Started a major audit for a manufacturing facility on PSO territory here in Tulsa. Three weeks in, they want to expand scope to include natural gas bills and reduce our contingency fee from 25% to 20% because of the "larger project size." Our original LOA was clear about electric only. How do you handle scope creep requests like this?
Client wants to modify our signed agreement mid-project
Eddie, I always treat scope changes as separate agreements. New scope = new contract with original terms. Don't let them leverage existing work to negotiate better rates. I had a Florida Power & Light customer try this exact same thing in Tampa last year.
Kent's right. Scope creep is how you lose money on projects. For my Idaho Power customers, I explain that adding natural gas analysis requires different expertise and tools. If anything, the fee should be higher for gas work, not lower. Stand firm on your original terms.
Eddie - Randy here from Memphis. This is a classic negotiation tactic. They're hoping you'll accept less to keep the project moving. I'd offer to do the gas analysis as a separate engagement at your standard rate, or they can find someone else for that portion. Don't compromise your fee structure.
Thanks everyone. You're absolutely right about standing firm. I'll propose a separate agreement for the natural gas work at full rates. If they don't like it, they can finish with electric only as originally contracted. Not worth setting a bad precedent.
Good decision Eddie. I learned this lesson early with a Dominion Energy customer in Charleston. Once you discount your rates mid-project, they'll expect it on every future engagement. Better to lose one job than establish a bad precedent with a client.
Also document everything in writing. Send an email confirming that the original scope remains unchanged and any additional work will require a separate agreement. Protects you if they later claim there was a verbal understanding about expanded scope.
Wayne, already done. Sent a formal email yesterday outlining exactly what was included in our original agreement and what would require additional contracting. They're reviewing internally but I think they'll accept our terms.
Smart approach Eddie. Clear written communication prevents most disputes. I always follow up verbal conversations with email summaries stating "per our discussion today" to create a paper trail. Saves headaches later if memories differ.
Update: They accepted our terms. Natural gas analysis will be a separate engagement at standard 25% contingency. Electric audit continues as originally planned. Thanks for the encouragement to stand firm everyone!
Excellent outcome Eddie! Standing your ground professionally usually works out. Clients respect auditors who know their worth and stick to their agreements. Sets the right tone for the entire business relationship going forward.