Inside or Outside the project scope?
The question of whether a change is inside or outside the defined scope of work is often at the core of project change management, and the practice and politics of this sometimes differs from the theory - especially for changes that originate within the owners organisation, rather than with a contractor.
The Theory - for Contractors
If a contractor believes that they have been asked to perform work that is outside the scope of their contract then they will raise (send) a VOR - Variation Order Request - to Company, explaining what they believe the change to be. This can also occur if the contractor considers that they have no choice but to modify the scope - possibly due to some outside influence, like the action (or inaction) of another contractor.
If the Company agrees that the change to the agreed scope exists then a VO Variation Order will be issued to the contractor.
If the Company considers that the work is within the existing scope, or is additional work that they do not want to have performed, then the VOR will be rejected, and a DVO may be issued.
The Theory - for Company Project Teams
If a project decides that they want to - or need to - change the Scope Of Work (SOW) of the project then part of the decision-making process includes getting approval for any change in cost. Because of this, it is essential to know whether the proposed change is inside or outside the existing scope - sometimes described as being the scope frame or framework.
A change that is still within the agreed framework of the project would have to be financed from the Contingency Reserve. This can usually be approved by the project team.
A change that is clearly NOT within the agreed framework of the project should be financed with new money - from the project's Management Reserve. This usually has to be approved by stakeholders outside the project team.
To help visualise this, here are some examples:
- A change from having a single process plant, to having two process plants is clearly NOT within the original project scope framework.
- A change of colour for equipment, completed before construction begins, or material is ordered, is a development within the original project scope framework.
Distortions in practice
Usually changes related to contracts follow the theory, although there can be some give-and-take in some circumstances.
If a project team has had a clear instruction that they must not exceed their budget - the cost baseline - then this will lead to a bias that (if at all possible) all changes will be defined as being inside scope, using the contingency. Clearly, this strategy is not always possible in the long term.
Some project teams try to make their project look better - or realise that there is no way that they will keep to any budget, and here the bias is to define all changes as being outside scope - so that they can try to get additional money into the project cost baseline.
This can be a confusing subject. However, I knew a project director who explained that it was really very easy:
- If the change was going to cost extra then it should be outside the frame (meaning the project should get more money)
- If the change was going to save money then it should be inside the frame (meaning that the project should keep the money in its budget)
Of course, some people may have problems with this interpretation!!
This article was written by John Thropp and first published in March 2019.