If you’re a contractor, “scope creep” can be the bane of your existence. Scope creep happens when the work required under a construction contract expands beyond what was originally agreed upon, often without a formal change order or adjustment to the expected price and timeline.
Vague assumptions, “quick favors” and sudden changes in vision or goals can pile up. Suddenly, the project has expanded beyond all recognition, costs are spiraling and the contractor no longer has everything in writing. Left unmanaged, scope creep can lead to payment disputes, project delays, damaged working relationships and reputational damage, or even litigation.
Why Scope Creep Happens
Scope creep often starts with miscommunications and incomplete planning. Common causes include:
- Vague or poorly defined work orders and agreements
- Incomplete plans or undefined specifications at the beginning
- Undocumented project changes that compound
Pressure to keep a project moving can sometimes contribute, since that can make it inconvenient to stop and address the cost of changes before they are made. Owners and developers alike can also simply underestimate how complicated a “small” change might be. Finally, the longer the project, the more likely unexpected events will result in change orders.
The Real Risk to Contractors
Scope creep can directly affect a contractor’s profitability and liability. It can be difficult to collect on the extra costs for any extra work when there is no written authorization. At the same time, refusing to perform any requested changes – no matter how small – without first getting documentation can strain your relationship with your client and delay the project.
In other cases, disputes can erupt between you and your client due to differing interpretations of the original contract. Your client may believe that something was included in a general description, but it was never on your radar in the first place. Those types of disagreements can quickly escalate.
What Contractors Can Do to Protect Themselves
Good communication and a proactive approach to the issue in your contracts is the best protection you have against scope creep. You need to:
- Precisely define the scope of the project: Get detailed. Be granular. Your contracts should clearly define not only what is included in your project and price, but also what is specifically not your responsibility and excluded. Ambiguity is legally dangerous.
- Have clear change order procedures: Changes to projects are bound to happen, so your contracts need a written process for handling them, as well as an agreement on the fact that adjustments will be made to both the timeline and cost.
- Document everything: Verbal agreements and handshake deals create problems. You need detailed records of all change requests and written authorization before you proceed with any work outside of the original scope. If you worry about efficiency, immediately write an email to confirm your understanding of the change order and ask the client to reply with an affirmation or any additional changes.
- Get everybody together: Start by having all the stakeholders together for the early discussions, then schedule regular times to communicate progress or concerns. That will help keep everybody cognizant of all changes and any shifting goals.
Finally, it is essential to be blunt. If a requested change will affect the quality, timeline or price of a project, make sure that you inform the other parties – in writing – of exactly what they can anticipate. Get in the habit of sending confirmation emails, too, whenever in-person communications result in changes to the plans.
When disagreements do arise about the scope of a construction project, the outcome often depends on the contract language and the available documentation. The court or arbitrator will typically look at whether work was authorized and proper procedures were followed. With clear contracts and a disciplined approach to documentation, you can work with the requested changes without negatively affecting your bottom line.