By Mark Jackson
We typically see contract negotiations focus on legal protections such as indemnification, waivers and releases. While these are important aspects of a contract, they may actually be secondary to something that should come far more naturally to design professionals – drafting a clear and concise Scope of Services. Scope of Services is a contract provision that should include a detailed list of the services that your firm will provide for a specific project, for an agreed upon fee. We also recommend listing other services that can be provided for an additional fee, and, sometimes the most important, a list of services that are specifically excluded for this project. A clearly defined Scope of Services helps all parties agree on the duties, expectations, deliverables, and milestones for a particular project. In addition to helping to avoid any misunderstandings with your client, a detailed Scope of Services can be instrumental in determining whether or not you’re responsible for an alleged claim in the future.
Once you have negotiated your contract, make sure everyone on the project’s team understands the Scope of Services. You don’t want the work to expand, extend, or creep beyond what was originally agreed upon. While accommodating additional requests may seem client-focused, scope creep can have significant negative impacts on your firm and damage your relationship with the client.
What is Scope Creep?
Scope creep is a common challenge for architecture and engineering firms, occurring when project requirements expand beyond the agreed-upon scope—often without corresponding adjustments to budget, timeline, or resources. Scope creep frequently occurs when there are unclear requirements, insufficient planning, or evolving client needs. It can manifest as additional tasks, new deliverables, or changes to existing plans. Scope creep might include unplanned design revisions, extended consultations, additional site visits, or added features that were not part of the initial agreement. Design firms that do not manage scope creep can experience:
- Eroded Profit Margins: Uncompensated extra work leads to increased costs that eat into your profit margins. For instance, redoing designs multiple times without additional fees can consume hours that were not accounted for in the budget. If not properly controlled, firms can spend countless hours trying to accommodate the client’s wishes. While it is important to give your clients the outcome they want, they need to understand there is a cost associated with your time, design revisions, and any additional changes from the original agreement.
- Delays: Providing additional services should increase the amount of time it takes for you to complete the job, right? Make sure that you’re given the proper time allowance in relation to each of the additional services you take on. Oftentimes we see that an expanded scope leads to what clients perceive as project delays. For your firm, these “delays” can also create a domino effect impacting other scheduled projects. For firms managing multiple clients, this can mean strained timelines and potential conflicts.
- Team Burnout: Firms right now are already busy – with employees often over extended. Overloading staff with unplanned tasks can lead to frustration, reduced morale, and even attrition. Team members may feel undervalued or overwhelmed, especially when the additional workload is not adequately recognized or compensated.
- Reputation Risks: When scope creep leads to missed deadlines and cost overruns, client satisfaction suffers. This can damage your firm’s reputation and jeopardize future business opportunities.
- Professional Liability Claims: Scope creep increases the likelihood of a dispute or professional liability claim. For example: clients often feel that any extra costs are damages, regardless of how they came about. Design firms should not have to pay for client-requested improvements or changes when they were not part of the original scope.
What Causes Scope Creep?
The main causes of scope creep are unclear initial agreements, lack of documentation, client miscommunication, and not setting boundaries or enforcing contract provisions. Having vague or unclear project scopes leaves room for interpretation and additional demands. If you did not include a detailed scope of services in your contract, there is a greater chance of misconceptions between the parties. Additionally, lack of documentation and unclear change management processes can lead to small requests snowballing into significant deviations. Your clients need to understand that repeated requests for design changes can lead to material delays and costs. To address this, firms should implement a structured and transparent change order process, ensuring that additional revisions are properly documented and billed. Miscommunication with clients also plays a role as clients may not fully understand the implications of their requests, assuming they’re minor or already included. Firms need to make sure they effectively communicate with their clients on how changes to the scope of services affects the project schedule and cost. Setting boundaries is also important when dealing with clients. Hesitation to push back on client demands can lead to a culture of always saying “yes,” regardless of impact. This results in an increase in man-hours to complete your projects and a reduction in the firm’s profitability.
How to Mitigate Against Scope Creep:
Establishing a formal system for handling additional requests is a crucial step to mitigate against scope creep. Firms should require that all changes be documented, reviewed, and approved by both parties before implementation. Not only does this protect your firm but also educates clients about the impact of their requests. Firms should be invoicing the client as additional services are being provided for the project. And your contracts should have strong payment provisions that allow you to stop services if you are not being paid. You do not want to get to the end of the project and have a large accounts receivable for unbilled or unpaid change orders. This increases the likelihood of a dispute and/or a professional negligence claim against the firm.
Leveraging project management tools to monitor progress against the agreed-upon scope can allow you to track the progress diligently. Tools like Gantt charts, dashboards, and milestone tracking can provide early warnings when a project starts to deviate. Lastly, train your team. Equip your team with the skills to handle out-of-scope requests. Role-playing scenarios or providing scripts for common client interactions can empower staff to maintain boundaries professionally.
Final Thoughts:
Preventing scope creep doesn’t mean being inflexible. Instead, it’s about striking a balance between meeting client needs and protecting your firm’s resources. Scope creep is a pervasive issue that can significantly lead to delays and impact the bottom line of architecture and engineering firms. By taking proactive measures—such as defining clear contracts, implementing change management processes, and leveraging technology—you can minimize its impact while maintaining strong client relationships. By properly managing your scope of services, firms will have a more successful project delivery and increased profitability.