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Scope Creep

Case Study

Almost a decade ago, we were in the throes of pricing work for those very first repairs undertaken by EQC after the Canterbury Earthquake Sequence, and boy did that teach me a thing or two.

There were plenty of lessons that were learned and to this day we are still learning them, but a few stories come to mind that were fundamental, and I thought I would pass some of them on to you.

Back in those days, there was a prescriptive process that had to be followed to have the scopes of work priced for each dwelling. A necessary evil you might say to get things happening and homes starting to be repaired. The scopes of work were created by a combo of a builder and a PMO project manager, who would measure up and create a simplified list of what needed to be done.

Builders were often pricing several dozens of these at a time, and we would often have builders arrive at the office with a pile of them asking us to help out.

Line items were to be priced elementally, with pre-determined rates to be used. Pretty simple, right?

Confusion on site

I remember talking to one of my builders one day and given the majority of these types of repairs were mostly of a cosmetic nature the main subcontractors involved were generally painters, plasterers and sparkys.

Their issue was that they were often walking into homes that were a bit older, and sometimes they would end up with scope creep from the subbies where they would do a bit more than what they should have. Often this was down to confusion, bedroom 2 and 3 got mixed up etc, but also sometimes to the painter it was a bit more reasonable to paint all of the trims in the room, rather than just one length of them as per the scope.

This issue was costing my guy money…. As the subbies would bill him for what they had done, rather than what was on the scope. Because the scope document was for the builder, the entire job was relying on good communication which could be challenging given how many of these he had on at any given time.

It was often easier just to let it slide, and the cashflow from the quick turnaround jobs was pretty good. But soon it started to catch up with him and the extra cash being lost was often more than the low predetermined profit margins allowed for in the quotes.

Job Sheets

The way we ended up nutting it out, was to create a job sheet that would be stuck to the door or wall of each room. The job sheet would outline what was being done in each room including all other pertinent details such as the colour to be painted and which other subbies would also be working in the space. It also gave the elemental description and the measurement of each task. Each job sheet would need to be signed by whoever was working in the room as soon as they had completed their work. This signature would be confirming they had completed it, and that they agreed with the scope and measure. No signature meant no payment, and no invoice could be for more work than what was on the job sheet unless a variation had been applied for.

I tell ya what, it worked an absolute treat. It kept the project management requirements to a minimum, and the cash under control. It also meant that if there were any changes or variations, it was in everyone’s best interest to have the paperwork completed formally so that the claims could be made.

Since then, this has been a solution I have proposed to lots of builders who have been doing any kind of bitsy renovation work. If you have provided an upfront fixed price quote, or you know you could have an issue with a homeowner making changes and expecting them to be done for free, then this is a sure-fire way to keep a lid on it, and save you the sleepless nights of making sure you have billed for everything!

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