Scope creep — the expansion of work being done for a client without additional compensation — is a reality for almost every agency. Scope creep affects resource management, profitability, and overall job satisfaction. And while clients certainly contribute to the problem, for most agencies, scope creep is a self-inflicted wound borne out of poor communication.
The Relationship of Profitability and Scope Creep
It’s important to remember that scope creep is doing extra work for free. If you are charging for extra work, that isn’t scope creep. That’s just good sales. However, that’s usually not the case for creative agencies. Free work has an immediate effect on profitability. Doing work for free means you are spending more on labor in exchange for the same fee. This cuts job profitability and, in extreme cases, can lead to break-even or projects that lose money.
Scope creep also makes your calendar less available for other paying work. The resources within your agency aren’t infinite. Every day your team spends on non-paying work is a day they can’t spend on profitable work. Scope creep thus reduces your agency’s capacity to make profit.
Ever-expanding projects can also lead to frustration and lower productivity within your team. The satisfaction of a job well done is replaced with frustration. Work stops feeling meaningful because it doesn’t seem to contribute to completion. Projects soon become a Sisiphyean effort leading to burnout and turn-over.
To avoid these problems, agencies need to better understand where scope creep comes from.
What are the Most Common Causes of Scope Creep for Creative Agencies?
So how does scope creep arise? It comes in many forms:
The client asking for for something faster than scheduled
The client asking for more rounds of revision / feedback
The client asking for something new
The client providing new or different information than what was provided when the statement of work was prepared
The client assuming everything related to your work is included (e.g., if you build websites, a client will often assume that you are handling everything web-related like site content)
Your agency doing more work because the client didn’t fulfill its obligations (e.g., deliver content on time, provide timely feedback, etc.)
While it is easy to look at this list and say that the client is the one responsible, the reality is that scope creep comes from the agency’s response to these situations. We typically see two themes in agency responses to these types of client requests.
The “Good Service” Defense
First, scope creep happens when agencies feel they need to handle extra requests for free in the name of “client service,” or to keep the client happy. But what the mantra of “client service” is hiding is a fear that a client will be unhappy or angry when they learn that their request will have a cost. And rather than face that possibility, the agency does the work for free to avoid having to have that difficult conversation.
Internal Misunderstandings
Second, scope creep happens when the agency itself doesn’t have a good understanding of the scope of a project. Faced with a client request, the agency can’t definitively tell a client whether the work is included. Not wanting to sound uncertain or have a conversation with a disappointed or angry client, the agency takes responsibility for the uncertainty and does the work for free.
Like the “client service” requests, the agency’s failure to define scope well and subsequent failure to have a direct conversation when an uncertainty arose leads the agency to doing work for free.
Fortunately, both problems are fixable.
How to Manage Scope Creep
Managing scope creep is a combination of having the right language in your contract as well as good project management communication. You can’t have one without the other. We see lots of agency contracts with the right legal language to manage scope creep. But unless your agency is committed to having those potentially difficult conversations, you’ll never get it under control.
Change the Statement of Work
One way to manage scope creep is to start thinking about the different types of events and client requests mentioned above as requests to change the statement of work. To be sure, your client won’t use the words “amend the SOW”, but that’s what it is. It’s on you to treat it that way. Your response will probably sound a little something like this:
We’d love to help you figure out how to do that! Would you like us to bill for that extra work hourly or quote you an updated fixed fee for that work?
This is a constructive and non-confrontational response that points them to an acceptable outcome.
Make Client Cooperation Part of Your Agreement
The second way to manage scope creep is to ensure your contract describes the assumptions that your fee is based on as well as a statement that allows you to modify your SOW if those assumptions turn out to be untrue. Take client cooperation. No doubt your fee assumes that the client will cooperate reasonably toward completing the project. Put another way, if you knew before starting a project that the client was going to be an uncooperative pain-in-the-neck, you would have quoted a higher fee.
By including language in your contract describing the client’s obligation to cooperate, you set the stage for a conversation with your client about amending the SOW if and when they are uncooperative. That conversation might look something like this:
You’ll recall that our contract requires your team to provide information and feedback within three business days. I can certainly understand that your team has a lot on their plate in addition to this project. However, your team is routinely taking 10 – 14 days to provide feedback. In some cases they don’t respond at all. Had you let us know at the outset that you needed 14 days to respond, we would have priced the project accordingly. If your team won’t be able to respond timely going forward, per our agreement I’ll prepare an amendment to the SOW increasing the fee to compensate for the extra time you need.
This approach reminds the client that their choices have a cost and that the contract allows you to adjust the SOW accordingly. Client obligations can be outlined a number of different ways and should also tie into your contract’s termination clauses for extreme cases.
This conversation might feel more uncomfortable than the first example. You are calling out the client for bad behavior, letting them know the financial consequences and telling them to fix it. Just have the conversation in a direct, business-like manner. It might be a little difficult the first time you talk to a client, but it will be easier with the next client. And by the fifth client, you’ll feel quite comfortable managing these boundaries.
Your Agency Can Manage Scope Creep
While scope creep may start with your agency’s clients, it is up to you to respond appropriately in order to preserve profits. Whether scope is creeping due to client requests or because of a client fulfilling its responsibilities, the agency can ensure these events turn into billing opportunities instead of free work.
If you’re wondering if your SOWs adequately protect your agency from scope creep, consider taking advantage of our free Agency Contract Report Card. We’ll review your contracts based on a number of key criteria and provide an analysis of where you’re nailing it and how you can improve.
