Death by scope creep

What we see in agencies on a regular basis is low contribution margins, due to inaccurate scopes of work. Here’s our tips on how to avoid death by scope creep.

As business systems and workflow consultants for the creative industry, we spend a lot of time helping agencies analyse their business. We believe that one of the most important things you can do for your agency is to scope.

However, what we are seeing on a regular basis is low contribution margins, and quite often this comes down to agencies not getting their original scope of work right. 

When it comes to scope of work, agencies often use old templates to quote work, charge a fixed price they agreed years ago, or even worse, purely guess the amount of work required for a project.

Taking the time to plan and document what a project will involve, before providing a quote to a client, will mean there’s less risk of project complications. Which can impact timelines, budget and most importantly, profit. Even agencies that operate on a retainer basis, can also lose out if they do not scope properly.

Some statistics:

In the Deltek Industry Snapshot 2017: Marketing Services Trends, they found that scope creep and management processes had the biggest impact on profit.

Deltek Industry Snapshot
Deltek Industry Snapshot 2017: Marketing Services Trends

So why aren’t agencies regularly scoping their work? We believe it’s mostly down to the perceived time constraint. Scoping jobs takes time upfront and too often agencies are time poor.

A solution:

Thankfully The Virtu Group have the answer the industry has been waiting for, with their big data tool Scope. A baseline for agencies to benchmark and create rate cards and scopes of work against industry standards.

At its core, Scope allows you to enter the key components of your scope of work and provides a prediction of the phases, hours and costs you should be billing – based upon industry data.

The data is pulled from millions of real jobs from over 800 agencies across the globe. Empowering agencies to create scopes of work that are based on fact, not guesswork.

Tracey Shirtcliff, founder of The Virtu Group says: “Scope is the first tool ever to give you real insight on what to charge and what should be in your project and job scopes.  A key part of the product is the unique ‘Scope Mark’ certification. This allows you to benchmark yourself to hundreds of other agencies globally and locally.  This goes down to rates and hours on tasks and the resource to complete those tasks.  It’s a game changer.”

In the past the only way for agencies to get data like this was to pay a small fortune to industry bodies. Now for the first time, thanks to Scope, everyone has access to a common industry standard.

We believe Scope is a revolutionary piece of kit. If you’re an agency that has trouble scoping your work this is the solution you’ve been waiting for.

For more information on making the pieces of your business work better together, contact us