CONSTRUCTION Accounting ARTICLE -
3 Simple Steps to Effective Scope Management

Target Audience: Construction Industry Professionals, Project Planners, Job Costing, Estimators, Spending Planners, Project Managers, Contractors, Construction Accountants

The best-laid plans — and projects — can go awry if key personnel are constantly distracted by tasks that weren’t agreed to during a job’s planning phase. If the project gets too big or too far off course, the results can be disastrous. And what’s often perceived as a lack of skill on your team’s end is actually the result of a series of preventable distractions.

More than just a theory, scope management provides a plan for staying on-task and on-budget. Adopting a plan for scope management doesn’t require a major overhaul to your current management style. Rather, it compartmentalizes a project into more manageable stages, so you can maintain your focus on what needs to be done and, thus, avoid costly distractions.

Here are three simple steps to improving your construction company’s scope management:

1. Define your terms. The preproject planning phase, which includes estimating and final bid submission, serves as your chance to make sure everyone starts on the same page. Be sure to discuss topics such as:

• What the owner wants vs. what you can deliver,
• Any plans for bringing in subcontractors, and
• Any foreseeable problems and change orders.

This is the time to define the contract terms as specifically as possible to help assure you’ll be compensated should major changes occur. And of course, make sure you have it in writing.

2. Keep an eye on the estimate. During the contract performance phase, when the job is actually under way, regularly compare the original estimate to your current job cost status. Doing so will give you an idea of where you stand on the budget, as well as help expedite the change order process should one arise. In that event, make sure all pertinent parties approve the change and sign off on it.

The goal is to prevent scope creep — the slow and unplanned mutation of a project at the hands of a series of small scope changes. Individually, these changes may seem harmless but, together, they can have a major effect on the execution and ultimate outcome of your project — even to the point of causing its failure.

3. Bring it home. The third phase of scope management is project wrap-up. If you haven’t encountered distractions up to this point, you will now, so it’s imperative that you stay focused for a short punch list and a successful, efficient completion. At this point, it’s important to make sure the team members that were designated to close out the project during the preproject planning phase are free to do so.

Most projects begin with good intentions and a general agreement on what the outcome will be. Yet, sadly, the worst can often come at job’s end — when last-minute changes turn into long-running disputes. So, rather than relax at this point, double your efforts to see the project through to completion. This includes not only reacting quickly and concisely to the punch list, but also clearly communicating with the owner.

Find out how our expertise in construction accounting can add value to your business. Email us or call us at 1 (888) 875-9770.

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