How to Keep Cost and Scope Under Control on Client Projects
A project manager’s responsibilities—and job implications—grow complicated when it comes to client projects. Even though all project plans require your team to deliver the requirements on time, on budget and within quality constraints, delivering client projects can be a different game with higher stakes.
For example, when your company is working with an external client, it’s far more difficult to defend a late-running project than for an internal client. In the worst-case scenario the client could take your company to court if the project isn’t delivered within the constraints of the contract.
Cost and scope are the two most important parameters to manage for positive client project outcomes. Here are five smart practices that keep client project cost and scope under control.
1. Describe the scope in as much detail as you can.
From the start, define the project scope in as much detail as possible. Instead of simply providing a list of features that your project will deliver, produce a description of each of these features in collaboration with your client. If scope and requirements are too vague or high-level, they’ll be open to interpretation—so get down and detailed. Otherwise, you risk leaving yourself open to taking on extra features into the work scope that you didn’t anticipate. You want to avoid this at all costs.
Specific tools you can use to describe and baseline project scope include:
- User stories
- Product descriptions
- Requirements traceability matrix
- A work management software tool where you input every task that rolls up to project features.
Develop these collaboratively with your client and get them all signed off before starting work.
2. Ask for a pre-project phase.
On larger, more complex projects it takes a significant amount of time to produce a thorough scope description. It could take weeks or months of analysis to clarify exactly what the client needs and how your team can deliver it. To speed this process up, have the client pay for a pre-project. Here, the purpose is to define the project in a detailed manner, and to create a prototype. The advantage is that everyone from the supplier to the customer gains clarity about the scope of work. A pre-project reduces risk and makes it much easier to estimate the work and create a realistic baseline for the contract.
Great tools to use during the pre-project phase include:
- Collaborative workshops
- Business process mapping
- Client interviews
- Mock-ups and prototypes.
Involve the entire team in the pre-project process as much as you can.
3. Produce a realistic cost estimate.
On a client project where the cost estimate becomes contractually binding, it’s important that the estimate is as realistic as possible. It has to cover all the project’s phases and activities and account for people costs as well as materials, hardware and software. You’ll also need to add sufficient contingency to account for the project’s risks or uncertainties. As the supplier you must to be ready to absorb risk into the budget.
Compiling a realistic estimate is all about breaking the project’s features into as much detail as possible and then producing best- and worst-case estimates for each feature.
Effective ways to make cost estimates include:
- Using the PERT estimation technique
- Using a peer group estimation process
- Using project or client management software with project costing.
4. Manage scope collaboratively.
After the estimate is done and the contract has been signed, it’s imperative that the team collaboratively picks up on any incoming scope changes. This task becomes much easier if everyone on the team understands the ins and outs of the project, and has attended the preceding scoping and estimation workshops, or has been involved in the prototype. Using centralized project scheduling software that everyone has access to is also an effective way to keep everyone on the team apprised of shifting scopes and resource changes.
Remember: Controlling scope is not about rejecting any changes that come up; it’s about analyzing changes and bringing them to the attention of the sponsor or steering committee so they can make the next best decision.
The best way to continuously manage scope is to review the detailed task list at the beginning of each iteration or new version, and to continuosly test the developed features or review the latest drafts.
Your helpful tools here will include:
- A centralized project management software tool
- A change control process comprised of a change log, impact analysis and a change control board.
5. Implement rigorous cost controls.
As you move through the project, one of the best ways to continuously control cost is to establish rigorous controls from day one. You can do this by creating a budget-tracking sheet where you monitor the weekly or monthly expenditures and compare these figures to the project’s overall budget. This gives you the transparency you need and the ability to act if you spot an unhealthy trend.
It’s also important to control expenditures by agreeing to who signs off on specific resources and responsibilities. So, consider who has authority to sign-off on timesheets, materials, hardware, software and vendor invoices. This is crucial as it gives you a way to control the actual costs that will be booked to your project.
Specific tools you can use to control cost include:
- Detailed budget
- Cost tracking sheet
- Delegated sign-off responsibilities
- A Baseline.
In summary, the best way to keep cost and scope under control on a client project is to first and foremost agree to a baseline that you can track against. To do this, you’ll need to analyze and describe the project’s features in as much detail as you can—preferably in a pre-project phase—and then produce a realistic cost-estimate that accounts for best/worst case scenarios . When your baselines are in place, you can control them with a good change control process and by regularly comparing actual cost to your project’s budget. Good luck!
Managing expectations is another big aspect of keeping cost and scope under control on client projects. To learn more about managing expectations and other common PM challenges, download our eBook, “How to Solve the Top 9 Project Management Challenges.”