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How do you cope with changing requirements and scope creep in cost forecasting?

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Cost forecasting is a vital skill for cost engineers, as it helps to estimate the resources, time, and budget needed for a project. However, cost forecasting can be challenging when the project requirements and scope change frequently or unexpectedly, leading to scope creep. Scope creep is the phenomenon of adding new features, tasks, or deliverables to a project without adjusting the scope, schedule, or budget accordingly. Scope creep can cause cost overruns, delays, quality issues, and stakeholder dissatisfaction. How can you cope with changing requirements and scope creep in cost forecasting? Here are some tips to help you.

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1 Define the scope clearly

The first step to avoid scope creep is to define the project scope clearly and explicitly. The scope should include the project objectives, deliverables, assumptions, constraints, risks, and acceptance criteria. It should also specify the roles and responsibilities of the project team and the stakeholders, as well as the communication and change management processes. The scope should be documented and agreed upon by all parties involved, and any changes should be formally approved and recorded.

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Karthik Yenumula PMP, CCP
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Or do a scope vs cost study for every possible scope increase that you can think of from preliminary or schematic stage and have it documented as an add alternate for every time scope adjustment is done. This might not be a bid document but atleast gives you an idea about how long can you stretch if scope is being altered/added. Very important to document the scope reduction in design phase of drawings as most of the time those will be added during construction phase

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Chidambaranathan Moorthy

Superintendent Brown Field at SAIPEM, Abuali Island, KSA
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I agree, but the scope creeps shall be assessed meticulously with the involvement of Change Management. Accordingly the cost forecast to be determined as per Change Budget Allocation. In case the change requirement is impacting in minor in terms of Projected Cost Forecast and ambiguity in scope narrative, the cost forecast can be reallocated with the consent of stakeholders.

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Jon Thompson,PMP-SP

Project Controls Analyst (Primavera & MSP)
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Changing requirements and scope creep are directly related to unit cost of changes and cost forecasting should be adjusted accordingly. jt

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Júnio César Silva
(已编辑)
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New specifications/rules/laws/standards/quality control, new requirements from the customer, design changings and all new things from outside and did not agreement at the contract shall be discussed immediately with the project manager and the customer responsible to present the impacts, in cost and time. If the changing is because internal reason like requirements did not consider in the proposal phase and design improvements, it shall be controlled closely with the project manager and promote the internally discussion the possibilities to reduce risks with lower costs. Talk with our team, pick up the ideas and discuss them, with project opportunities and risks, I'm sure that the solution will appear.

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George Carr

Ex senior estimator and cost manager at Retired
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Easy to say but difficult to do. The answer is get on top of it immediately. Have an in house cost engineering department including skilled estimators who can roughly evaluate changes Immediately. Why roughly? Simple, no one has time to do detailed estimates before the damage is done. Damage? Nice to have changes, design engineers egos? clients “ I must have surely it is included”? Some changes are recently discovered, new bad ground conditions. So no it’s not all good news! Spending over 1.5 percent up front on geotechnical investigations pays off. Any one of the above can dramatically increase cost. Fighting egos can be a full time job. Watchword is stay strong, have evidence, be honest. Not easy in the corporate world but vital!

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2 Use a flexible forecasting method

The second step to cope with changing requirements is to use a flexible forecasting method that can adapt to the project dynamics. One such method is the rolling wave planning, which involves planning the project in phases or waves, rather than in detail from the start. The rolling wave planning allows you to forecast the cost of the near-term activities more accurately, while leaving the later activities more flexible and open to changes. The rolling wave planning also requires you to update and revise the cost forecast regularly, based on the actual progress and performance of the project.

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3 Monitor and control the project performance

The third step to cope with scope creep is to monitor and control the project performance , especially the cost and schedule variances. You should track the actual cost and time spent on each project activity, and compare them with the planned or budgeted values. You should also identify and analyze the root causes of any deviations, and take corrective or preventive actions to bring the project back on track. You should also report the project status and performance to the stakeholders, and communicate any issues or changes that may affect the cost forecast.

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4 Manage the change requests

The fourth step to cope with scope creep is to manage the change requests effectively. A change request is a formal proposal to modify the project scope, schedule, or budget, usually initiated by a stakeholder or a project team member. You should have a clear and transparent change management process that defines how to submit, evaluate, approve, and implement the change requests. You should also assess the impact of each change request on the cost forecast, and update it accordingly. You should also document and communicate the approved changes to all parties involved, and ensure that they are reflected in the project plan and contract.

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5 Learn from the lessons

The fifth step to cope with changing requirements and scope creep is to learn from the lessons. You should conduct a post-project review or a lessons learned session at the end of the project, or at the end of each phase or wave. You should collect and analyze the feedback and data from the project team and the stakeholders, and identify what went well and what went wrong in the cost forecasting process. You should also document and share the best practices and improvement opportunities for future projects.

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6 Improve your skills and knowledge

The sixth step to cope with changing requirements and scope creep is to improve your skills and knowledge in cost forecasting. You should seek to enhance your technical and analytical skills, such as using cost estimation techniques, tools, and software, applying cost-benefit analysis, risk analysis, and sensitivity analysis, and developing cost contingency plans. You should also seek to improve your soft skills, such as communication, negotiation, collaboration, and problem-solving, which are essential for managing stakeholder expectations, resolving conflicts, and facilitating changes. You should also keep yourself updated on the latest trends and developments in cost engineering, such as new methodologies, standards, and best practices.

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Oseghale Okohue BEngr. Msc. MBA. DBA. Prince2?Practitioner

Accredited NEC4 ECC Project Manager & Snr. P6 Planner | EPICM, Offshore Engineering,Renewable Energy (HVDC & HVAC Power Cables, Wind, Solar, BESS, Grid Code Compliance (G99, G5/5, P28) & Integration, GIS/AIS Sub-Station)
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In engineering management, adaptability is key to handle changing requirements & scope creep in cost forecasting. Utilize agile methodologies, robust change control processes, & risk management strategies. For energy projects, like building a power plant, employ modular designs & contingency plans to mitigate cost overruns. Regular communication with stakeholders ensures alignment and minimizes surprises.

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How do you cope with changing requirements and scope creep in cost forecasting?

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1 Define the scope clearly

2 Use a flexible forecasting method

3 Monitor and control the project performance

4 Manage the change requests

5 Learn from the lessons

6 Improve your skills and knowledge

Cost Engineering

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