All projects have change requests by nature. Change requests should be evaluated (impact analysis, resources needed, cost and time estimates). Change requests evaluation need time and resources that
Senior Projects Manager | Field & Marten AssociatesNew Westminster, British Columbia, Canada
What is your question, Oleksii? Saving Changes...
Oleksii SavinHead of PMO| OpenVPNKiev, Kyiv City, Ukraine
The question is where should time and cost for future possible change requests evaluation and analysis (not implementation) be allocated during project planning and estimating?
Imagine, we estimate a fixed bid scope of work. We estimate all deliverables, communication, contingency and management reserves.
But we don’t know how many change requests may arise later. Furthermore, some change requests or package of change requests may need a lot of time for evaluation (but the team is already allocated to scope of work implementation estimated and planned earlier).
The result of change request evaluation may not be approved hence the team spent a lot of time for CR evaluation that is rejected instead of working on the planned scope.
So, where such time should be “parked” to avoid schedule problems? Saving Changes...
Senior Projects Manager | Field & Marten AssociatesNew Westminster, British Columbia, Canada
You should do risk management, and then establish your Contingency reserve which would include future unanticipated change orders. Change orders, especially on construction projects, are almost inevitable, and we always allocate certain percentage in our budget as a Contingency reserve. Saving Changes...
To add to Rami's response, I've worked on projects where it was recognized proactively that there'd be a reasonable volume of change requests and while it was not considered part of the contingency reserve, it was a separate line item in the budget which could be tracked in a similar manner to contingency reserves. I've also worked on projects where the contract specified a ceiling amount on cumulative change request spend.
As far as the effort of evaluating change requests, this can be a real issue on projects which run late as the team spends time evaluating instead of delivering scope. In such cases, a change control board or other governance entity will filter all change requests initially and only pass those on to the team which they feel are worth the opportunity cost to evaluate.
I agree with Rami and Kiron. One of the reason that there should be a change request process is to answer a lot of questions like how we should pay for that change! Saving Changes...
I typically include a discrete estimate in my WBS as well, rather than including it as contingency funding. We use historical data if possible to estimate the amount if possible, or a best guess based on prior experience if not. Change activity that exceeds the baseline estimate would use contingency reserve.
There may also be different categories of change. If we realize that we erred in our initial estimate, the change may still require change board approval but we can't pass the cost on to the customer in most cases. If the customer requests the change, then the cost of processing the change may be billable and added to our budget. Saving Changes...
Oleksii SavinHead of PMO| OpenVPNKiev, Kyiv City, Ukraine
Colleagues, thanks for your comprehensive answers! Saving Changes...
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