitude, the change order is generally accepted as progress on the project. And your senior management will be delighted when you show them the revised project budget and the additional amount that they can put into their division’s quarterly forecast. When it’s done right it can be a win-win for everyone.