Getting Paid for Out of Control Projects

It could be the result of a miscalculation on your part in pricing the project, a misunderstanding on the part of the customer, etc. but particularly in complex situations, development and delivery costs can spiral out of control exceeding your contractual agreements. Especially when the relationship is new, you may be hesitant to approach your customer to ask for more money than initially agreed. Overruns in scope are common. Getting paid for them is not so common.

The things you have in your favor are that most customers know when costs are spiraling upwards particularly when the overruns are caused by their changes, delays, or demands and many will try to be fair. But understandably most customers will sit back and wait to see what you will do.

While of course, it is very important to catch the overrun early and to prepare your data for the meeting with your customer, the most important thing you can do to stop scope creep is to address it with your customer as soon as you are aware of it. Earlier is better. Later can take away much of your collection leverage but in reality later is legitimate too.

One thing for sure is that if you don’t ask, you won’t get paid. If you ask, you’ll have a good chance of succeeding. And you can stem the tide of continued overruns.

In seeking payment for out of scope work, you’ll need all of your negotiating skills, starting with your preparation and confidence. Make sure you know the customer’s perception including level of satisfaction and where he/she thinks things stand. If there is new or conflicting information, you may need time to go back and prepare your response. Meet with your customer face-to-face if at all possible. Lay out the situation and cost, make your request, and be silent. If your customer resists, acknowledge neutrally, probe, and make a second effort.

Oh, and don’t be surprised if you don’t need to make a second effort. One salesperson was pleasantly surprised after he set up a meeting to discuss the status of the project. When he met with the customer, the customer preempted him by saying, “OK, Jonathan, I’ve been waiting for this. What’s the number?” It was a big one and the salesperson got paid.

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