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Scope creep can be a frustrating problem for suppliers of services. Typically, scope creep is where a project’s scope increases. For instance, a project plan changes when a customer requests more work than they have paid for. Issues over scope creep can lead to mismatched expectations and complaints from customers. This article will explore how using a contract can help reduce the risk of scope creep with business customers.
What is Scope Creep?
Typically, scope creep occurs when there is an increase or expansion in the services the customer requires from a supplier. This often changes the original scope, requiring extra work or project objectives.
Scope creep can result from poor communication with customers or the lack of a change control process in a contract. It can also occur when a detailed scope of work is not agreed upon, meaning the customer does not believe their requests constitute scope changes or additional work.
For instance, imagine you are an accountant delivering a self-assessment tax return filing for your client. It turns out your client has unexpected complications and requires detailed tax advice whilst you are completing their tax return. The client may think that this advice is covered within the service and for the cost of the tax return. This is scope creep, however, and you would likely need to charge separately for this advice. This may be difficult to explain to the customer if your contract with them fails to specify the precise scope of your engagement.
Scope creep will inevitably occur from time to time. Not every customer will know precisely what services they need from the outset, and their requirements may change over time.
However, scope creep can create various risks, which we will explore further below.
How Can Contracts Reduce the Risk Of Scope Creep?
Contracts are vital documents for legal protection from risk. Scope creep is a crucial risk which arises in commercial relationships. For instance, scope creep can lead to:
- misunderstandings and dissatisfaction from customers if they do not believe their request is scope creep;
- loss of potential income, for instance, if you deliver more work but for the same cost originally agreed with the customer with no additional payment; or
- disputes – for example, if you fail to provide what the customer expected under your contract.
We will now explore some ways a contract can reduce the risk of scope creep below.
1. Clearly Lay Out a Scope of Work
Your contract should specify exactly what services you agree to deliver to a particular customer. This will help avoid misunderstandings and mismatched expectations.
For instance, you can include a ‘Contracts Details’ or ‘Services Schedule’ section in your contract to specify this. The more precise your terms, the better. If the services you intend to deliver are defined broadly, the customer could argue their requests are covered if there is scope creep.
Your contract should lay out various details, including:
- a detailed list of services and caveats to explain which services are carved out or subject to further and separate costs;
- a clear list of the deliverables you will provide the customer under the contract;
- specific timeframes for delivery of the services and any agreed milestones; and
- details of the charges payable and any additional charges the customer will incur if there is a scope creep.
By clearly documenting the scope of your services, you will have evidence of what the customer agreed to with you. Therefore, if any issues around scope creep arise with your customer, you can turn to your contract as evidence of what you agreed to. You can also show what falls outside your agreed work’s scope.
2. Include a Process for Changes and Costs
Scope creep is problematic when customers want extra work delivered within the same pre-agreed budget. This is where your contract can assist.
Your contract can include a detailed change procedure whereby the parties must agree upon changes to the scope of work in writing. For instance, you can include a procedure outlining that you will consider customer change requests and then advise them of any additional costs you will charge for extra work. This can help manage scope creep and allow you to charge appropriately for further work you must deliver.
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By including a change procedure clause, you can point out to your customers where there is potential scope creep. This can help manage the scope creep process and avoid difficult conversations or confusion about what to do if a customer changes their requirements.
When you have a clear contract detailing these terms with a customer, you will also have evidence to support your position in case of a legal claim. For instance, if the customer sues your business for not providing specific deliverables, which you can prove were not included in the scope of your contract.
3. Know the Importance of Managing Customer Expectations
Whilst these are formal clauses to include in your contract, you should remember the importance of customer conversations and nurturing your relationship.
You should continue to monitor progress under the contract and discuss it with your customers. If you feel any customer requests will require additional work or changes to the work you have done, tell them. Customers are more likely to understand and trust you if you communicate efficiently and reasonably with them. This could also help manage scope creep risk – for instance, a customer may change their mind if you politely explain the position.
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Key Takeaways
Scope creep can be a frustrating problem for suppliers of services. Customers may demand extra work without understanding it is beyond the scope of what they originally agreed with you. By entering into a robust contract with your customer, you can help avoid scope creep. For instance, you can include a clear scope of work to evidence what you have agreed to deliver. Further, you include a process for changing customer requirements and increasing your charges where required. Always be honest with customers about scope creep to gain their trust and nurture your working relationships.
If you need help with a contract, LegalVision’s experienced commercial lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers who can answer your questions and draft and review your documents. Call us today at 0808 196 8584 or visit our membership page.
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