Business Advice

Stop scope creep in its tracks with a great contract

- May 1, 2023 4 MIN READ

As a small business owner, you know that scope creep can be one of your biggest challenges. It can take your project off course, increase your workload, and leave you frustrated and underpaid, writes Shalini Nandan-Singh.

So, what can you do to protect yourself and your business from scope creep? One of the most effective tools is a contract, aka service agreement or client contract. In this article, we’ll explore the topic of scope creep and how effective contracts can help you set reasonable boundaries and get paid for your work.

What is scope creep?

Scope creep is a term used to describe a project that has grown beyond its original scope without a corresponding adjustment to the budget or timeline. It often happens when a client (usually verbally) adds requirements or changes the project scope midway through the project. These requests can result in the project taking longer to complete, costing more money than initially estimated, and straining the business owner-client relationship.

Tip – always follow up a verbal discussion about additional work with an email to confirm so you have grounds to charge for the extra work.

For example, let’s say you’re a website designer hired to design a website for a client. The project’s scope is agreed upon, and a contract is signed. However, halfway through the project, the client requests additional features not included in the original scope. Of course, as a professional, you want to accommodate the client’s requests, but you’re not confident enough to ask for additional payment for the additional work. This is where scope creep can occur, and the project can quickly spiral out of control.

Why contracts are important for reducing scope creep

Contracts are necessary because they provide a legal framework for the project. A good contract outlines the scope of work, the timeline, and the payment structure. It also includes clauses that address potential project scope changes and how they will be handled. This is important because it helps to ensure that both parties are on the same page and that there are no surprises or misunderstandings during the project.

In the case of the website designer, if there had been a clear contract in place, it would have outlined the scope of the project and the payment structure. Then, if the client requested additional work, the designer could have referred to the contract to determine if the work was within the original scope and, if not, what the additional payment would be. This would have prevented scope creep and ensured that the designer was paid fairly for their work.

TIP:  Scope creep should be addressed in all contracts – what it looks like, how it is confirmed, what it will cost, and how the fees should be paid.

How to write an effective contract

An effective contract should be clear, concise, and specific. It should outline the scope of the project, the timeline, and the payment structure. It should also include clauses that address potential project scope changes and how they will be handled.

When writing a contract, it’s essential to be as specific as possible. Use clear language and avoid technical jargon the client may not understand. Include as much detail as possible, including deadlines, milestones, and payment schedules.

It’s also important to include clauses that address potential changes to the project scope. For example, if the client requests additional work, a clause should outline how those changes will be handled. Will the additional work be done at an additional cost? Will the timeline be extended? These are essential questions that should be addressed in the contract.

Finally, it’s crucial to have a lawyer write or review the contract before it’s signed. This will ensure that the contract is legally binding and that both parties are protected.

TIP: Establish clear communication channels with your client and set expectations from the project’s outset. Regularly communicate project progress and make sure to document any changes in scope. By doing so, you can help prevent misunderstandings and keep the project on track.

Benefits of effective contracts

An effective contract can bring numerous benefits to small business owners. Firstly, it can help to prevent scope creep by clearly defining the scope of work and the payment structure. This will help to ensure that both parties are on the same page and that there are no surprises or misunderstandings during the project. This Free Client Agreement Checklist can help you assess the effectiveness of your client contracts.

Secondly, an effective contract can help to protect you legally in case of a dispute. If the client fails to pay for the work or refuses to honour the contract terms, you will have a legally binding document to protect you in court. This can save you a lot of time, money, and stress in the long run.

Thirdly, an effective contract can help to establish trust and credibility with your clients. Having a well-written contract in place shows your clients that you are a professional who takes their work seriously. It also demonstrates that you have their best interests in mind and are committed to delivering high-quality work.

Scope creep can be a headache for small business owners. However, using effective contracts, you can set appropriate boundaries and protect yourself from scope creep. Contracts are a crucial tool that can help to ensure that both parties are on the same page and that the project is completed on time and on budget.

As a small business lawyer, I recommend you take the time to create clear and compelling contracts for your projects. Doing so can help prevent scope creep, protect yourself legally, and establish trust and credibility with your clients.

If you need help creating a contract for your next project, please book a complimentary call with me. I’m here to help you protect your business and ensure you get paid fairly for your work.

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5 important tips to legally protect your small business