Change Orders in PS Projects
Overview of a Formal Change Order Process
A formal change order process is a structured approach to managing changes to the scope, timeline, cost, or deliverables of a project. It ensures changes are evaluated, documented, approved, and communicated effectively. This process is critical in professional services projects to maintain control over project parameters while adapting to customer needs.
Steps in a Formal Change Order Process
Identify the Need for Change
Changes may arise from new customer requirements, unforeseen circumstances, or technical constraints.
Clearly define the nature of the change (scope, schedule, cost, or deliverables).
Initiate a Change Request
The party requesting the change (customer or internal team) submits a formal change request.
The request should include:
A description of the change.
Reasons for the change.
Potential impacts (cost, timeline, resources).
Evaluate the Change Request
The project team assesses the feasibility and implications of the change, considering:
Impact on the project scope, budget, and timeline.
Risks introduced by the change.
Alignment with project goals and customer priorities
4. Develop a Change Order Document
Document the proposed change, including:
Detailed description of the change.
Updated project scope, timeline, and budget.
Resource requirements and risks.
Stakeholder responsibilities.
Seek Approvals
Present the change order to the customer and internal stakeholders for review.
Obtain written approval from all relevant parties to proceed with the change.
Implement the Change
Update project plans, schedules, budgets, and resource allocations as needed.
Communicate the approved change and implementation plan to the project team and stakeholders.
Monitor and Report
Track the progress and impact of the change on the project.
Include updates in regular project status reports.
Key Strategies for Managing Change in a Project
Set Expectations Early
Establish a clear change management process during project kickoff.
Ensure the customer understands that changes may affect scope, cost, or timeline.
Define and Communicate a Scope Baseline
Use a well-documented Statement of Work (SOW) to define the original project scope.
Use the baseline to evaluate and justify changes.
Implement Strong Governance
Assign responsibility for approving changes to a designated project sponsor or governance board.
Ensure all changes are formally documented and approved before implementation.
Leverage Collaboration Tools
Use your professional services automation tools (or project management toolset) to track change requests and related documentation.
Provide visibility to all stakeholders to avoid miscommunication.
PSA note: Best practice is to create a change order process launching from the project in your PSA:
Launch flow
Generate CO opportunity associated with the originating opportunity
Services sales scopes and documents the changes
Changes in roles, hours, financials quoted through PS quoting tool
CO SOW generated, signed
Budget, Hours, etc updated on existing project or new project stood up depending on circumstances
Prioritize Changes
Not all changes are equally critical; prioritize changes based on their value, urgency, and alignment with project objectives.
Group non-urgent changes into batches to minimize disruptions.
Control Scope Creep
Use formal change requests to prevent informal or undocumented changes from affecting the project.
Regularly review progress against the original scope to identify unauthorized changes.
Be Transparent with Customers
Clearly communicate the reasons for approving or rejecting changes.
Highlight the trade-offs and implications of changes to ensure customer buy-in.
Monitor Budget and Schedule Impacts
Update cost and schedule forecasts to reflect approved changes.
Include contingency reserves to manage the financial and time impact of unexpected changes.
Document Lessons Learned
After the project, analyze the changes that occurred and their impact.
Use this information to refine future change management processes.
Benefits of a Formal Change Order Process
Prevents Misunderstandings: Ensures that all parties agree on the implications of changes before implementation.
Maintains Control: Helps avoid uncontrolled scope changes that can jeopardize project success.
Improves Decision-Making: Provides a structured framework for evaluating the trade-offs of changes.
Strengthens Customer Relationships: Transparent and fair handling of changes builds trust with customers.
Reduces Risk: Proactively addresses the risks associated with changes to minimize disruptions.
By following a formal change order process and employing robust strategies, professional services organizations can manage project changes effectively, ensuring successful outcomes while maintaining customer satisfaction and project profitability.