Every aspect of a project is tied to the budget. The amount and type of labor, number of work hours, and required level of effort all contribute to overall costs. Scope planning is critical for avoiding surprises that can delay projects, incur additional costs, and lead to poor customer experiences.
How can your organization properly conduct scope planning and how can it help control the financial aspects of your organization?
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Scope planning involves organizing and allocating all aspects of the work required for a project to be completed. The scope is crucial because it helps guide project managers, directors, and supervisors to understand what is and is not part of the project’s scope.
When you conduct scope planning before a project, it becomes easier to identify any work that falls outside the scope, thus potentially incurring additional costs. In short, scope planning helps your organization stay within budget and know when to adjust for extra work.
Scope planning must take place before the project begins, and the scope must be managed throughout the project’s duration.
Scope planning and management include three main processes:
Project scope management is inherently linked to financial management. Companies must understand the costs of completing a project to ensure appropriate billing to the client or customer.
Let’s examine each of the core processes of scope management to understand their importance for project execution and how they impact financial management.
There are five key steps involved in creating a project scope:
Of course, not all project scopes will be completely predictive. Agile project management approaches allow for projects to adapt and change over their lifecycle, and the project scope is defined and approved at the beginning of each new phase.
Agile methodologies work well for projects that are expected to change frequently and include close and regular involvement with key stakeholders. In an agile project scenario, the five steps listed above would be repeated at the onset of each new project phase.
Regardless of the project management methodology, there are a few things you’ll want to watch out for when putting together a project scope. Like any other business document, the clearer it is, the better. The project scope needs to be interpreted by all involved parties and needs to be easy to reference if needed to demonstrate what is included in the scope and what is not.
Avoid the following issues when putting together the project scope during your scope planning process:
Many challenges can adversely impact a project by throwing off the timeline or budget. That’s why it’s important not just for your project scope to lay the groundwork for the project, but for your team to closely monitor and analyze the scope throughout the project.
Effective scope control should involve running a variance analysis against the project’s budget and schedule. If a variance appears—i.e., the budget is coming in higher than originally planned—this early identification allows you to address it quickly to keep the project on time and on budget.
And variances can happen quite frequently. Clients might ask for one extra item here or provide more rounds of feedback there, and pretty soon your team has put in 20 extra hours on additional work not included in the project scope. This is called scope creep, and it happens all the time.
Scope creep can be avoided if someone is paying close attention to the activity happening on the project and how it ties back to the project scope. If the scope only accounts for two rounds of edits but your client is onto the third round, it’s time to step in and reference the project scope.
Keeping a close eye on the project scope helps project managers and directors manage client and stakeholder expectations and ensures there are no surprises with deadlines or, more importantly, the budget. Scope planning can also insure against other common issues that might arise during a project, especially when working with a client. These can include:
All of these challenges can be dealt with and alleviated if your project scope is monitored and analyzed properly.
However, additional stakeholder requests or timeline delays due to supply issues or unforeseen circumstances will happen, and while it may be out of scope or result in a change to the scope doesn’t mean it can’t be done.
Change requests are an important way to keep track of alterations to the scope. Change requests are essentially a log of the specific request, the circumstances around the request; i.e., the client needs a few extra days to review, the stakeholder making the request, and how the request will impact budget, schedule, and other dependent tasks.
This step is perhaps the most impactful when it comes to financial management. As we know, every aspect of a project is connected to a budget line item. Your scope, when planned and controlled properly, manages the definition and execution of those line items, from labor to the number of hours of work to the level of effort.
There are several reasons why the scope closing is so important:
Even the most well-executed and well-managed project scopes can come up against tricky project challenges. But understanding how to tackle those challenges and keep your projects within scope means you’re providing better customer experiences overall.
The same goes for internal projects. Perhaps you’re implementing a new ERP system, which can be a significant undertaking. Creating a project scope helps your organization:
It’s just as helpful for a client as it is for you to have a project scope that is clear, collaborative, and detailed, and the investment in the project is all the more valuable and meaningful when things go as planned.
Budget touches everything, and everything touches budget. A well-defined project scope can guide projects and ensure seamless finance and accounting operations or the implementation of customer-centric cloud applications.
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