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Jarrod Stevens | 28 Mar 2022 | 5 min read
How to Prevent Scope Creep Through Better Procurement Planning
In this article, we explain everything you want to know about scope creep: what it is, why you don’t want it, and the tools and techniques you can use to prevent it.
What is Scope Creep?
Scope creep is a variation in the scope of a specification. The provider ends up delivering a greater range of goods and services than originally specified.
Here’s a classic example of scope creep:
Imagine that you have engaged a subject matter expert to draft the specification for an upcoming Facility Management (FM) tender. After that, since you’re very busy, you also ask them to develop the whole tender package. Then, since they did a great job in writing the scope and bid documents, you get them to lead the evaluation team in reviewing the tender responses.
In this example, the original scope statement - assuming there was one - would have only covered drafting the specifications.
How Does Scope Creep Happen?
Scope creep is usually the result of poor planning. To cite the above example, there are two reasons for seeking the specialist’s support: a lack of capability and a lack of capacity.
The client could have identified both of these reasons at the start of the project but didn’t. The needs were unforeseen, but they were not unforeseeable.
Scope Creep Impact: Why You Should Avoid It
So, is scope creep a bad thing? It is, and here are three reasons why you should be trying to prevent it.
1. The Total Project Value Changes
If you’ve commissioned additional services, then the total value will be different. In the above example, the total value of the three phases might be three times greater than the original scope.
Let's say that each phase cost $10,000. This is important because the governance and approval processes for a $30,000 project might be different than for the original $10,000 project.
2. You May Not Pick the Best Provider
In the example above, was the FM specialist the best provider for all three activities? The skills needed to lead an evaluation team are quite different to the skills needed to draft a specification.
The selection of the best provider might have been different if all three scopes were considered as a single package.
3. Proper Scoping Results in Better Deals
If you want value for money, you want to scope first. In the example above, there are three separate engagements. If you had invited pricing for all three activities, you may have attracted better rates than for each engagement separately.
How Do You Deal with Scope Creep?
Wondering how to avoid scope creep? It's possible so long as you take the proper steps. There are four control processes that can help reduce the incidence of scope creep:
1. Procurement Planning
Compressing timelines is the root cause of many problems in procurement projects. Good practice is to plan the end-to-end procurement process, not just the next step.
A procurement planning solution can help ensure any goods or services are scoped up front, even in a decentralised or centre-led environment. It will prompt the user to clearly define the scope and budget before they go to market.
To learn more about procurement planning solutions, read our article: “How the Right Software Can Improve Your Procurement Planning.”
2. Identify the Need
Don't focus on the solution, such as "we need an FM specialist!" Instead, ask yourself questions like "what is the problem that we are trying to solve?" and "If I don't approve this, how will it affect the project?"
Again, a procurement planning solution can prompt the buyer to justify spend. This not only helps keep things in scope, but also helps keep spend down.
3. Ensure the Approvers Do Their Job
When a request to approve a proposed purchase pops up in their workflow, the approver needs to be independent and inquisitive.
"If I approve this, what happens next?" was a reasonable question to ask at the beginning of the example.
4. Question Formal Variations
In some organisations, formal variations are needed to change an existing scope. Each request to approve a variation should raise questions about the reasons for the request.
If the reason for the request is that the planning processes were poor, this might raise red flags. Ask yourself, “Are there other project decisions that have already been made which were as poor as this?”
The Best Tools to Identify Scope Creep
Ideally, prevention is preferrable to detection. That said, here’s how to spot scope creep in your organisation:
Most procurement solutions have some capacity to analyse spend by sub-category and by supplier. If the spend with one supplier is $30k that is not remarkable. If that spend is made up of three separate transactions related to the same project, that will generate some further questions.
Many organisations check for 'order splitting'. Order splitting is when a project is deliberately split into smaller parts to avoid governance requirements. When this comes up, ask yourself “Was this deliberate, or the result of lack of planning?”
Regardless of the answer, the actions breached governance and best value wasn’t realised.
If the original approval was for $10,000 and the final spend was $30,000, this should raise red flags. This is especially relevant if each subsequent phase was not separately approved.
Contract Management Systems
Many contemporary contract management systems allow review of variations. A retrospective review would reveal the number and nature of the variation as part of the contract management process.
To learn more about the benefit of contract management systems, read our article: “The Ultimate Guide to Contract Management Software.”
The Best Software to Stop Scope Creep in Procurement
VendorPanel offers several solutions that can help you actively reduce the incidence and impact of scope creep, such as:
- Our Contract Management solution gives you complete visibility on your contracts, including variations and operational analytics.
- Our Procurement Planning solution makes sure any procurement event is properly planned and scoped. This information is automatically carried over when you go to market or create a contract.
- Our Reporting and Analytics solution captures the data you need to stay audit ready, get meaningful information on user spending, and more.
- Our Policy Guide solution makes sure staff use the right policy by default according to criteria you designate, such as spend amount and risk.
VendorPanel is the platform of choice for public and private-sector organisations such as the Victorian State Government, the Royal Women’s Hospital, BGIS and McDonald’s. For a commitment-free chat about our solutions, contact us today.
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