Keeping Clients Happy: How to Ensure a Project Doesn't Go Over Budget
“Under-promise and over-deliver” is a hallmark of successful service delivery. It’s critical that businesses meet client expectations instead of fixating on the budget, but businesses that consistently go too far above and beyond the scope of work risk damage to their bottom line. To put it in perspective, if projects go over budget by just 10 percent on average, business take a hit of 19.5 percent on their profit margins. Going the extra mile can get expensive and only worsens when larger projects take on a life of their own.
Businesses can fight scope creep, or a project expanding beyond its budgeted objectives, by dissolving silos between disparate operations. To get everyone on the same page, try these methods and ensure a smoother transition from the business win to project completion.
Connect sales and project management teams during the sales process.
The best way for project-based companies to avoid scope creep is to treat your initial quote for the client as the beginning of the project-planning phase and involve the project management team. A lot of scope creep happens because the incentives and attitudes of sales are different than project management teams. Not done maliciously, the sales team is just not aware of the actual scope of the project. Sales teams want to win new business and often excite the client when they explain the capabilities of their project team. Of course, this makes sense because it does not pay to be pessimistic in a sales pitch. But if the project management team is included in the early dialogue, they can help set realistic goals and deadlines from the start.
Catch the problem early and better your chances of survival.
Catching scope creep early is crucial to your business and relationship with the client. When moving on to the next step in a project, always refer back to your budget. Ask yourself if this offering was in the original plan and whether or not you can afford it. To get ahead of the curve, consider using forecasting tools. These can help you monitor your budget with the future in mind, allowing you to adjust more quickly.
Like any member of your team, the client likes to be made aware of issues as soon as possible. If your team notices a project going beyond its expected limits, begin a conversation with the client and suggest alternatives. They may expand your budget to accommodate if the project is crucial to their goals. The earlier you deal with scope creep, the better your survival rate with that client and your interactions with them.
Project managers struggle to stay up-to-date on projects because of the current state of their project management tools. Because they require users to manually input progress, the original plan is often ignored and it’s impossible to track actual achievements against the planned objectives. Even worse, the management systems are often not linked with the billing system where employees are recording time spent on the project and as a result, it’s easy for project managers to be blindsided by scope creep. The best tools allows professionals to track the work against projections so that they can catch problems as they arise and adjust their plan accordingly before they deliver far beyond the client’s initial expectations.
Be transparent during the quoting process.
The client came to your professional services business because they need experts. If they understood completely what you did, they wouldn’t have hired you. Remember that there is a knowledge gap in any client relationship during the quoting process, so explaining in detail what you will do is not excessive but completely necessary.
You can two options during the quoting process that will minimize scope creep and maintain transparency with the client. You can either bill by line item to show how each smaller step of a service amounts to the final cost. If the client wishes to expand the project, they will know exactly how much they will pay because they can refer to something tangible throughout the project.
As an alternative, your quote can be very specific about the expected deliverable, but withhold the costs. This way the client will know exactly what they will receive in the end and you leave the door open to discussion should the budget need expansion to provide the final product.
We all know how hard it is to start a business, hire great people and wine awesome clients. It’s no secret that it is always better to serve the client to your best ability, but this isn’t possible in the long run if your teams let projects get out of control. The sad reality is that scope creep can destroy all of your hard work and starve your business of the profit it needs to grow. By maintaining transparency with the client and including project management in the sales process, your professional services business will avoid scope creep and be able to grow.
Related: 5 Key Reasons Projects Fail
Entrepreneur Editors' Picks
Formerly Enslaved Black Man Nearest Green Taught Jack Daniel Everything He Knew About Whiskey. Today, the Founder of Uncle Nearest Premium Whiskey Celebrates His Legacy.
Leadership Lessons From the Exclusive Creativity School That 'Packs 5 Years Learning Into 5 Days'
3 Expert-Backed Strategies for Staying Calm in Times of Confrontation
The CEO of Wayfair Has Helped Revolutionize Digital Shopping for 20 Years. Here's How He Handles Rocky Economic Conditions.
This Founder Went to Prison When He Was 15 Years Old. That's Where He Came Up With the Idea for a Company Now Backed By John Legend.
3 Signs You're Letting Pride Get in the Way of Being Successful
Chip and Joanna Gaines and Shonda Rhimes Found Incredible Success By Using This One Entrepreneurial Strategy. Here's How You Can Too.