Why is it important to create the Scope of Work before the project starts?

Why is it important to create the Scope of Work before the project starts?

April 3rd - 2020

What is the SoW (Scope of Work)?  

A Scope of Work (SoW, for its acronym in English) related to project management is a document in which a hiring entity specifies the objectives and deliverables of a particular project or service contract. Contractors and potential service providers use the information that an SoW provides to determine whether they can fulfill their goals and deliverables for a service and to present a proposal.

How many projects are not successful because of the lack of the right plan? 

When a project fails to deliver on its targets, it is important to look at the hard data behind the project and the people working on it if lessons are to be learned. 

A PricewaterhouseCoopers’s (PwC) study from 2019 shows that of the 10,640 projects analyzed, only 2.5% of companies completed their projects 100% successfully!

The PwC project also highlighted some other shocking statistics:

  • “Only 64% of projects meet their goals.”
  • “70% of companies claim to have at least one failed project per year.”
  • “Organizations lose $100 million for every $1 billion invested in projects. “

     

Determining precisely what are the risks that can impact the project and their magnitude in the face of the whole initiative is essential for the team to act quickly to reduce the chances of these risks occurring. When one or more risks are underestimated, or even unconsidered, there can be a huge impact on the project. These shortcomings can lead to abandoning a project because of a lack of financial feasibility.                

Most Common Causes of Project Failure (Wrike 2015):

  • Changing priorities within the organization – 40%
  • Inaccurate requirements – 38%
  • Change in project objectives – 35%
  • Undefined risks/opportunities – 30%
  • Poor communication – 30%
  • Undefined project goals – 30%
  • Inadequate sponsor support – 29%
  • Inadequate cost estimates – 29%
  • Inaccurate task time estimate – 27%
  • Resource dependency – 25%
  • Poor change management – 25%
  • Inadequate resource forecasting – 23%
  • Inexperienced project manager – 20%
  • Limited resources – 20%
  • Procrastination within a team – 13%
  • Task dependency – 11%
  • Other – 9%

Recording and understanding why various projects failed are essential—but it is even more important to use the data to improve.

Real cases of disastrous Project Management failures

Poor planning in project management is the number one reason why a project fails. If something does not start right or is not correctly defined from the start, it would be absurd to think that it will end right.

The story of a new submarine model for the Spanish Navy is a good example of a poor SoW. Several years ago, the S-80 submarine suffered a major engineering setback: it was overweight because someone misplaced a comma in a calculation and it was at risk of not being able to resurface after submerging. The solution: make the submarine longer to distribute the weight. Recent reports made public by the newspaper El País say it cannot fit into the port of Cartagena where the submarine was supposed to be stationed. This is a classic example of how a poor definition of the targets can lead to a disastrous ending. Each of the four new submarines will end up costing almost $1.2 billion, nearly double the initial budget and a 7-year delay over the initial time estimate. 

Another sadly infamous example is the Denver Airport’s Automated Baggage System where authorities tried to remodel and upgrade the luggage check-in and transfer system. The goal was to fully automate all baggage transfers, integrate all three terminals, and significantly reduce aircraft turnaround time. Unfortunately, the project scope was not clearly defined and management took on unnecessary amounts of risk because of poor planning. Furthermore, the projected managers hid data from the stakeholders until it was too big to ignore. Most of the project had to be redone and the airport reopening date was delayed by 16 months with losses amounting to approximately $2 billion! The whole project was ultimately canceled in 2005.

A weak project plan and a lack of a solid SoW, paired with an inadequate risk management approach, can lead to project failure. A proper definition from the start is the key to success.

Conclusions 

A well-defined SoW reduces the risk of misunderstandings and communication gaps. Anyone could think that the SoW is not something that would be worth giving too much attention. After all, it is just a paper that is written beforehand that tries to put into words a concept that is still not completely developed. However, this is precisely its great value: if it is written as it should be, it can be seen as the origin of all the actions that are foreseen within the project execution. In addition, the SoW is an integral, cross-sectional element that does not disappear at any stage of the project. It can change slightly or refocus, but it will never change substantially. 

The Scope of Work is composed of useful and truthful information. It is the main reference for the preparation of the different stages that constitute a project, as it acts as the starting point. It favors the analysis of requirements in terms of costs, resources, and dynamics, among several other factors. A correct SoW minimizes the risk of a customer's incorrect understanding by defining the scope of the work to be carried out and quantifying it whenever possible so that they do not expect more than what they are paying for. Unfortunately, all too often scopes are managed badly and result in additional costs; the worse the scope is defined, the greater the impact on the cost. If the process is carefully controlled and documented with the appropriate level of knowledge, then extra costs can be avoided, and the right decisions can be made earlier on in the project. The key lies in the proper definition of a project in order to carefully control, manage, authorize and communicate change.  

Risks must be included and accounted for in the project’s predictions, in order to minimize the impact of an event; whether if it is foreseen or not, this is the most reliable way to protect the clients’ investment and ensure trust for current and future projects. A robust documented procedure will ensure that any surprise is handled accordingly, and is a proactive tool, technique, and quality method that enables the overall satisfaction and efficiency levels the customer expects.