Combatting Scope Creep for Trades SMEs
When a job expands, taking up more labour, materials, or time than expected, it can begin to cut into your profit margin. It’s called scope creep because it will creep up on you!
The profits lost when failing to charge for small extras or overtime will seem minimal at the time, but could add up to the cost of a new van or more over the course of a year. It’s a significant issue for trades business owners—so we talked to Hannah, our pricing expert and experienced quantity surveyor, about how to prevent and mitigate it.
Identify the issue
Sticking your head in the sand about an unforeseen $100 here and there seems harmless, but ostriches don’t run businesses for a reason. Hannah said that you can let extra costs slide here and there, according to your judgment—but if and when you do, make note of it rather than choosing to ignore it.
Knowledge is power, and ignorance is only bliss until the bills roll in. Keep careful track of when you spend outside budget, so you can make informed decisions about future quoting and at what point it will become necessary to pass charges on to customers. Scope creep will become an issue you need to address, and it’s best to have data to back up your strategy.
Top tip: Adding in a contingency fund or buffer to your quotes is a good practice. It’s rare that this buffer won’t be used!
Keep the communication flowing
Establishing regular and transparent communication with customers was Hannah’s main tip for managing scope creep. A customer that’s in the dark about the progress of a project might feel ambushed by a sudden message that two extra labour hours are required, or that an unforeseen issue with stud placement means you’ll need some extra length of pipe.
A good relationship with a customer will allow you to be honest about extra costs without becoming the bad guy. Communication should be clear before work begins, with a shared understanding of the scope of the job. If, for example, you discover rotten nogs that will require more materials and time to address, this is outside the scope of the job and should be on-charged. If the client knows the scope and has trust and goodwill, it shouldn't be a problem to let them know immediately of the problem and the added cost.
Top tip: find a method of communication that is easy and the customer will be responsive to. Hannah says that some of her clients use Whatsapp for this.
Quote thoroughly
Of course, the best way to deal with scope creep is to avoid it entirely by making sure that your quotes cover everything. We picked Hannah’s brains about this last year and put together a blog on pricing and quoting tips for trades SMES—have a read and get your estimations up to scratch!
Top tip: always take photos before, after, and during! Having these available can solve problems and help you to prove existing issues and unexpected hurdles.
Prioritise project management
Strong project management can help you to stay on track and on budget, evading the decision of whether to swallow added costs or bring it up with customers. No-one wants to do either of those things. A lot of added cost is in labour hours. Smart scheduling can contribute to a balanced budget!
Good oversight of a project can reduce wastage, maximise the output of labour hours, and ensure that scheduling is as efficient as possible so no extra time is spent. Most small trades businesses are not able to have a dedicated project manager, of course. As a business owner, you can nurture these skills and create systems to ensure that projects are as well-managed as possible.
Top tip: When a customer asks “can you just do this, too?”, respond with something like: “yes, but we have kept our quoting as tight as possible so it would come with an extra charge. Are you happy to add that on?”
In a competitive market, it can be difficult to maintain a profitable business, let alone a thriving one. We’re using the knowledge and expertise of our team to equip trades business owners with what they need to succeed. Stay tuned for more!
