How to reject new requirement in project?

Question

I am a PM for a waterfall methadology project. And I am going to ask a question that every PM faced I believe, but it is my first time to face such situation and would need your support and guidance.

Usually project is working as following:

1. Phase 1: We do analysis meeting with customer based on a predefined scope in the contract. In that we gather info and get all needed data for a solution design preparation.
2. Phase 2: We send solution design for customer approval based on info gathered in phase 1.
3. Phase 3: Once I get approval from phase 2, Development execution shall start.

Now, my case is I am suffering in phase 2. This phase was planned as 1 week. But now we consumed 2 weeks and customer keeps asking for new things or modifying old things (not discussed in phase 1). I did my best and tried to accept few things that I can afford to move one and rejected any thing extra would take much effort.

And everything by end of week 2, looked okay but suddenly they send me one more document (a new recommendation from audit/mgmnt) with over 60 requirement mentioning that they want to understand my project covers these points by what percent. Then I got a promise that once I send my feedback I will get approval.

I did my analysis and we are covering 70%. I sent my feedback. And I got a feedback that solution design is approved but under one condition!! That to add 3 points from the last document I did analysis for.

If we are going that direction it is a pure scope creep. And don't know what to do. So I am expecting if I will reply no, they will say it is a business need. But it is not in the scope? So what can I do in such cases, as this loop should be ended.

I already raised flags that we are delayed and we need to move forward.. but now it is management requirement!! This is the justification

Answer 1

If you have a change process defined, and your customer is sidestepping the process to squeeze scope in without paying for the impacts, then you say no. You're a party to the contract and you get to say no if you think the contract is being violated. It's the job of the PM.

EDIT to address comments: They are right to say the change is needed...if indeed it is needed. They are, after all, the customer. Where they are not right is not allowing additional costs and time for those changes above to what was agreed previously. When you are at an impasse, and you can no longer negotiate informally or through the established change process, then you escalate this issue through your contracts and legal departments. It is no longer a PM issue. Your contracts and legal departments will begin their formal processes to arrive at a suitable solution or escalate it to the courts.

For some reason, this issue plagues the IT industry. This never occurs, at least to this degree, in construction. If a customer increased his requirements by saying something like, "I am going to need you to build this detached garage and, no, I won't pay you more," the contractor would walk away laughing. It is more muddy or ambiguous with IT and knowledge work but the same concept applies. Say no and then escalate. Stop work if you are unable to move on the original scope.

Answer 2

As per the wording in your question:

And I got a feedback that solution design is approved but under one condition!! That to add 3 points from the last document I did analysis for.

So it sounds like they have recognised that that their request is bigger than the original scope, and yet they want it for no additional cost. This should be seen as an invitation for you to go back to them with a revised cost / time estimate for the larger scope of work. As they have not yet signed off the project, that is arguably fine without a CR, but as soon as they have signed off, any change should, without doubt, be subject to a CR, and that should be defined in the contract. And that's any change, whether it adds to or reduces the scope. Why? - because without a CR, you are contractually held to the original scope, regardless of what has been communicated to you. And bizarrely, sometimes a reduction in scope doesn't actually change the cost or timescale very much.

But back to the original question - I suggest it is only scope creep once the scope has been signed off. You don't have a signed-off scope, so it can't be scope creep. It is simply a revised set of requirements. And you should increase the contract and be paid for delivering them, as they have acknowledged that they are extras that you hadn't originally included in the scope as you understood it. It's a tough message to take back, but you need to be tough otherwise they will do it again, and again, and again.

Answer 3

Many similarly-structured projects – where legal contracts hold sway, adopt one or the other of two strategies:

(1) Formal Change Orders: The parties must expressly negotiate each change to the contract.

(2) Formal Burn-Limits: The parties may informally bargain within the scope of the contract so long as the total amount of money spent doing so does not exceed some agreed-upon "wiggle room."

Answer 4

Why do you want to reject what the customer is asking? If your contract or your way of working obliges you to turn away work that the customer wants and is presumably willing to pay for then perhaps your business model is broken and that is not the customer's fault.

The second thing to think about is that on any project (I'm assuming software development) whatever contractual terms are in effect, it is essential to have an agreed method for managing change. With very few exceptions it isn't realistic to expect everything to be defined perfectly at some early stage (or at any stage). Effective change control is in your company's best interests and in your customer's essential interests.

What I suggest is that you agree with the customer how these and future requests should be dealt with throughout the work. I'm sure there will be future requests, so prepare for that. Customer engagement and feedback is a positive thing. Communicate with your customers regularly, get their feedback and act on it is the way to make successful projects and satisfied customers.

Regarding the commercial side, there are two common scenarios: either T&M or fixed-price (FFP). If it's a FFP contract then that means both sides have accepted that the scope is a matter for commercial negotiation. Your company's account manager or leadership team must be ready to discuss with the customer what is to be included in the price and what is an additional cost item. You shouldn't expect the customer on their own initiative to make the decisions on scope. In any case, I suggest you allow the requirements drive the plan rather than the plan limiting the requirements.

If T&M, then just treat everything on the backlog as a change and avoid those tricky scoping discussions.

Answer 5

One thing that I learned from Herman Holtz's (Hermann Holz) many books on "consulting contracts" is the idea of task orders. An umbrella contract sets the ground rules for one or more individually-scoped-and-priced task orders to be issued during the fulfillment of the contract. It is further specified that all revisions must be accompanied by new task orders which serve to formalize the change process. I refer you to his books.