The ‘not so’ hidden costs of scope creep

Last week I caught up with a sector colleague of mine. They were telling me of a situation that it turns out a number of other operators are facing at the moment – scope creep.

This isn’t ‘service creep’ which can shift the expectation of residents over time (we will cover that at our upcoming Professional Development Day.) Instead, this scope creep refers to service providers expanding their work beyond what was originally agreed upon.

During our discussion, the example became quite specific and is a direct consequence of legislative changes in NSW, which now allow residents to choose their auditor.

At first glace, the engagement of an auditor seems a rather straight forward process. Afterall, it has been common practice in the sector for decades. Late last year, however, a troubling trend emerged: auditors pushing for additional investigations beyond their historical scope of work.

The Impact of Scope Creep

When any service provider expand their role beyond what was originally agreed, the consequences can be significant. Consider:

1. 1. Escalating Costs
      Additional, unapproved work results in inflated invoices, putting pressure on village budgets. In many cases, these unexpected costs may ultimately be passed on to residents, increasing their fees.
   2. Tension Between Stakeholders
      Unclear expectations and unapproved charges create friction between operators, residents, and service providers. This not only leads to frustration but also erodes trust—something that is essential for a well-functioning village.
   3. Service Delays or Withheld Work
      If disputes arise over additional charges, service providers may pause or refuse to complete essential work until payment is settled. Given the strict timeframes operators face—such as budget preparations and annual meeting deadlines—this can cause significant operational disruptions.
   4. Disputes and Legal Challenges
      Unchecked scope creep can escalate into formal disputes, requiring mediation, intervention, or even Tribunal involvement—consuming time, resources, and energy that could be better spent elsewhere.
   5. Compromised Service Quality
      When providers stretch their role beyond their agreed-upon expertise, their core service delivery may suffer, leading to inefficiencies and potential dissatisfaction among residents.

Protecting Your Village from Scope Creep

Over the course of the conversation, it became clear that as Village Professionals, we need to ensure we have clearly defined parameters to ensure that all contractors and service providers have a clear expectation of what is required of them, and the time frames under which they need to be delivered.

Consider the following with regards to your contract management practices:

• Clearly Define the Scope
  Every contract should explicitly outline:
  • The services to be provided
  • The frequency and deliverables
  • Deadlines and exclusions
• Set Cost Parameters
  Establish fixed fees or well-defined variable rates for additional work to prevent unexpected cost blowouts. Transparency in pricing helps protect both operators and residents.
• Require Pre-Approval for Extra Work
  Any additional services must be formally requested and approved in writing before being undertaken. This ensures clarity and prevents unauthorized expenses.
• Regularly Review Agreements
  Conduct periodic contract reviews to check compliance, identify potential issues, and assess value for money. A proactive approach helps prevent disputes down the line.
• Engage Trusted Providers
  Whenever possible, work with service providers experienced in the sector. Those who understand the importance of transparency, professionalism, and resident-focused service are far less likely to cause issues.

Is it time to take action?

If you are finding costs escalating with service providers, with a range of issues arising, the least of which is cost management, take a moment to consider how you have defined the scope of their work. If you need to go back to the beginning, it might be more beneficial than trying to ‘make it work’ and kick the issue down the road a little further.

Budget time is now. Be proactive.