Managing Customer Expectations: Budget, Time, and Scope

The customer often does not understand the interrelationship between a project’s budget, time, and scope. Early in the life of a project, a good project manager should discuss this relationship with the customer, and ensure that everyone understands how attempts to adjust one or two of these automatically adjusts the third.

Managing Customer Expectations

Budget

The project manager is typically working with two related budget numbers: cost and price. Cost is the amount of money the project manager is expected to spend to accomplish the work, and price is the amount the customer will be charged for that work. If costs go over budget, the project will not make the amount of money expected, or the customer will need to be charged a higher price, unless adjustments to time or scope can be made.

Customers may have an expectation that internal projects are no cost, or “free.” In actuality, all projects have a cost, even if the internal customer is not paying that cost and will not be charged or required to pay a bill.

 

Time

Time is the amount of calendar time over which the budget cost will be spent to accomplish the work of the project. Customers may sometimes desire to shorten (or even lengthen) the time of a project, and may not understand the adjustments to budget and scope that would be required.

 

Scope

Scope is the set of work to be accomplished in the project. Attempts to add scope (or to remove scope) will always result in corresponding adjustments to budget and time.

 

You Can Only Control Two or This Really Is “Rate Multiplied by Time Equals Distance” From Physics

If we are asked to “do the same amount of work in less time,” or to “do more work in the same amount of time,” we can see that we’ll have to pay more. In other words, changes to time and scope result in changes to budget. Similarly:

  • Changes to time and budget result in changes to scope
    • For example, “do this in less time, at lower cost” results in “remove some work from the scope”
  • Changes to budget or scope result in changes to time
    • For example, “do more work for the same budget” results in “add to time”

This is really the same “law of physics” that gave us our favorite formula from high school: Rate multiplied by Time equals Distance. As with the physics problems, Rate is speed – the speed at which we spend the budget. This will be expressed as “dollars per day” or “person-hours per week”, for example. Time is the number of time units used (days, weeks, etc.). And Distance is the total work accomplished, expressed as dollars or hours.

Let’s do an example.

Suppose we have determined that to accomplish everything in scope for a specific project, we will need to spend 400 person-hours. There are several ways we could accomplish this work. Here are two:

  • Put one person on it, at 40 hours per week, taking 10 weeks
    • Rate = 40 person-hours per week, Time = 10 weeks, Distance = 400 person-hours
  • Put two people on it, at 80 hours per week, taking 5 weeks
    • Rate = 80 person-hours per week, Time = 5 weeks, Distance = 400 person-hours

The customer is motivated to get as much work done as possible, in as little time as possible, for the lowest price as possible.

 

Helping The Customer Understand

Let’s suppose we schedule one resource, and begin the project. Now suppose the customer adds a new requirement to the project (that we calculate will require 100 hours), and specifies that the project still must complete on the original date. They have added scope, and restricted time. Assuming we agree to do the additional work (which is a different discussion), the only way we can complete the project on time is to increase the rate of spending. Or, the only way we can complete 500 person-hours of work in 10 weeks is to spend more than 40 person-hours per week.

The customer may not understand that only two of these three parameters can be controlled or changed, and that the third results from the other two. A good project manager will need to work with the customer to prioritize budget, time, and scope, especially when the customer requires changes.

 

Sometimes It Physically Cannot Be Done

The customer often proceeds through a project with expectations that some of the above myths are true. At the beginning of a project, the project manager should have good discussions with the customer that put them both on the same page for how the project will work. This will manage these expectations and help ensure a successful project.

 

Manage The Expectation

The customer is motivated to get as much work done as possible, in as little time as possible, for the lowest price as possible. Change introduced after the “contract” has been signed will affect budget, time, and scope. Sometimes it is difficult for the customer to see why all three parameters cannot be changed or restricted. The project manager can sometimes manage the expectation by discussing the issue as a physics problem.

 

 

Benefits of Managed IT Services from Global Data Systems

  • Strategic Managed IT: We help you solve your technology related business problems.
  • Connectivity: We get you reliable, secure connectivity anywhere in the western hemisphere in 48 hours.
  • Support: When you need help simply call our 24x7x365 support number.
  • Billing: Instead of managing hundreds of vendors - get one, easy to read bill from GDS.

Contact Managed Services Provider, Global Data Systems >