Managing Change on an IT Project: Part 2 – Negotiating Change

As discussed previously, change management is a key activity for which the Project Manager is responsible. It goes hand-in-hand with Scope Management. Whenever issues arise that appear to be out of scope, they must immediately become part of the change management process on a project.

Part 1 discussed the concept of Identifying Change on a project. In Part 2, I will discuss the next step the Project Manager must take – Negotiating Change.

“It’s Out of Scope”

You’re the Project Manager and you’ve reached the point where you, or someone on your team, have identified a potential out of scope issue. Customers cringe when they hear the words “It’s out of scope” uttered by a Project Manager. Or possibly even your customer has brought an out of scope issue to you and identified it as out of scope verbally. That would be the easy route. That’s how it was for me on one project I mentioned in another article when the customer requested the Business Analyst to be full-time on the project – and onsite – for the rest of the engagement. They knew that was out of scope and knew they would pay for it. It doesn’t always go like that. In fact it rarely does.

When an obvious out of scope issue arises, the best course of action – after you’ve discussed it with the delivery team members – is to take it to the customer. The earlier in the process they know about it the better. Give them as much information as possible and explain what likely effects it will have on cost/budget and schedule. This is when you put your PM negotiating cap on

As the customer, they are worried about both cost and timeframe. One may be more important than the other on any given engagement, but the customer is definitely watching both closely. As quickly as possible, put together a proposal for the out of scope (OOS) issue detailing the cost estimate and timeframe changes (either or both depending on what affect the OOS issue has on the project). Deliver it to the customer and set up a meeting to go over it either in person or over the phone depending on logistics. Be careful to include all details on the benefits to the customer of the change and the work to be performed and any assumptions you have made to achieve the cost and timeframe estimates. The customer will appreciate the documentation and the justification and this will likely make the acceptance and signoff process – and thus the negotiation process – much smoother.

Dollars and Sense

As the PM and the keeper of schedule and budget and the leader of the delivery team, you are in a unique position to negotiate with the customer on this change order. It may be possible to provide the customer with a reduced hourly rate for the labor involved in the change. This is an especially good tactic to take if there was any grey-area surrounding the need for the change or the potential that there was some early-on failure on the part of Sales to properly educate the customer thus leading to this needed change order.

Another possible negotiating point may be in schedule. If the change will affect the timeliness of rolling out some critical functionality, then it may be possible – and necessary – to negotiate with the customer a possible phased approach to implementing the changes needed in the change order. Proceeding down the current may satisfy the customer and allow for the revised work covered in the change order to be performed in a later phase. If that is the case, then this later phase work can be estimated at either the regular hourly rate or at a revised, negotiated rate depending who or what actually caused the need for the change order.

The Final Step

Above all else, always be sure to obtain customer signoff on any change work that is performed. Get customer sponsor signature approval on the change order before the work is performed (at the time of estimate acceptance and agreement to move forward with the change) and also once the change is tested and implemented. This will ensure that everyone is on the same page – which is critical when you are making changes at this point of an engagement.

Related posts:

1. Managing Change on an IT Project: Part 3 – Implementing Change
2. Managing Change on an IT Project: Part 1 – Identifying Change
3. Internal Projects: When Scope Changes
4. The Art of Negotiation – Part 1
5. What the Customer is Trying to Tell You